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Edited version of private advice
Authorisation Number: 1052038139547
Date of advice: 28 September 2022
Ruling
Subject: CGT - 15 year exemption
Question 1
Will you satisfy the basic conditions under Subdivision 152-A of the Income Tax Assessment Act 1997 (ITAA 1997) for small business relief upon the disposal of the property?
Answer
Yes. The basic conditions will be satisfied when the property is sold. You do not carry on a business however the property was used as a business carried on by a small business entity connected with you. You satisfy the active asset test as you have owned the property for more than 15 years and the property has been used in the business of your connected entity (the company) for more than 7.5 years that you have held the property.
Question 2
Do you meet the conditions to apply the small business 15-year exemption under section 152-105 of the ITAA 1997 to disregard the capital gain made on the disposal of the property?
Answer
Yes. As the basic conditions will be satisfied when the property is sold and you are over 55 years of age and the event that will occur will be in connection with your retirement you can choose to apply the 15 year exemption and disregard any capital gain made in relation to the disposal of the property.
This ruling applies for the following period:
Year ending 30 June 2023
The scheme commences on:
1 July 2022
Relevant facts and circumstances
You and your spouse acquired 50% interest each in the property in 200A.
The property is x acres and 90% of the property is used for carrying on a business.
In 200B your spouse passed away and you acquired their 50% interest in the property.
Company A carries on a business on the property.
You are the sole shareholder and director of the company since 200B.
The aggregated turnover of the company is less than $2 million for the 2022 income year.
You intend selling the property and the business.
You are over 55 years of age and intend to retire after the sale of the business and property.
Relevant legislative provisions
Income Tax Assessment Act 1997 subdivision 152-A
Income Tax Assessment Act 1997 section 152-105