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Edited version of private advice
Authorisation Number: 1052062159335
Date of advice: 24 November 2022
Ruling
Subject: CGT - small business concessions
Question
Will you satisfy the basic conditions in Subdivision 152-A of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to the disposal of your 50% interest in Block A?
Answer
Yes. A CGT event will happen when you dispose of your 50% interest in Block A, the event will result in a gain and Block A will be used by your affiliate in their business in the year of the event. Also, Block A will satisfy the active asset test as it has been used in businesses carried on by you or your affiliate for a total of at least 7½ years of your ownership period and none of the exceptions apply.
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You and your sibling acquired a property as tenants in common.
You used the property in a business carried on in partnership with your sibling for a number of years.
After you ceased the partnership business you leased your share in the property to your sibling for use in a sole trader business they carried on.
Your sibling is your affiliate.
You and your sibling will subdivide the property into 2 blocks. Following the subdivision you will have a 50% ownership interest in each of the subdivided blocks.
So that you and your sibling can own one block each you will dispose of your 50% interest in one of the blocks (Block A) to your sibling and will acquire your siblings 50% interest in the other subdivided block.
You will make a capital gain on the disposal of your 50% interest in Block A.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subdivision 152-A
Income Tax Assessment Act 1997 subsection 152-10(1A)
Income Tax Assessment Act 1997 subsection 152-40(4A)