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Edited version of private advice
Authorisation Number: 1051578234119
Date of advice: 17 September 2019
Ruling
Subject: CGT cap amount
Question 1
Where the CGT 'small business 15-year exemption' under section 152-105 of the Income Tax Assessment Act 1997 (ITAA 1997) applies, will the contribution made to a complying superannuation fund qualify as a contribution made under section 292-100 of theITAA 1997 to the extent that it does not exceed your 'CGT cap amount' under section 292-105 of the ITAA 1997, when it is made?
Question 2
What CGT cap under section 292-105 of the ITAA 1997 are you able to utilise for this contribution?
Answer 1
Yes, refer to Reasons for Decision
Answer 2
CGT cap available for the income year in which the contribution is made, refer to Reasons for Decision
This ruling applies for the following period:
Year ending 30 June 2020
The scheme commences on:
1 July 2015
Relevant facts and circumstances
· In the 2018-19 income year you received a private ruling confirming the sale of property in the 2015-16 income year, satisfies the basic conditions for relief under section 152-10 of the ITAA 1997.
· This ruling further determined that you are entitled to claim the 15 year exemption under section 152-105 of the ITAA 1997.
· You were granted a lodgement deferral to lodge your 2015-16 income tax return by specified date in the 2019-20 income year.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 152-105
Income Tax Assessment Act 1997 Section 292-80
Income Tax Assessment Act 1997 Section 292-90
Income Tax Assessment Act 1997 Section 292-100
Income Tax Assessment Act 1997 Subsection 292-100(1)
Income Tax Assessment Act 1997 Subsection 292-100(2)
Reasons for decision
Summary
1. Where the CGT small business 15-year exemption applies, the contribution made to a complying superannuation fund will come under section 292-100 of the ITAA 1997 to the extent that it does not exceed your 'CGT cap amount' when it is made.
2. The CGT cap is a lifetime limit which is indexed annually. So, providing you satisfy the necessary conditions imposed under subsections 292-100(1), (2) and (9) of the ITAA 1997, the amount of capital proceeds that qualify for the small business 15-year exemption will be excluded from being a non-concessional contribution up to your CGT cap amount available for the 2019-20 income year.
Detailed reasoning
3. Subparagraph 292-90(2)(c)(iii) of the ITAA 1997 specifically excludes contributions covered under section 292-100 of the ITAA 1997 (certain CGT related payments) from being non-concessional contributions to the extent that they do not exceed the CGT cap amount when these are made.
4. The CGT cap is a lifetime limit which is indexed annually. The CGT cap amount for the 2019-20 financial year is $1.515 million. The CGT cap is reduced by the amount of each contribution that a person has elected to be covered by the exemption from the non-concessional contributions cap under section 292-100 of the ITAA 1997.
5. To qualify for the CGT concession under subsection 292-100(1) of the ITAA 1997 certain conditions must be met. These are:
(a) the contribution is made by you to a complying superannuation plan in respect of you in a financial year; and
(b) the requirement in subsection (2), (4), (7) or (8) is met; and
(c) you choose, in accordance with subsection (9), to apply this section to an amount that is all or part of the contribution.
6. Subsection 292-100(2) of the ITAA 1997 (15-year exemption) provides that the requirement in this subsection will be met if:
(a) the contribution is equal to all or part of the *capital proceeds from a *CGT event for which you can disregard any *capital gain under section 152-105 (or would be able to do so, assuming that a capital gain arose from the event); and
(b) the contribution is made on or before the later of the following days:
(i) the day you are required to lodge your *income tax return for the income year in which the CGT event happened;
(ii) 30 days after the day you receive the capital proceeds.
7. Subsection 292-100(9) of the ITAA 1997 explains that to make a choice for the purposes of paragraph 292-100(1)(c) of the ITAA 1997, you must:
(a) make the choice in the approved form; and
(b) give it to the superannuation provider in relation to the complying superannuation plan on or before the time when the contribution is made.
8. So, providing you satisfy the necessary conditions to qualify for the CGT concession under subsections 292-100(1), (2) and (9) of the ITAA 1997, the amount of capital proceeds that qualify for the small business 15-year exemption will be excluded from being a non-concessional contribution up to your CGT cap amount available for the 2019-20 income year.