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Edited version of private advice
Authorisation Number: 1051652187295
Date of advice: 30 March 2020
Ruling
Subject: Capital gains tax
Question 1
Will the sale of the property occur in connection with your retirement under paragraph 152-105(d)(i) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
Having considered the specific circumstances of this case, the Commissioner considers that the sale of the property will be in connection with your retirement. It is considered that there is a significant reduction in the number of hours worked.
Question 2
Are you entitled to the capital gains tax (CGT) small business 15 year exemption on the sale of your property?
Answer
Yes.
You satisfy the basic conditions for the small business concession under section 152-10 of Subdivision 152-A of the ITAA 1997 upon the sale of the property. You have owned the active asset for more than 15 years. You will be both over 55 years old and the CGT event will happen in connection with your retirement. The Commissioner considers that the conditions under section 152-105 of Subdivision 152-B of the ITAA 1997 are satisfied.
This ruling applies for the following periods
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commenced on
1 July 20XX
Relevant facts
Entity A and entity B purchased a commercial property more than 15 years ago.
The property has been used to run your company's business for more than 15 years. The company is a small business enterprise.
You wish to sell the property and both retire.
You will be both over 55 years of age at the time of entering into a contract of sale.
Entity A is currently working more than xx hours per week and has been advised that they need to slow down.
You are currently an employee for an unrelated entity and also do book work for the business. You wish to retire due to personal circumstances.
If entity A does not like retirement, they may work in the future for example after six to 12 months. The work will include private work and doing some odd jobs for others as a sole trader. Entity A may do this work for approximately xx hours per week.
You satisfy the maximum net asset value test.
You meet the basic conditions for the small business CGT concessions in Subdivision 152-A of the ITAA 1997.
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-B
Income Tax Assessment Act 1997 - Section 152-105