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Ruling
Subject: CGT - Small business concessions - 15 year exemption
Question
If the company pays you a percentage of the proceeds of the capital gain realised from the disposal of the property within two years, is the payment exempt?
Answer
Yes
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts and circumstances
You are joint shareholders in a company.
The company received a capital gain on the disposal of a property.
You were both CGT concession stakeholders at the time of the sale.
The company has received a private binding ruling stating that the capital gain is eligible for the 15 year exemption.
The company intends to pay the proceeds of the capital gain to a superannuation fund for you, from which you will draw a pension.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 152-110
Income Tax Assessment Act 1997 Section 152-125
Reasons for decision
Payments made to a company's CGT concession stakeholders are exempt if:
· a capital gain of the company is disregarded under the small business 15 year exemption, and
· the company makes one or more payments in relation to the exempt amount within two years after the relevant CGT event to an individual who was a CGT concession stakeholder of the company just before the event.
The total payments made to each CGT concession stakeholder must not exceed an amount determined by multiplying the CGT concession stakeholder's control percentage by the exempt amount.
In this case, the company is able to disregard the capital gain under the small business 15 year exemption and you were both CGT concession stakeholders at the time of the CGT event. Accordingly, if the company makes a payment to you, within the limits outlined above and within two years of the CGT event, the payment is exempt.