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Edited version of private advice
Authorisation Number: 1052230231811
Date of advice: 13 March 2024
Ruling
Subject: Small business CGT concessions - 15-year exemption
Question
Will the company satisfy the small business capital gains tax (CGT) 15-year exemption in section 152-110 of the Income Tax Assessment Act 1997 on the disposal of its interest in the property?
Answer
Yes. The company satisfies the basic conditions, and the property is an active asset. The property has been owned for more than 15 years. Person B has been a significant individual of the company for more than 15 years. At the time of the CGT event, Person B was a significant individual and permanently incapacitated. Therefore, the company is eligible to disregard the capital gain made on the disposal of the property.
This ruling applies for the following period:
Year ended 30 June 20YY
The scheme commenced on:
1 July 20YY
Relevant facts and circumstances
The property was purchased by Person A and Person C. Together they used the property for a business.
The company was registered in 19XX. The shareholders of the company were 1 ordinary share Person A and 2 ordinary shares to Person B.
In 19XX the company purchased Person C's interest in the property. Person C started a business elsewhere. The property was now owned in equal interests by Person A and the company.
Person A continued the business until 20XX when they retired due to dementia and the business ceased. The property was then leased to a third party.
In 20XX Person A passed away and their share in the company was inherited by Person B. Person B now owned all 3 ordinary shares in the company.
Person B became incapacitated due to dementia and relocated to an aged care facility.
In 20XX the company sold its interest in the property to Person B.
The company satisfies the maximum net asset value test. The property is an active asset.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 152-110
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