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Edited version of private advice
Authorisation Number: 1052208724407
Date of advice: 11 January 2024
Ruling
Subject: CGT - small business concessions - 15 year exemption
Question
Are the taxpayers eligible for the small business Capital Gains Tax (CGT) 15 year exemption under section 152-105 of the Income Tax Assessment Act 1997 (ITAA 1997) on the disposal of the property?
Answer
Yes. The trust satisfies the maximum net value test. The trust owned the property for more than 15 years which was used in business by a connected entity from MM 19YY to MM 20YY. The property was continuously owned for a 15-year period before the CGT event. The trust had a significant individual for over 15 years and one of those significant individuals is over 55 years and reduced their hours as part of their retirement plan as a result of the sale.
This ruling applies for the following period:
Year Ending 30 June 20YY
The scheme commenced on:
1 July 20YY
Relevant facts and circumstances
The trust purchased the property in MM 19YY.
The trust sold the property in MM 20YY.
The trust leased the property to the company for the entire duration of ownership.
Person A is 100% shareholder of the company.
Person A and Person B are both directors of the company.
Person A owned XX% (>50%) of shares in the corporate trustee while Person B owned YY% shares.
In recent income years the trust did not make any distributions.
In the 201X income year the trust distributed to the company only. Person A is a 100% shareholder in the company.
In the four income years the trust distributed to Person B only.
In one earlier income year Person A received the only distribution from the trust.
In most of the remaining income years there were no distributions made.
Once the property sold, Person A reduced their work hours as part of their retirement plan.
The trust satisfies the maximum net asset value test under section 152-15 of the ITAA 1997 in the financial year the property was sold.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 152-10
Income Tax Assessment Act 1997 section 152-15
Income Tax Assessment Act 1997 section 152-35
Income Tax Assessment Act 1997 section 152-55
Income Tax Assessment Act 1997 section 152-65
Income Tax Assessment Act 1997 section 152-70
Income Tax Assessment Act 1997 section 152-110
Income Tax Assessment Act 1997 Subdivision 152-B
Income Tax Assessment Act 1997 subsection 328-125(1)