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Edited version of private advice
Authorisation Number: 1051698724412
Date of advice: 23 June 2020
Ruling
Subject: Small business capital gains tax (CGT) concessions
Question
Does the company satisfy the basic conditions for the small business CGT concessions under section 152-10 of the Income Tax Assessment Act 1997 (ITAA 1997) for the disposal of the CGT asset, being goodwill, included in the business sale?
Answer
Yes.
The company satisfied the basic conditions under section 152-10 of the ITAA 1997, as it was a small business entity at the time of CGT event. The company had an aggregated turnover less than $2 million and the goodwill included in the sale is considered an active asset as it was held ready for use for more than half of the relevant period. You can find further information on our website by searching QC52266.
This ruling applies for the following period:
Financial year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The company purchased two adjacent properties and prepared them for the operation of a business.
The preparatory work included:
· engaging town planners
· lodging a development application and receiving the necessary approval to construct XYZ
· engaging various engineers, architects and tradespeople to construct the property
· obtained the necessary service approval on from the Department of XYZ to carry on the business at the location.
The company opened the business on XX and operated it until settlement of the business asset sale on XX.
At around the same time the centre opened, approval was granted for a competitor's business that was much larger and in very close proximity to the company's business.
The company sold the business assets an unrelated entity one month later.
The company's aggregated turnover based on a reasonable estimate of what it would have been if it traded for the full financial year that the CGT event took place was less than $XXX.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-10
Income Tax Assessment Act 1997 section 152-10
Income Tax Assessment Act 1997 section 152-35
Income Tax Assessment Act 1997 section 152-40
Income Tax Assessment Act 1997 section 328-110
Income Tax Assessment Act 1997 section 328-115
Income Tax Assessment Act 1997 section 328-120