Edited version of private advice

Authorisation Number: 1052408048708

Date of advice: 17 June 2025

Ruling

Subject: CGT - small business concessions

Question 1

Do you satisfy the basic conditions under section 152-10 of the Income Tax Assessment Act 1997 (ITAA 1997) to apply the small business capital gains tax concessions in relation to the sale of your interest in the property for the year ending 30 June 20XX?

Answer 1

You and your sibling have owned the property for less than 15 years. The sale of the property resulted in a capital gain. The property was rented out to three tenants for the entire ownership period. Unit 1 is used by you to carry on a business while unit 2 and unit 3 are rented out to third parties. You use XX% of the property while XX% is shared space and the other XX% is rented out to third parties. The main use of the property is not to derive rent and accordingly the property satisfies the active asset test and the basic conditions under 152-10 of the ITAA 1997.

Question 2

Are you eligible to apply the small business retirement exemption under Division 152-D of the ITAA 1997 to the capital gain on the sale of the property?

Answer 2

You satisfy than basic condition as mentioned above. Therefore, you can apply the retirement exemption in subdivision 152-D of the ITAA 1997. As you are under 55 years there is a requirement to pay the exempt amount (up to $500,000) into a complying superannuation fund or RSA.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You and your sibling acquired an industrial complex consisting of three factory units (the property). The complex was equally owned by you and your sibling (the partnership).

The characteristics of the units were as follows:

Unit 1 - XX metres squares and X parking spots totalling XX metres squared.

This unit was occupied by you to run your mechanical business, and rent was paid to the partnership.

You have an ABN and was GST registered as a sole trader. Rent of $XX was paid by you for the use of the unit.

Unit 2 - XX metres squared and X parking spots totally XX metres squared.

This unit was occupied by a tenant without parking and rent was collected by the partnership. The rent collected by the partnership for the 20XX financial year was $XX.

The parking spots allocated to unit 2 totalling XX metres squared were used by you for your business.

Unit 3 - XX metres squared and X parking spots totalling XX metres squared.

This unit was occupied by a tenant and rent was collected by the partnership. The rent collected by the partnership for the 20XX financial year was $XX.

There was a shared space of XX metres squared which is utilised as a driveway to access parking and the units.

There is also an area upstairs that is XX metres squared that is used as an office and storage area by you.

The total area of the complex, including upstairs, is XX metres squared.

The property was purchased in August 20XX and settled in October 20XX.

The use of the three factory units remained unchanged until the owners exchanged a contract of sale in October 20XX. Settlement occurred in November 20XX.

The turnover of your sole trader business has never exceeded $2 million.

You are less than 55 years of age.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subdivision 152-A

Income Tax Assessment Act 1997 section 152-10

Income Tax Assessment Act 1997 section 152-35

Income Tax Assessment Act 1997 section 152-40

Income Tax Assessment Act 1997 Subdivision 152-D

Income Tax Assessment Act 1997 section 328-125

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