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Edited version of private advice
Authorisation Number: 1052208135615
Date of advice: 5 January 2024
Ruling
Subject: CGT - disposal
Question
Are Individual A and Individual B eligible to disregard the capital gain that resulted from the sale of their property under the 15-year exemption?
Answer
Yes. Based on the facts provided, Individual A and Individual B are eligible to access the small business 15-year exemption to disregard any capital gain arising from the CGT event. The property was owned for more than 15 years and used in the business of a connected small business entity (the partnership) for more than 7.5 years. Individual A and Individual B were both over the age of 55 at the time of the event. Additionally, given Individual A and Individual B's involvement in the business ceased, and the reduction of Individual A's hours worked per week in outside employment soon after settlement occurred, we consider the event was in connection with their retirement.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
The property was purchased jointly by Individual A and Individual B in 20XX at the cost of $X.
A primary production business was operated through a partnership that commenced in 20XX. Individual A and Individual B each hold a 50% interest in the partnership.
Aggregated turnover for the partnership was under $2 million.
The business was carried on until 20XX.
The property sold for $X via contract dated 20XX. Settlement occurred in 20XX.
Prior to the sale of the property, Individual A was employed by an unrelated party working 38 hours per week. Individual A also worked in the business.
Individual A's employment hours will reduce to 12 hours per week in 20XX or cease all together. Individual A's involvement in the business ceased in 20XX.
Prior to the sale of the property, Individual B worked 8-12 hours per day in the business. Individual B's involvement in the business ceased in 20XX.
Individual A and Individual B were both over the age of 55 at the time of the sale of the property.
Relevant legislative provisions
Income Tax Assessment Act 1997 subdivision 152A
Income Tax Assessment Act 1997 section 152-10
Income Tax Assessment Act 1997 section 152-35
Income Tax Assessment Act 1997 section 152-105