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Edited version of private advice
Authorisation Number: 1052076070685
Date of advice: 11 January 2023
Ruling
Subject: CGT - small business concessions
Question
Does the Property satisfy the active asset test pursuant to section 152-35 of the Income Tax Assessment Act 1997 (ITAA 1997) and the meaning of active asset pursuant to section 152-40 of the ITAA 1997?
Answer
Yes. You acquired the Property in 2005 and it has been used in the course of carrying on a business by a connected entity for at least 7.5 years during the ownership period. We do not consider that the exceptions in subsection 152-40(4) of the ITAA 1997 have any application in the circumstances. Therefore, the Property will satisfy the active asset test in section 152-35 of the ITAA 1997 and the meaning of active asset in section 152-40 of the ITAA 1997.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The Company has been incorporated in the relevant year.
In the relevant year, Trust A and Trust B each acquired 50% of the shares in the Company.
The Company is a connected entity with Trust A and Trust B.
Trust A and Trust B in partnership purchased the Property in the relevant year.
The Company has used part of the Property to carry on a business for more than 7.5 years.
Part of the Property has been leased to an unrelated party during the time of the ownership.
The Company has occupied more than 50% of the total estimated property floor area for more than 7.5 years.
The percentage of rental income derived from the Property for at least 7.5 years has been significantly less than that 50% of the total income derived from the use of the Property.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 152-35
Income Tax Assessment Act 1997 section 152-40
Income Tax Assessment Act 1997 section 328-125