Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1051636512925
Date of advice: 20 February 2020
Ruling
Subject: Income tax - capital gains tax - CGT small business concessions
Question 1
Are the units active assets?
Answer
Yes. The Commissioner considers that the property owned by The Trust is used in the business of a connected entity and the units satisfy the 80% test. Therefore the units of the Trust are considered active assets.
Question 2
Do you meet the conditions for the small business 50% reduction under Subdivision 152-C of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes. You satisfy the basic conditions for the small business concession under section 152-10 of Subdivision 152-A of the ITAA 1997. It follows that the small business 50% reduction under Subdivision 152-C of the ITAA 1997 can apply upon the sale of your units.
Question 3
Do you meet the conditions for the small business retirement exemption under Subdivision 152-D of the ITAA 1997 where you keep a written record of the amount you chose and the amount is less than or up to your retirement exemption limit?
Answer
Yes. You satisfy the basic conditions in Subdivision 152-A of the ITAA 1997. You also satisfy the significant individual test and the concession stakeholder is over 55 years. You are eligible to reduce your gain by applying the small business retirement exemption under 152-D of the ITAA 1997 up to your life time limit of $500,000. Please ensure you keep a record of the amount you choose to disregard. Further information can be found by searching 'QC 52290' on ato.gov.au
This ruling applies for the following period
Year ending 30 June 2020
The scheme commenced on
1 July 2019
Relevant facts
Entity A was established many years ago.
Entity A owns a commercial property. The commercial property houses businesses.
Entity A has a connected entity for the relevant period of time that uses the property for their business.
The unit holders of entity A include entity B and entity C
The units held by entity C were acquired in xxxx.
Entity B and entity C intend to redeem their units in entity A.
Entity B is a small business entity.
Entity A satisfies the 80% active asset rule in subsection 152-40(3) of the ITAA 1997.
Entity B is a significant individual in entity A and is over 55.
Entity A satisfies the maximum net asset value test.
Relevant legislative provisions
Income Tax Assessment Act 1997 - Division 152
Income Tax Assessment Act 1997 -Subdivision 152-A
Income Tax Assessment Act 1997 - Subdivision 152-C
Income Tax Assessment Act 1997 - Subdivision 152-D
Income Tax Assessment Act 1997 - Section 152-110