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Edited version of private advice
Authorisation Number: 1051620421424
Date of advice: 16 December 2019
Ruling
Subject: Small business concession - extension of time - stakeholder
Question
Will the Commissioner extend the time limit in paragraph 152-125(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to XXX in accordance with subsection 152-125(4) of the ITAA 1997, so that the payments made to a capital gains tax (CGT) concession stakeholder can be disregarded under subsection 152-125(2) of the ITAA 1997?
Answer
Yes. After considering your facts and circumstances the Commissioner will allow an extension of time. Further information on small business CGT concessions can be found on our website, ato.gov.au by searching Quick Code QC52290.
This ruling applies for the following periods:
Year ended 30 June 2019
Year ending 30 June 2020
Year ending 30 June 2021
Year ending 30 June 2022
Year ending 30 June 2023
Year ending 30 June 2024
The scheme commences on:
1 July 2018
The description is based on the following documents. These documents form part of and are to be read with this description.
· The application for private ruling dated November 20XX
· Sale of Business Agreement
· Loan Agreement
The Company operated a business.
The Company entered into a contract of sale to sell the business.
The Company offered a vendor finance arrangement as the purchaser was unable to obtain finance.
The business sales agreement made on February 20XX provides at clause the purchase price payable by the Purchaser to the Vendor for the Sale Assets.
The loan agreement provides at clauses:-
· Loan amount and Loan Repayment Date:
- a. subject to paragraph b, the fifth anniversary of the Drawdown Date; or
- b. a later date (if any) which the Lender and the Borrower agree in writing is to be the Loan Repayment Date for the purposes of this Agreement.
· The Borrower must make minimum repayments of the loan of $XX during each consecutive 12 month period commencing on the drawdown date.
· The Borrower may at any time prepay the whole or any part of the Loan then outstanding.
The company has continuously owned the goodwill for the 15 year period ending just before the CGT event.
The Company had a significant individual for at least 15 years and just before the CGT event, the individual was over 55 years of age and the event happened in connection with their retirement.
The Company is eligible to apply the small business concessions to the sale of the business.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 152-110
Income Tax Assessment Act 1997 subsection 152-125(1)
Income Tax Assessment Act 1997 paragraph 152-125(1)(b)
Income Tax Assessment Act 1997 subsection 152-125(2)
Income Tax Assessment Act 1997 subsection 152-125(4)