Edited version of private advice

Authorisation Number: 1051965155629

Date of advice: 11 May 2022

Ruling

Subject: Small business CGT concessions - 15-year exemption

Question

Do you need to satisfy the basic conditions under subdivision 152-A of the Income Tax Assessment Act 1997 (ITAA 1997) to apply the Small Business Retirement exemption for a J5 CGT event that will occur in November 2022?

Answer

No, as you have noted, you don't need to meet the basic conditions again. Due to the CGT event being a J5 event the basic conditions do not need to be met again and were already satisfied.

Question 2

Will you be able to access the Small Business Retirement Exemption on the contribution if it is made after the end of the financial year which the CGT event J5 occurs but before the tax return lodgement date?

Answer

Yes, as you have identified, if you choose the retirement exemption after you've received the capital proceeds (for example, when you lodge your income tax return), you're not required to make the contribution until you make the choice. However, once you make the choice, you must immediately make a contribution of an amount equal to the exempt amount as you were less than 55 years old just before you made the choice.

This ruling applies for the following periods:

Year Ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

This private ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are different from these facts, this private ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You sold shares in your private company, which created a capital gain.

You satisfied the basic conditions for the small business CGT concessions including the minimum net asset value test and the active asset test in the income year you sold the shares.

You applied the 50% active asset reduction and the small business rollover to reduce the gain to nil.

It is unlikely that you will find a replacement asset within the two-year replacement period, as a result a capital gains tax J5 event will occur two years after original CGT event.

You are considering using the small business retirement exemption and will make that decision at the end of the period when the J5 event occurs (period ending 30 June 20XX).

The contribution you will be choosing to make will be $500,000 or less.

You have not used the small business retirement exemption previously.

You are currently under 55 years old.

Relevant legislative provisions

Income Tax Assessment Act 1997 section152-305(4)

Income Tax Assessment Act 1997 section 292-100(7)