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Edited version of private advice
Authorisation Number: 1051679536665
Date of advice: 15 May 2020
Ruling
Subject: Income tax - capital gains - small business 15-year exemption
Question
Can you disregard the capital gain made on the disposal of the Property 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 periods:
Year ended 30 June 2020
Year ended 30 June 2021
The scheme commences on:
1 July 2019
Relevant facts and circumstances
You acquired a property and a business over 15 years ago.
Since acquisition you have owned the property and operated the business and continue to do so.
You have entered into a contract to sell the property.
The purchaser is not acquiring the business and the business will be closed down upon settlement of the Property Sale.
The sale of the property will give rise to a capital gain.
The property is being sold as part of Person A's retirement plan. Person A:
· is over 55 years of age
· is the sole director and secretary of the trustee company
· is consulted with by the business manager when large expenditure items are required
· regularly monitors the financial position of the business
· continues to inject funds into the business when required
· is looking to simplify their affairs and therefore is selling the property.
As the property and the business was your only asset, Person A will retire from their role of overseeing the management of the property and business and will wind up the trust upon settlement of the property.
Your aggregated turnover, including your connected entities and affiliates, was less than $2 million.
The property was used by you in the course of carrying on your business for at least seven and a half years of which you have owned the property.
You have had a CGT concession stakeholder for at least 15 of the years that you have owned the property.
You will make a distribution of at least 20% of any income and capital distributions to Person A in the CGT event year.
Relevant legislative provisions
Income Tax Assessment Act 1997 152-10
Income Tax Assessment Act 1997 152-50
Income Tax Assessment Act 1997 152-55
Income Tax Assessment Act 1997 152-65
Income Tax Assessment Act 1997 152-70
Income Tax Assessment Act 1997 152-110