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Edited version of private advice
Authorisation Number: 1051714885909
Date of advice: 21 July 2020
Ruling
Subject: CGT - small business concessions
Question
Does the land held by you satisfy the active asset test under section 152-35 of the ITAA 1997?
Answer
Yes. You satisfy the conditions of the active asset test as you have used the property for a total of at least 7.5 years in the course of carrying on a business via the rock sales and the main use of the property was not to derive rent. Further information can be found by searching 'QC 52271' on ato.gov.au
This ruling applies for the following period:
The scheme commences on:
Relevant facts and circumstances
There is a house on the property which has been used as a primary residence since purchased.
Portions of the property have been used by a related entity, which operates an excavation business.
All work of the business is done using their own equipment.
The work involves earthmoving and the sale and transport of rocks (sourced from the property) to clients. The rocks are used mainly for landscaping purposes, to create a natural environment, rock walls and swimming pool features.
The earthmoving and excavation work includes preparation and construction of landscaping projects, rock walls, site preparation, footings and pads for buildings, site cleaning and clearing, tree felling and root grubbing, road construction and maintenance, trench excavation and backfill for underground gas, water, electricity, sewer and optical fibre services, construction and cleaning out of dams, preparation for kerb and channel drainage, boring holes for pole homes and lifting poles into place, drilling piers for concrete footings, slashing, excavation of swimming pool sites, preparation and excavation for retardation basins, removal and replacement of concrete footpaths.
The land has been used in the following ways by the business:
· Asset storage - the property has a large shed which is used to store the excavation assets
· Training purposes - equipment operators trained themselves at the property in how to use the equipment
· Rock - there is a large supply of surface rock covering an extensive area of the property which has been getting sold for landscaping and rock walls.
· Soil dumping - The business has used the property for the dumping of excess soil material from job sites, to reduce costs to clients
· Dams for water
You have entered into a contract to sell the property.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 152-35
Income Tax Assessment Act 1997 section 152-40