Edited version of private advice

Authorisation Number: 1051893328916

Date of advice: 31 August 2021

Ruling

Subject: Small business 15-year exemption

Question

Do you meet the conditions in paragraph 152-105(d)(i) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes

Having considered your circumstances and the relevant factors, the Commissioner is satisfied that the conditions in paragraph 152-105(d)(i) of the ITAA 1997 have been met. Further information on the relevant factors and the small business 15-year exemption generally can be found on our website ato.gov.au and entering Quick Code QC52288 into the search bar at the top right of the page.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are over the age of 55.

You solely owned a farming property in Australia.

A partnership of you and your family members, operates a farming business on the property on a third-third-third basis.

In 20XX financial year, you transferred 50% of the land and part of the business to your family member.

You significantly reduced your working hours in the business and went semi-retired. After that, you had relocated to another town and travel back and forth to the property to work in the business.

You propose to transfer the remaining ownership of the land and the remaining interest of the business to your family member in the 20XX financial year.

The business duties that you currently undertake are:

•         working two to four half-days per week as required. This is estimated to be no more than 20 hours per week;

•         checking water, fences and pasture condition once or twice per week for approximately 8 hours;

•         caretaking, if required, when the new operator is away; and

•         assisting the new operator with cattle work by performing light duties in the cattle yards while avoiding being in the yards with the cattle (i.e. operating crows' nest or watching cattle go through plunge dip).

After the proposed transfer, you will no longer be a part of the business and will permanently retire and move to another town.

Relevant legislative provisions

Income Tax Assessment Act 1997 paragraph 152-105(d)(i)

Further issues for you to consider

This ruling has not considered your eligibility for the small business rollover. You should ensure that you satisfied the basic conditions and the other conditions relevant for the rollover. More information is available in the publication Advanced guide to capital gains tax concessions for small business 2013-14 (NAT 3359), which is available on our website www.ato.gov.au.