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Edited version of private advice
Authorisation Number: 1051817541508
Date of advice: 09 April 2021
Ruling
Subject: CGT and small business concessions
Question 1.
Will the disposal of shares by the taxpayer meet the basic conditions in section 152-10(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes. The disposal of shares will meet the basic conditions in section 152-10(1) of the Income Tax Assessment Act 1997 (ITAA 1997)
Question 2.
Will the sale of shares by the taxpayer meet the additional basic conditions in section 152-10(2) (ITAA1997)?
Answer
Yes. The sale of the shares by the taxpayer will meet the additional basic conditions in section 152-10(2) of the Income Tax Assessment Act 1997 (ITAA 1997)?
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
XX XXXX 20XX
Relevant facts and circumstances
1. Person A was an employee and shareholder of ABC Pty Ltd
2. In 20XX, person A's employment with the company was terminated.
3. Person A owned XX shares (33.3%) in the company via two discretionary trusts of which they were the sole shareholder and Director of the trustee company (Company H)
4. The breakdown of the shares owned is as follows:
XX shares (0.5%) owned by Company H ATF The "H" Trust
XX shares (32.8%) owned by Company H ATF The "V" Trust.
5. ABC Pty Ltd wholly owned the following subsidiaries:
XYZ Pty Ltd which operates a business providing data analysis software solutions to customers
DEF Pty Ltd which operates an online trading platform for credit providers to bid for customers.
6. On DD MM 20XX, an agreement was reached where the XX shares were disposed for $X million.
7. You have provided a copy of the "Deed of Settlement and Release - Share Sale DD/MM/XX" which sets out the terms and conditions of the sale.
8. The 33.3% of the shares were sold for $X million thus giving the total company a valuation of $X million at the time of the CGT event.
9. The taxpayer is a CGT small business entity as it carried on a business.
10. The taxpayer satisfies the $6 million net asset test.
11. Information provided demonstrates that the taxpayer meets the active asset test
Relevant legislative provisions
Income Tax Assessment Act 1997 section 152-10
Income Tax Assessment Act 1997 subsection 152-10(1)
Income Tax Assessment Act 1997 subsection 152-10(1A)
Income Tax Assessment Act 1997 subsection 152-10(2)
Income Tax Assessment Act 1997 section 152-35
Income Tax Assessment Act 1997 section 152-40