Edited version of private advice

Authorisation Number: 1052198768931

Date of advice: 04 December 2023

Ruling

Subject: CGT concessions - 15-year exemption

Question

Can the company disregard the capital gain made on the disposal of the property, in accordance with section 152-110 of the Income Tax Assessment Act 1997?

Answer

Yes. The company satisfies the maximum net asset value test, and the property satisfies the active asset test because it was used in an entity controlled by the same third party for more than 7.5 years. The company continuously owned the asset for more than 15 years before the CGT event and the company had a significant individual for a total of at least 15 years. The significant individual just before the CGT event was over 55 years old and has retired as a result of the property sale. Therefore, the company can disregard the capital gain made on the disposal of the property.

This ruling applies for the following period:

Year ending 30 June 2024

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

Company A purchased the property in 20XX. The director and sole shareholder of company A was the deceased.

The deceased also was the director and sole shareholder of company B which operated a business on the property for over 7.5 years until the business was sold.

The deceased passed away in 20XX and all shares in both companies were transferred to his spouse.

In 20XX, the company sold the property.

The company satisfies the maximum net asset value test of less than $Xm.

The deceased was a significant individual of the company for at least 15 years.

Just before the sale of the property, the spouse was a significant individual of the company, was over 55 years old and has retired as a result of the property sale.

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 152-110