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Edited version of private advice
Authorisation Number: 1051948480216
Date of advice: 10 February 2022
Ruling
Subject: Small business concessions - significant individual
Question
Is Person A a significant individual of the Trust for the 20XX year?
Answer
Yes. Upon making the distribution of the Trust funds, Person A's small business participation percentage will be at least 20% each for the 20XX year, meaning they will be a significant individual of the Trust just before the CGT event.
Question 2
Will the payment by the Trust on or before 30 June 20XX to Person A of an amount equal to the capital gain be exempt to Person A under section 152-125 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes. The requirements for the capital gain to be disregarded under section 152-110 of the ITAA 1997 have been met. The Trust will make the exempt payment to Person A before the end of two years after the sale of the Property and Person A was a concessional stakeholder of the Trust just before the relevant CGT event. The payment made by the Trust to Person A on or before 30 June 20XX will be exempt to the CGT concession stakeholder under section 152-125 of the ITAA 1997.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The Trust was established on XX/XX/XXXX.
Under the terms of the Trust Deed, the Trustee has the discretion to distribute income to any of the eligible beneficiaries each year and make interim capital distributions to any of the eligible beneficiaries.
The Trustee acquired a Property, which has always been used by the Trustee to carry on a primary production business.
On or around XX/XX/XXXX, the Trustee sold the Property.
The Trust carried on business and its aggregated turnover was less than $2 Million. The Trust otherwise satisfies the basic conditions in 152-10 of the ITAA 1997.
Person A has been a CGT concession stakeholder of the Trust (as the term is defined in section 152-60 of the ITAA 1997) for at least 15 years.
Person A is over 55 years of age. The sale of the Property happened in connection with their retirement.
The Trustee will pay the amount equal to the capital gain from the sale of the Property to Person A in the 20XX financial year then vest the Trust.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 152-10
Income Tax Assessment Act 1997 section 152-50
Income Tax Assessment Act 1997 section 152-55
Income Tax Assessment Act 1997 section 152-60
Income Tax Assessment Act 1997 section 152-70
Income Tax Assessment Act 1997 section 152-110
Income Tax Assessment Act 1997 section 152-125