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Edited version of private advice

Authorisation Number: 1052358297986

Date of advice: 6 February 2025

Ruling

Subject: CGT - retirement exemption

Question 1

Is the disposal of farmland, a CGT event '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 owned farmland that you sold over numerous years. You sold one parcel of land in the 20XX financial year when you ceased the farming business. Due to circumstances around your new residence there was a delay in selling the remaining land. We accept that the disposal of the farmland is in connection with your retirement for the purposes of 152-105(d)(i) of the ITAA 1997.

This ruling applies for the following periods:

Year ended 30 June 20XX

Yer ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You sold farmland you solely owned.

The farmland was made up of:

•                     50% of property one was acquired before 20 September 1985 in the will of your deceased relative.

•                     The other 50% of property one was gifted to you in January 19XX by parent A.

•                     Property two was acquired in June 20XX via the will of parent A.

Only 50% of property one and 100% of property two are subject to capital gains tax (CGT).

You and your spouse operated your business as a partnership (the partnership).

Since the 20XX financial year the partnership consisted of you and your spouse each having rights to 50% of the partnership's net income.

The partnership ceased its operations in the 20XX financial year, and you retired at this time.

At this time, you sold one of the parcels of land that the partnership used for farming and accessed the 15 year exemption for this CGT event.

The remaining farmland was leased to an unrelated party.

Funds from the 20XX sale were used to purchase which you intended to build a new residence.

Contracts for the building of the house were signed in 20XX with a build time of up to X working days outlined in the contract. This would have seen the house completed in 20XX. Your intention was to sell the farmland at this time.

Delays in the building process meant you were unable to have assurances regarding the completion date of the house and therefore delayed the sale of the farmland as you needed to retain the residence to live in until your new home was built.

You are currently over 55 years old.

Settlement for the first parcel was in 20XX and the second is dated for early 20XX.

Relevant legislative provisions

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

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