Edited version of private advice

Authorisation Number: 1052336332582

Date of advice: 13 February 2025

Ruling

Subject: CGT - concessions

Question

Do you satisfy the basic conditions to access the small business CGT concessions in section 152-10 of the Income Tax Assessment Act 1997 (ITAA 1997) on the sale of your property?

Answer

Yes. You pass the maximum net asset value (MNAV) test as your net assets and those of any connected entities is under $6 million. Your partnership is the only other entity whose assets are included. The entities your relatives have are not connected to or affiliated with you in any way.

The property was an active asset as your partnership used it in business for over half of the time you owned the property.

Since you pass both the MNAV test and the active asset test, you meet the basic conditions with respect to the sale 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

You and your spouse purchased a property upon which you conducted a primary production business in partnership with each other.

The property purchase was partly funded by loans from your relatives' entities. Those partnerships borrowed the funds from lenders and on lent them to you for the purchase.

Your partnership does not pay interest on those loans.

Prior to this, as part of succession planning, you leased properties you owned to your relatives at market value rate however full payment was not received every year and you did not call on their payment as you did not require the funds.

You contracted one of your relative's entities to undertake much of the farming operations on your property.

You previously transferred the other properties to your relatives.

Due to a decline in health, you made the decision to cease farming the property and initially leased it to your relative's entities at market rate.

You decided to sell the property to pay out debt and retire and your relative expressed desire to purchase the property.

You agreed to sell the property to that relative at a value you had previously obtained. You will continue to live in the homestead on the property for as long as you desire. You do intend to purchase a house closer to town when the time is right.

You have held no common bank accounts, joint investments or common employees between you and your relative's partnerships, and each business owned their own plant and equipment for use in their business operations.

You executed a contract to sell the property to an entity connected to your relative.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 152-10

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