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Edited version of private advice
Authorisation Number: 1051555739637
Date of advice: 30 July 2019
Ruling
Subject: Small business concession, connection with retirement.
Question
Does the capital gains tax (CGT) event as a result of the sale of the properties happen in connection with your retirement in accordance with paragraph 152-110(1)(d)(i) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes. After considering the facts and circumstances the Commissioner considers that the sale of the property is in connection with your retirement as you will significantly reduce your hours worked and your role in the primary production activities. Further information about whether a CGT event is in connection with retirement can be found on ato.gov.au by searching "QC 52288".
Further issues for you to consider
This ruling has not fully considered your eligibility for small business concession; it has only addressed the condition under paragraph 152-105(1)(d)(i) of the ITAA 1997. You should ensure that you satisfy the basic conditions and the other relevant conditions for exemption. More information on small business CGT concessions is available on our website ato.gov.au.
This ruling applies for the following period:
Year ending 30 June 2020
The scheme commences on:
1 July 2019
Relevant facts and circumstances
You are over 55 years of age.
You purchased more than one property after 20 September 1985. Company A used the properties for farming activities since acquisition.
You provided details of the properties.
You are the Managing Director of Company A and own more than 40% of the ordinary shares in Company A.
Company A is a CGT small business entity for the relevant year. You have provided details of the primary production activities that Company A carries out.
You currently assist Company A with its business activities approximately 40-50 hours per week.
You will to transfer your ownership interests in the properties your child. Upon the transfer, you will reduce your working hours significantly to approximately 10 hours per week and guide your child in managing activities. You will no longer do hands on work.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subdivision 152-A
Income Tax Assessment Act 1997 section 152-105
Income Tax Assessment Act 1997 paragraph 152-105(1)(d)(i)