| Disclaimer You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1052097532162
Date of advice: 14 April 2023
Ruling
Subject: CGT - 15 year exemption
Question 1
Will you satisfy the basic conditions under Subdivision 152-A of the Income Tax Assessment Act 1997 (ITAA 1997) for small business relief upon the disposal of the property?
Answer
Yes. A CGT event will happen when you dispose of the property, and you will make a capital gain on the disposal. In the income year of the CGT event, you will be a partner in a partnership that is a CGT small business entity that will use the property in the course of carrying on a business. Other than in partnership you will not carry on a business in the income year of the disposal of the property. You have owned the property for more than 15 years and it has been used in your foliage business for more than 7.5 years of your ownership period. As such, the property will satisfy the active asset test under section 152-35 of the ITAA 1997.
Question 2
Do you meet the conditions to apply the small business 15-year exemption under section 152-105 of the ITAA 1997 to disregard the capital gain made on the disposal of the property?
Answer
Yes. As the basic conditions will be satisfied when the property is sold, and, you are over 55 years of age, and the event that will occur will be in connection with your retirement, you can choose to apply the 15 year exemption, disregarding the capital gain made on the disposal of the property.
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commence d on:
1 July 20XX
Relevant facts and circumstances
Individual A and Individual B (you) jointly acquired the property more than 20 years ago.
The partnership of Individual A and Individual B (the partnership) carries on a business on the property.
73% of the property is used in the business.
The aggregated turnover of the partnership is less than $X million for the 20XX - XX income year and will be less than $X million in the 20XX - XX income year.
You intend selling the property and the business and will continue to operate the business until the income year in which the property is sold.
You are both over 55 years of age.
You will both be retiring from the business and Individual B will also be retiring from her part-time work.
Relevant legislative provisions
Income Tax Assessment Act 1997 subdivision 152-A
Income Tax Assessment Act 1997 section 152-35
Income Tax Assessment Act 1997 section 152-40
Income Tax Assessment Act 1997 section 152-105
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
