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Edited version of private advice
Authorisation Number: 1051621389356
Date of advice: 20 December 2019
Ruling
Subject: Small business 15-year exemption
Question
Can you disregard the capital gain made on the disposal of your business assets under the small business 15-year exemption?
Answer
Yes. You won't have an assessable gain on the sale of your active assets as you satisfy the basic conditions, will have owned the active assets, and had a significant individual, for more than 15 years. Also, an individual who will be a significant individual just before the CGT event will be over 55 at that time and the event will happen in connection with that individual's retirement. Further information about the small business 15-year exemption can be found by searching 'QC 52288' on ato.gov.au
This ruling applies for the following period
Year ending 30 June 2021
The scheme commences on
1 July 2020
Relevant facts and circumstances
You are a company.
You have been operating for in excess of 15 years.
You satisfy the basic conditions.
You are selling the underlying business assets in their entirety.
Your significant individual is over 55 years of age.
As part of the sale contract there is a clause that the significant individual will continue to work in the business for a period of time. You will cease operations immediately upon sale, and be wound up in due course.
Following the sale of the business assets your significant individual will work on a much reduced scale with another entity, although still performing similar activities.
You have had a significant individual for at least 15 years of the whole period of ownership and will continue to up to and including the time of the CGT event.
You are a small business with an aggregated turnover of less than $2million, your net assets do not exceed $6million, and the sale of the underlying business assets are active assets that have been active for at least 7.5 years during the test period.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 152-35
Income Tax Assessment Act 1997 section 152-40
Income Tax Assessment Act 1997 section 152-50
Income Tax Assessment Act 1997 section 152-55
Income Tax Assessment Act 1997 section 152-110