| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012447003778
Ruling
Subject: CGT - small business 15 year exemption
Question 1
Are you entitled to the small business 15 year exemption?
Answer
Yes
This ruling applies for the following period
Year ended 30 June 2013
The scheme commenced on
1 July 2012
Relevant facts and circumstances
You are over 55 years of age.
You acquired a fifty percent share in a property in year ended 30 June 19XX. You and another each bought a further share in the same property in a subsequent year. You later purchased the co-owner's share and acquired sole ownership of the property.
You carried on a business from the property during the period of ownership, until the business ceased in year ended 30 June 200Y due to your ill-health.
You then rented part of the area to an unrelated party, and the residence to another party. You allowed other businesses to utilise your land to park vehicles on for a fee following the cessation of your business.
You meet the conditions of the active asset test.
The property is currently under a contract for sale, which is scheduled for settlement in year ended 30 June 20ZZ.
You are currently still operating a business, but will retire following settlement of the property in year ended 30 June 20ZZ.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 152-10
Income Tax Assessment Act 1997 Section 152-105
Reasons for decision
To qualify for the small business capital gains tax (CGT) concessions, you must satisfy several conditions that are common to all the concessions. These are called the 'basic conditions'. Each concession also has further requirements that you must satisfy for the concession to apply.
The Advanced guide to capital gains tax concessions for small business 2010-11 (NAT 3359) provides a detailed explanation of the conditions for each concession.
Basic Conditions
In your case, it is accepted that you meet the basic conditions due to the following:
· a CGT event will occur when you dispose of the property
· the event will result in a gain
· you are a small business entity
· you consider that the property meets the active asset test.
Small business 15 year exemption
To be eligible for the small business 15 year exemption you must satisfy the basic conditions and two further conditions:
· you continuously owned the CGT asset for the 15-year period ending just before the CGT event happened; and
· you are:
o at least 55 years old at that time and the event happened in connection with your retirement
From the information supplied, you will be over 55 years of age at the time of the disposal of the property, and it is your intention to retire following settlement on the sale of the property. Accordingly, you are entitled to the small business 15 year exemption and can entirely disregard the capital gain on the sale of your property. You do not need to apply any other concessions.