Edited version of private advice

Authorisation Number: 1052054897859

Date of advice: 7 November 2022

Ruling

Subject: Small business concessions

Question 1

Do you satisfy the basic conditions to apply the small business capital gains tax (CGT) concessions in Subdivision 152-A Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes. Having considered your circumstances and the relevant facts, the individuals will each satisfy the basic conditions to apply the small business CGT concessions in Subdivision 152-A of ITAA 1997. When you sell the property, a CGT event will occur which may result in a capital gain. You are both considered CGT small business entities and have aggregated turnovers of less than $2 million for the income year. The asset in question satisfies the active asset test as it has been used in the course of carrying on business for over 7 and half years, while being owned for over 15 years.

Question 2

Do you satisfy the specific conditions to apply the 15-year exemption in Subdivision 152-B ITAA 1997?

Answer

No. Although the basic small business CGT concessions have been met, the individuals have owned the assets for over 15 years and both individuals are over 55, the event is not in connection with their retirement. You have stated you are looking to reduce costs and move the businesses to your residential property by building a new facility.

Question 3

Do you satisfy the specific conditions to apply the small business 50% reduction in 152-C of the ITAA 1997?

Answer

Yes. Since the 15-year exemption cannot apply since you are not retiring, you can use the small business 50% reduction in 152-C of the ITAA 1997 as the basic small business CGT concessions have been met. The 50% asset reduction, will apply automatically, unless you choose for it not to apply.

Question 4

Do you satisfy the specific conditions to apply the small business retirement exemption in subdivision 152-D of the ITAA 1997?

Answer

Yes. Given that the 15-year exemption cannot apply, you are eligible to apply the small business retirement exemption in subdivision 152-D of the ITAA 1997 as the basic small business CGT concessions have been met. As you are both over 55 years of age, you may choose to apply the small business retirement exemption. There is a lifetime limit of $500,000 per individual which can be disregarded.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

Relevant facts and circumstances

You purchased a commercial property in the year ending 30 June 20XX, with your spouse as join tenants.

You and your spouse each conduct separate businesses on the property.

The property is not used for any other purpose and is for sole running of the businesses.

You are both Small Business entities with less than $X million dollars turnover.

You have owned the property for more than 15 years. You have both conducted your businesses at that property during that time.

You and your spouse are over 55 years old..

You looking to reduce business costs by selling the property and move business to your residential property and build a new facility.

Assumption(s)

It is assumed you will sell the property within the 20XX or 20XX income periods and the sale will result in a capital gain.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subdivision 152-A

Income Tax Assessment Act 1997 Subdivision 152-B

Income Tax Assessment Act 1997 Subdivision 152-C

Income Tax Assessment Act 1997 Subdivision 152-D