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Edited version of private advice
Authorisation Number: 1051773094599
Date of advice: 9 November 2020
Ruling
Subject: Trading stock - gt event k4 - cgt small business concessions
Question 1
Is XX XX 20XX, the earliest time you started holding the Property as trading stock?
Answer
Yes. From the information you have provided the Commissioner is satisfied that the land was held for resale and the business activity involving the dealing of land commenced on XX XX 20XX. The definite and continuous cycle of operations designed to lead to the sale of the land commenced on XX XX 20XX and the Property will be treated as trading stock on the same date.
Question 2
Did CGT event K4 occur on XX XX 20XX and therefore in the income year ending XX XX 20XX?
Answer
Yes, if you make the election under section 70-30(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) in the year ended XX XX 20XX. CGT event K4 happens when you start holding the Property as trading stock and you elect under section 70-30(1)(a) to be treated as having sold the Property for its market value.
Question 3
Are you eligible for the 50% CGT discount, the small business 50% reduction, small business retirement exemption and small business rollover under Division 115 and Subdivisions 152-C, 152-D and 152-E of the ITAA 1997 when CGT event K4 happens to the Property?
Answer
Yes. On XX XX 20XX when CGT event K4 occurred, you satisfied the conditions required for the 50% CGT discount, the small business 50% reduction, small business retirement exemption and small business rollover.
This ruling applies for the following period:
Period end 30 June 2020
The scheme commences on:
1 July 2019
Relevant facts and circumstances
You satisfy the basic conditions for the Small Business CGT concessions.
Your business uses the farming land for primary production activities.
You entered into a Development Agreement to develop, subdivide and sell subdivided vacant lots of land.
A planning permit has been issued by the Council.
On-site construction has commenced.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 104-220
Income Tax Assessment Act 1997 Division 115
Income Tax Assessment Act 1997 Subdivision 152-A
Income Tax Assessment Act 1997 Subdivision 152-C
Income Tax Assessment Act 1997 Subdivision 152-D
Income Tax Assessment Act 1997 Subdivision 152-E