| Disclaimer You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1052046425878
Date of advice: 21 October 2022
Ruling
Subject: CGT - small business 15-year exemption
Question
Do you meet the conditions to apply the small business 15-year exemption under section 152-105 of the Income Tax Assessment Act 1997 (ITAA 1997) to disregard the capital gain made on the disposal of your interest in the properties you own?
Answer
Yes.
You can entirely disregard a capital gain arising from a CGT event when the basic conditions under section 152-10 of the ITAA 1997 are satisfied and you continuously owned the CGT asset for the 15-year period ending just before the CGT event, and you are either 55 or over at the time of the CGT event and the event happens in connection with your retirement or you are permanently incapacitated at the time of the CGT event.
In your case, you intend to sell the properties to an unrelated party which will trigger CGT events A1 and result in a capital gain. You satisfy the maximum net asset value test. You have used the assets in the course of carrying on a business that was carried by you in partnership. You have held the assets for more than 15 years and they have been used as an active asset for at least 7.5 years during the time of ownership. You are over 55 years of age and the CGT event will occur in connection to your retirement. Accordingly, you will be entitled to apply the small business 15-year exemption to disregard any capital gain made upon the sale of your interest in the properties
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You are over the age of 55.
Your maximum net asset value is under $X million.
In the relevant year you acquired 50% interest as a tenant in common in the industrial property known as Property A. Later, you acquired 50% interest as a tenant in common in the industrial property known as Property B.
You have owned both property A and B for more than 15 years.
You carried on a business in partnership on both properties for more than 7.5 years.
You are in the process of selling the properties A and B.
You will retire upon the sale of the properties.
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 152-105