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Edited version of private advice
Authorisation Number: 1051536085736
Date of advice: 27 June 2019
Ruling
Subject: Small business concessions
Question
Can you disregard the personal use of the property by A and B when determining whether the property is an active asset?
Answer
Yes. Section 152-40(4A) of the Income Tax Assessment Act 1997 provides that when determining whether an asset is an active asset you can exclude the personal use of the asset by an entity that is your affiliate or connected with you. This section allows you to treat the use of an asset by an affiliate or a connected entity as your use. In this case A and B are connected with you and they use 50% of the property as their main residence.
A and B's personal use of the Property can be disregarded for the purpose of the determining whether the Property is an active asset for the purpose of the Small Business CGT Concession's Active Asset Test.
This ruling applies for the following period:
Year ending 30 June 2020
The scheme commences on:
1 July 2019
Relevant facts and circumstances
The company acquired property in 19XX as the sole owner.
The company runs a business providing investment services to domestic, regional and international markets that was established in 19XX.
From 19XX the business occupies 50% of the property and the other 50% is occupied by the shareholders of the company as their main residence.
The shareholders are considered to be entities connected to the company and they each hold 50% of the shares in the company.
The company will dispose of its ownership interest in the property.
A and B are the shareholders of the company.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 152-35(1)
Income Tax Assessment Act 1997 section 152-40
Income Tax Assessment Act 1997 paragraph 152-40(4A)