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Edited version of private advice
Authorisation Number: 1051794960618
Date of advice: 19 January 2021
Ruling
Subject: Capital gains tax - small business concessions
Question
Is your property an active asset for the purposes of the small business CGT concessions?
Answer
Yes. You owned the asset for more than 15 years. For more than 7 ½ years during the period from when you acquired the asset to when the business ceased, the properties main use was in the course of carrying on a business conducted by entities connected to you, and the exceptions did not apply. The Properties main use during the active asset test period was determined by considering income earned and land area. Further information about the active asset test can be found by searching 'QC 52271' on ato.gov.au
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You acquired the property jointly with your spouse in19XX.
The property was used in the business conducted by a connected entity of yours.
In addition to the business use, the property land area also contains a residence within a fenced yard.
From the purchase contract settlement, the property has been used for two purposes:
1. 22% by area - house and land rented, and
2. 78% by area - land used for the Business.
The proportion of gross income derived from the two uses of the property in the year ended 30 June 20XX was:
1. residential property lease - 2%
2. business - 98%.
The gross income amounts for the year ended 30 June 20XX are proportionately indicative of the gross income amounts derived from the property throughout your ownership period.
The property was used throughout your ownership period for the daily conduct of the Business including the storage of ancillary equipment, parking and maintenance of vehicles used in the Business.
The Business has now ceased. You are now in the process of disposing the assets including the property in the course of Winding up the Business.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 152-35
Income Tax Assessment Act 1997 section 152-40
Income Tax Assessment Act 1997 section 152-49
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