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This edited version has been archived due to the length of time since original publication.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 written advice

Authorisation Number: 1012901569433

Date of advice: 28 October 2015

Ruling

Subject: Small business CGT concessions - 15-year exemption

Question

Can you apply the small business 15-year exemption to disregard the capital gain made on the disposal of your share of the property?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 2016

The scheme commences on

1 July 2015

Relevant facts and circumstances

You acquired a 50% share in a property approximately 20 years ago.

The property has been used in partnership businesses carried on by you for a total of at least 7½ years of your ownership period.

Your current partnership business will cease when the property is sold.

You are at least 55 years old and do not have any plans to materially engage in business or employment in the foreseeable future.

The aggregated turnover in each of the partnership businesses has always been less than $2 million.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subdivision 152-A

Income Tax Assessment Act 1997 Subdivision 152-B

Income Tax Assessment Act 1997 section 152-105

Reasons for decision

Section 152-105 of the ITAA 1997 provides a small business 15-year exemption for individuals. Under this section, you can disregard the capital gain made on the disposal of a CGT asset if you: 

    (a) satisfy the basic conditions for the small business CGT concessions in Subdivision 152-A of the ITAA 1997

    (b) continuously owned the CGT asset for the 15-year period ending just before the CGT event, and

    (c) are at least 55 years old at the time of the CGT event and the event happens in connection with your retirement, or are permanently incapacitated at that time.

In your case, the basic conditions contained in Subdivision 152-A of the ITAA 1997 will be satisfied because:

    • a CGT event will occur when you dispose of your share in the property

    • the event will result in a gain

    • an entity connected with you (the partnership) will be a small business entity at the time of the event, and

    • you have owned your share of the property for more than 15 years and the property has been used in businesses carried on by you for a total of at least 7½ years of your ownership period.

In addition,

    • you will have continuously owned your share in the property for the 15-year period ending just before the CGT event

    • you will be at least 55 years old when you dispose of your share in the property, and

    • the disposal will happen in connection with your retirement.

You qualify for the small business 15-year exemption in section 152-105 of the ITAA 1997 in relation to the property. You can disregard your share of the capital gain made on its disposal.


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