| Disclaimer You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1051880373627
Date of advice: 18 August 2021
Ruling
Subject: CGT - active asset
Question
Do you satisfy the active asset basic condition for the capital gains tax (CGT) small business concession under section 152-10(1)(d) of the ITAA 1997 in relation to disposal of your interest in a commercial property?
Answer
Yes. Having considered your full circumstances, you satisfy the basic conditions under section 152-10(1)(d) of the ITAA 1997 in relation to disposal of your interest in a commercial property. The property is considered to be an active asset and its main use was not to derive rent.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
Person A & Person B are spouses.
Person A & Person B own a commercial premise with an additional entity that is not controlled by either Person A or Person B.
Person A & Person B both own 25% each of the commercial property with the remaining 50% being owned by another entity.
Person A & Person B acquired their interests in the commercial property in 20XX.
1/3 of the commercial property has been and continues to be rented to an unrelated third party.
2/3 of the commercial property has been and continues to be rented to Trust A.
Trust A conducts a business at the commercial premises since 20XX.
Person A was director of Company A until 30 June 20XX.
Person A held controlling interest of Company A with 50% of the shares until 30 June 20XX.
The issued units in Company A from 20XX to 30 June 20XX were owned as follows:
• Trust B - 50%
• Unrelated entities - 50%
Person A is the sole director and shareholder of Company B.
Trust B is a discretionary trust.
The profits from the business during the period that Person A was a director and shareholder were substantially greater than the rental income received from the unrelated third party.
Neither Person A, Person B or Trust A are a CGT small business entity.
Person A & Person B meet the maximum net asset value test with net assets less than $6 million.
Person A & Person B are intending of disposing of their investment in the commercial property.
Person A & Person B satisfy the basic conditions under section 152-10 of the ITAA 1997.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 152
Income Tax Assessment Act 1997 Subdivision 152-A
Income Tax Assessment Act 1997 Section 152-35
Income Tax Assessment Act 1997 Section 152-40
Income Tax Assessment Act 1997 Section 152-47
Income Tax Assessment Act 1997 Subsection 328-125(7)