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Edited version of private advice
Authorisation Number: 1051754384809
Date of advice: 15 September 2020
Ruling
Subject: Small business concessions
Question
Is the property an active asset?
Answer
Yes. As the property was used by a connected entity to carry on a business for at least half of the ownership period, the property is considered to be an active asset.
Question 2
Are you entitled to apply the 15 year exemption to disregard the capital gain on the sale of the property?
Answer 2
Yes. The property is an active asset and was used in a small business. You also are over the age of 55 and will permanently retire. As the conditions have been satisfied you are entitled to disregard the capital gain on the sale of the property.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
Individual A and Individual B acquired the business premises. The ownerships of the business premises are 50% for Individual A and 50% for Individual B.
The Company is a limited by shares Company. The Company was established on XX with total 20 shares issued.
Individual A owns XX shares and Individual B owns another XX shares in the Company. Therefore the shareholdings are 50% for Individual B and 50% for Individual A. The shareholdings remain the same since the company's established till now.
Individual A and Individual B were appointed as the Company's directors on X. There is no other director has been appointed since X.
The Company has been carrying on a business since 20XX financial year.
Individual A and Individual B have been leasing the business premises to the Company, and the Company has been wholly using the promises for conducting of its business since 20XX financial year.
The business's aggregated turnover in 20XX-20XX financial year was less than $XXX, and the estimated business's aggregated turnover in 20XX-20XX financial year will be less than $XXX.
Individual A and Individual B are both over the age of 55.
Individual A and Individual B entered an agreement in August 20XX to sell the business premises to an unrelated third party with a market price. There is a capital gain on the sale of the business premises.
The Company, Individual A and Individual B will wind down the business activity (by selling the business or ceasing the business) within three months after the sale of the business premises, then Individual A and Individual B will permanently retire.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 152