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Edited version of private advice
Authorisation Number: 1051948899275
Date of advice: 10 February 2022
Ruling
Subject: Small business concessions - in connection with retirement
Question
Will the sale of the Business be in connection with the retirement of your significant individual for the purposes of the small business 15 year exemption?
Answer
Yes. We consider that the sale of the Business will be in connection with the retirement of your significant individual for the purposes of the small business 15 year exemption. There will a significant change in the nature of the significant individual's present activities as a result of the sale of the Business and an overall reduction in the number of hours they work.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The Business has operated in excess of 15 years. The Business is the subject of a sale proposal, whereby the new purchaser will acquire the assets of the Business and the current owner will continue to work for the Business.
The current owner has been a significant individual for at least 15 years during the whole of your ownership period. The current owner will be over 55 years of age at the time of the sale of the Business.
The Business satisfies the basic conditions in section 152-10 of the Income Tax Assessment Act 1997 and the Business assets are active assets, having been used by the Business for over 7.5 years
The current owner has agreed that they will work for the purchaser for a period not longer than two years, decreasing the time they spend in the business from XX hours per week to a reduced work week of XX hours. Their duties will also be significantly reduced during this period.
The current owner will permanently retire at the end of the two year period after sale.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 152-10
Income Tax Assessment Act 1997 section 152-35
Income Tax Assessment Act 1997 section 152-40
Income Tax Assessment Act 1997 section 152-110