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Edited version of private advice
Authorisation Number: 1052153727090
Date of advice: 30 August 2023
Ruling
Subject: Small business concessions - active asset test
Question 1
Have Individual A and Individual B carried on business in partnership in relation to Property A and Property B for a sufficient period of time for the properties to satisfy the active asset test in section 152-35 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes. On review of the factors outlined in Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production? (TR 97/11), we are satisfied that the Partnership carried on a business in relation to both properties for more than 7 ½ years during their ownership period of more than 15 years. This period of business use by the Partnership sufficient for the active asset test in section 152-35 of the ITAA 1997 to be satisfied for both properties.
Question 2
Did Individual A and Individual B satisfy the basic conditions for relief in subsection 152-10(1) of the ITAA 1997 in relation to the sale of Property A and Property B.
Answer
Yes. The sale of the properties was a CGT event resulting in a gain for Individual A and Individual B, paragraph 152-10(1)(a) and (b) of the ITAA 1997 were satisfied.
Individual A and Individual B satisfied the maximum net asset test in the income year the properties were sold, satisfying paragraph 152-10(1)(c) of the ITAA 1997.
Per the answer to question 1, Individual A and Individual B's use of the properties was for a period of time sufficient to satisfy active asset test satisfying paragraph 152-10(1)(d) of the ITAA 1997.
This ruling applies for the following periods:
Year ending 30 June 2022
The scheme commenced on:
2 July 2021
Relevant facts and circumstances
Individual A and Individual B jointly acquired Property A and Property B more than 20 years ago.
Individual A and Individual B operated a primary production activity in partnership (the Partnership) for a period of more than 7 ½ years in relation to Property A and Property B.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 152-10(1)
Income Tax Assessment Act 1997 section 152-35