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Edited version of private advice
Authorisation Number: 1051619366638
Date of advice: 17 December 2019
Ruling
Subject: Small business concessions - active assets
Question
Was the property an active asset?
Answer
Yes
You satisfy the conditions of the active asset test as a connected entity has used the asset for a total of at least 7.5 years in the course of carrying on a business and the main use of the asset was not to derive rent. Further information can be found by searching 'QC 52271' 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
You purchased a property more than 15 years ago which was used as a rental property from purchase until you commenced operating a business from it a few years later.
You started a business (the business) on the property which operated for more than 7.5 years through a connected entity with an aggregated turnover of less than $2 million. You continued to rent one of the rooms to a third party for a period of time until you took over the space and used it for the business.
There is a small flat at the rear of the property that you used as accommodation as required when operating the business.
Of the total building area the retail space constitutes approximately two-thirds and the accommodation space constitutes approximately one-third of the relevant area. The rented room represents approximately one fifth of the relevant area.
You have provided details of the income derived from the property. The income from the business is significantly higher compared to minor rental income each year.
The property was sold more than 15 years after its acquisition.
You satisfy the maximum net asset value test.
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