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Edited version of private advice
Authorisation Number: 1052028553191
Date of advice: 13 September 2022
Ruling
Subject: Small business CGT concessions
Question 1
Is the Company carrying on a business within the meaning of section 152-40(1) and section 328-110 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.The Company is carrying on a business in the general sense and the Company's aggregated turnover is less than $2 million. The Commissioner is satisfied the Company is a small business entity.
Question 2
Are the quarry assets active assets in accordance with section 152-35 and 152-40(1)(a) of ITAA 1997?
Answer
Yes. The Assets are used or held ready for use in the course of a business that is carried on by the Company. They have been owned for less than 15 years and were active assets for at least half of the test period if disposed of in the 20XX income year.
This ruling applies for the following period:
30 June 20XX
The scheme commences on:
27 July 20XX
Relevant facts and circumstances
The Company has taken steps to prepare a quarry for the extraction of sand.
The Director of the Company knew there were sand resources at the quarry years before entering into agreements with the landowner to quarry the sand, through publicly available geological maps, other quarries in the area, early surveys and their personal local knowledge.
The Company engaged professionals, actioned relevant authorities, worked with traditional owners of the land, executed a head lease, undertook drainage and roadworks.
The Company removed topsoil from the property to determine the volume of sand at the Quarry and defined the extraction area.
Permits and work plans were approved. The Company entered into a Credit Trade Agreement to establish and trade National Vegetation Credits.
The Company was issued a Work Authority which granted permission to extract the resources at the site.
In 20XX extraction of sand at the quarry commenced.
The Company estimates the expenditure on the activity to date is hundreds of thousands of dollars.
Due to the strain of the extended COVID 19 lockdown in Victoria and the breakdown of the Director's marriage during this time, the Company no longer wishes to continue with the business.
The Company intends to sell the Company's assets including during the 20XX income year.
The Company's activity has an aggregated turnover of less than $2 million.
The Director has previously operated a different quarrying business through a former company.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 328-110
Income Tax Assessment Act 1997 section 152-35
Income Tax Assessment Act 1997 section 152-40
Income Tax Assessment Act 1997 subsection 152-40(1)
Income Tax Assessment Act 1997 paragraph 152-40(1)(a)