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Edited version of your written advice
Authorisation Number: 1051437691161
Date of advice: 24 October 2018
Ruling
Subject: The capital gains tax (CGT) small business concessions
Question
Is internally generated goodwill included in the market value of active assets for the purposes of basic conditions of the small business CGT concessions?
Answer
Yes.
Goodwill is an intangible CGT asset that is inherently connected to the business that generates it. The market value of the goodwill is included in the test to determine if the shares are also active assets. Further information can be found by searching 'QC 52272' on ato.gov.au
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You hold shares in a Company which carries on a business.
You will sell the shares and make a capital gain.
Part of the valuation of the active assets of the Company will be an amount allocated to goodwill.
Relevant legislative provisions
Income Tax Assessment Act 1997 paragraph 152-40(1)(b)
Income Tax Assessment Act 1997 subsection 152-40(3)