Edited version of private advice

Authorisation Number: 1052334051622

Date of advice: 21 November 2024

Ruling

Subject: Small Business Concessions

Issue 1

Small Business 15-year exemption

Question 1

Was the sale of the property in connection with your retirement for the purposes of subparagraph 152-105(d)(i) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer 1

Yes. You were 55 years old at the time the property was sold. You significantly reduced your working hours, initially to a smaller farming business, selling remaining farm plant and equipment and renovating investment houses. You then retired fully. As such, the Commissioner is satisfied that in these circumstances the sale of the property by you was in connection with your retirement for the purposes of subparagraph 152-105(d)(i) of the ITAA 1997.

For more information on this issue and the small business 15-year exemption in general, search Quick Code QC 52288 on www.ato.gov.au.

Issue 2

Commissioner's Discretion - further time to dispose of property

Question 2

Will the Commissioner exercise his discretion to allow further time to reduce or disregard capital gains relating to the disposal of the property beyond the 2-year period to DDMMYYYY outlined in section 152-80(3) of the ITAA 1997?

Answer 2

Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time as there is an acceptable explanation for the period of extension requested, the requested time is not excessive, and it would be fair and equitable in the circumstances to provide the extension.

This ruling applies for the following period:

Year ended 30 June 202X

The scheme commenced on:

1 July 200Y

Relevant facts and circumstances

You and your spouse acquired a farming property in 2 separate transactions. Property A was purchased in 200A and property B was purchased in 200B.

You operated a primary production business on the property via a partnership. A portion of the property was leased to an unrelated third party from 20CC to 20DD when it was then leased to an associated partnership.

You acquired your spouse's 50% interest in the property when they passed away.

You were restricted from listing the property on the market for sale due to consistent COVID-19 lockdowns and many government restrictions in place at the time.

You turned 55 in 202Z.

You commenced negotiations with one real estate agent but they did not go well and you decided to list with another agent.

During this period you were suffering from health issues. Dealing with real estate agents and making decisions was very difficult for you at this time. COVID restrictions and your remote regional location limited your access to agents and health services.

You listed the property for sale in AAA 202Z.

You sold the property on DDMMYYYY.

You have acquired another smaller property in a smaller town through a related entity. You operated this as a small primary production activity for a short period and then leased it to an unrelated third party.

You have retired from farming and purchased and moved into a house in town.

Upon selling the property, your working hours reduced from X hours per week to Y hours per week. The Y hours a week involved selling remaining farming plant and equipment and renovating investment houses.

You have since retired fully.

Relevant legislative provisions

Income Tax Assessment Act 1997 subparagraph 152-105(d)(i)

Income Tax Assessment Act 1997 subsection 152-80(3)

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