Edited version of private advice

Authorisation Number: 1051701371301

Date of advice: 18 June 2020

Ruling

Subject: Small business concessions

Question

Does the partnership satisfy the basic conditions under subdivision 152-C of the Income Tax Assessment Act 1997 (ITAA 1997) to apply the 50% active asset reduction to the capital gain made on the sale of the property?

Answer

Yes. Applying the same principles in Taxation Ruling TR 2019/1 Income tax: when does a company carry on a business,the partnership is considered to carry on a business. As the partnership has an aggregated turnover of less than $XXX in the income year in which the capital gains tax (CGT) event occurred, it is a CGT small business entity in that income year. The property has been owned by the partnership for more than XX years and used in the partnership's business for more than XX of those years, therefore the property satisfies the active asset test. Accordingly, the partnership has met the basic conditions to apply the 50% active asset reduction small business CGT concession. For more information please see QC 52289 on ato.gov.au.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

The partnership is a family partnership.

In XXXX, the partners purchased a property.

The partners lived at the property.

The partnership operates cattle farming and agistment on the land of the property to derive income.

The partnership has lodged family partnership income tax returns with the Australian Taxation Office (ATO) since 1 July XXXX.

The income for the partnership is less than $XXX dollars per year

The land has been used in the partnership's business for more than XX years.

The property was sold and ownership ended creating a capital gain.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 152-10

Income Tax Assessment Act 1997 subsection 152-35

Income Tax Assessment Act 1997 subdivision 152-C