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Edited version of your written advice
Authorisation Number: 1051466414283
Date of advice: 14 December 2018
Ruling
Subject: CGT - small business concessions
Question 1
Is your spouse your affiliate in accordance with section 152-47 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes. In accordance with paragraph 152-47(2)(a) of the ITAA 1997, your spouse is taken to be your affiliate, as your interest in the property was exclusively used in the course of carrying on a business by your spouse. Further information can be found by searching QC52285 on ato.gov.au.
Question 2
Can you apply the small business 15 year exemption in relation to the disposal of the property?
Answer
Yes. You satisfied the basic conditions for relief under Subdivision 152-A of the ITAA 1997: the property was used by your affiliate who was a small business entity and you satisfy the active asset test. You also met the additional conditions for the 15 year exemption: you continuously owned the asset for the 15-year period leading up to the CGT event, you were over the age of 55 at the time of the event and the event occurred in connection with your retirement. Further information can be found by searching QC52288 on ato.gov.au.
This ruling applies for the following period:
Year ending 30 June 2019
The scheme commences on:
1 July 2018
Relevant facts and circumstances
Your spouse commenced a business in 20XX under his sole operation.
Rental payments were paid to an unrelated party from three years.
Both businesses were run from the same property.
In 20XX you and your spouse purchased this property as joint tenants in equal shares (the property).
Your spouse continued to run each business in their own right from acquisition date until the property was sold and up to settlement which occurred in the income year ending 30 June 2019.
You worked full-time in your own capacity and assisted in the business on an informal basis.
Your spouse paid you rent to enable their exclusive possession of the property to conduct their businesses.
The property was sold in 20XX.
Your spouse was a small business entity in the 2018-19 financial year.
Your spouse has since ceased operating their businesses.
You have ceased your full-time employment.
Relevant legislative provisions
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 section 152-47
Income Tax Assessment Act 1997 section 152-105