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Edited version of private advice
Authorisation Number: 1051794757091
Date of advice: 08 January 2021
Ruling
Subject: Income tax - CGT- small business concessions
Question
Is the interest in the vacant land, held by the Entity X an active asset for the purposes of the small business CGT concessions?
Answer
Yes. Entity X satisfies the conditions of the active asset test. A connected entity used the asset for at least half of the ownership period in the course of carrying on a business and the exceptions do not apply. Further information can be found by searching 'QC 52272' on ato.gov.au
This ruling applies for the following period:
Financial year ending 30 June 2019
The scheme commences on:
1 July 2018
Relevant facts and circumstances
Entity X purchased vacant land jointly with two other purchasers.
Entity Y, a connected entity of entity X, purchased a business, along with the business premises in 19XX and have been operating the business at the same location since acquisition.
The business aggregated turnover is more than $2 million, however entity X (and their connected entities and affiliates) satisfy the $6 million maximum net asset value test.
The vacant land is located adjacent to the business premises.
As parking was limited, the adjacent vacant land was purchased to improve car park availability for customers, and access to the business premises for delivery trucks supplying stock.
After a business downturn the vacant land was sold.
During the entities ownership period the vacant land was never used for any other purpose other than parking for the business.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 152-35
Income Tax Assessment Act 1997 section 152-40
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