Edited version of private advice

Authorisation Number: 1051893542830

Date of advice: 2 September 2021

Ruling

Subject: Small business concessions

This ruling applies to the beneficiaries of the trust and to the trustee and to any future trustee, for as long as the ruling remains current.

Question 1

Does the trustee for the trust satisfy the basic conditions for relief under section 152-10 of the ITAA 1997?

Answer

Yes. You satisfy the basic conditions under section 152-10 of the ITAA 1997 in relation to the sale of land located at XXXX.

Question 2

Is the trust entitled to claim the 15 year exemption contained in section 152-110 of the ITAA 1997 for any capital gain arising from the sale of the property?

Answer

Yes. The property had been owned by you for a continuous period of at least 15 years; had a significant individual (being XXXX) who was 55 years or older; and the sale of the property occurred in connection with the taxpayer's retirement. Therefore, the capital gain from CGT event A1 happening can be disregarded in accordance with section 152-110 of the ITAA 1997.

Question 3

Will the Commissioner extend the time limit in paragraph 152-125(1)(b) of the ITAA 1997 to five years in accordance with subsection 152-125(4) of the ITAA 1997, so that all the payments made to a capital gain tax concession stakeholder can be disregarded under subsection 152-125(2) of the ITAA 1997?

Answer

Yes. The Commissioner may exercise his discretion under subsection 152-125(4) of the ITAA 1997 and allow further time to make payments to the concessional stakeholders.

In your case you have entered a contract for the sale of the property whereby you will receive the sale proceeds over a X year period. Given the details of your sale the Commissioner considers there is an acceptable explanation and it would be fair and equitable to provide an extension.

The Commissioner will exercise his discretion and extend the two-year time limit under subsection 152-125(4) of the ITAA 1997 to XXXX in relation to the payments from the contract that are expected to be received outside the two-year period.

This ruling applies for the following period:

1 July 20XX to 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

XXXX has lived on a XX acre property located at XXXX since 19XX.

The property was transferred to the trust when it was established in 19XX. XXXX is a director and major shareholder in the trustee company.

XXXX is a primary beneficiary of the trust.

During the year ended 30 June 20XX the trust derived assessable income and disposed of the property resulting in a capital gain. The trustee resolved to distribute 100% of the income of the trust to XXXX.

The property has been used by XXXX, in two partnerships in which he was a partner, to derive income from primary production businesses. XXXX was actively involved full time from the year 20XX in one partnership and from 20XX in the second partnership. The sale of the property occurred in connection with XXXX retirement.

The aggregated turnover is below $XXX.

XXXX was born on the XXXX.

A contract for sale of the property was entered into and signed on the XXXX 20XX between the vendor and an unrelated entity.

The final settlement is to occur X years from the date of sale. The sale proceeds are to be paid over the X year period, the balance being made on the XXXX.

Relevant legislative provisions

Income Tax Assessment Act 1997 subdivision 152-A

Income Tax Assessment Act 1997 subsection 152-10(1)

Income Tax Assessment Act 1997 subsection 152-10(1A)

Income Tax Assessment Act 1997 section 152-15

Income Tax Assessment Act 1997 section 152-35

Income Tax Assessment Act 1997 subsection 152-35(1)

Income Tax Assessment Act 1997 subsection 152-35(2)

Income Tax Assessment Act 1997 subsection 152-35(1)(b)

Income Tax Assessment Act 1997 subsection 152-35(2)

Income Tax Assessment Act 1997 section 152-40

Income Tax Assessment Act 1997 section 152-55

Income Tax Assessment Act 1997 section 152-65

Income Tax Assessment Act 1997 subsection 152-70(4)

Income Tax Assessment Act 1997 subsection 152-70(5)(a)

Income Tax Assessment Act 1997 section 152-110

Income Tax Assessment Act 1997 section 152-125

Income Tax Assessment Act 1997 subsection 152-125(b)(1)

Income Tax Assessment Act 1997 subsection 152-125(4)

Income Tax Assessment Act 1997 section 328-125

Income Tax Assessment Act 1997 subsection 328-125(3)

Explanatory Memorandum to Tax Laws Amendment (2006 Measures No. 7) Act 2007