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Edited version of private advice
Authorisation Number: 1052034585525
Date of advice: 20 September 2022
Ruling
Subject: Small business concessions
Question
Will the capital gain made in relation to the sale of the Property be disregarded under the small business 15-year exemption in subdivision 152-B of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes. You have met the basic conditions in subdivision 152-A of the ITAA 1997. The Property's main use for over 7.5 years was in a small business carried on by connected entity. You have continuously owned the Property for more than 15 years. You had a significant individual for a total of at least 15 years during the whole period of ownership. The significant individual just before the sale of the Property will be over 55 years of age and the sale will happen in connection with their retirement. Therefore, the capital gain made on the disposal of the Property will be disregarded under the small business 15-year exemption.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The Company purchased a Property in 19XX.
The Property is a 2-storey building, with a commercial premises located downstairs (approximately XX square metres) and a residential premises located upstairs (approximately XX square metres).
The commercial premises has been occupied by Person A. Person A has carried on a business at the Property as a sole trader for over 15 years. Person A is a connected entity of the Company.
The residential premises has been rented out to third parties throughout the Company's ownership period. The residential premises is managed by a real estate agent.
For at least 7.5 years the lease income received by the Company from Person A and rental income received by the Company from third parties was comparable.
Person A is over 55 years of age. The Property will be sold in connection with Person A's retirement.
Person A has been a significant individual of the Company for more than 15 years and will be a significant individual of the Company prior to the Property's sale.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subdivision 152-A
Income Tax Assessment Act 1997 Subdivision 152-B
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