Edited version of private advice

Authorisation Number: 1052263555028

Date of advice: 18 June 2024

Ruling

Subject: CGT - change of ownership

Question 1

Did CGT event A1 occur under section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997) happen to the taxpayer when the property was transferred to the statutory trustees?

Answer

No. A CGT event did not occur on the creation of the statutory trust or when the property the subdivided property was transferred to you.

For a CGT event A1 to occur a change ownership must occur from you to another entity however, a change of ownership does not occur if you continue to be the beneficial owner of the asset. A court created a statutory trust for the purpose of partitioning and subdividing the property to you and your sibling. There was no change of beneficial for the property when the property was transferred to or from the statutory trustees.

Question 2

Does the taxpayer meet the conditions to apply the capital gains tax small business 15-year exemption under Subdivision 152-B of the ITAA 1997 in relation to the sale of the property?

Answer

Yes. You have satisfied all the basic conditions in subsection 152-10(1) of the ITAA 1997, have continuously owned the asset for a period of more than 15 years, you were over 55 years at the time of the CGT event which happened in connection with your retirement. Therefore, you will be eligible to claim the 15-year exemption under Subdivision 152-B of the ITAA 1997.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You operated a small business primary production business with an aggregated turnover of less than $XX million the year prior to your retirement.

The business was conducted on a property. You provided us with the address of the property.

You provided us with details on when your parent was granted a lease tenure over the property.

The lease was converted to a perpetual lease known as a Crown Lease on a specified date.

You were gifted a 25% interest in the Crown Lease of the property by your parent on a specified date.

You used your share of the property for your business activities and provided us with details on when this commenced.

You were gifted an additional 25% interest of the property on a specified date, therefore holding a 50% interest in the property. You utilised the additional land in your business activities.

You and your sibling were owners of the property, both owning a 50% share.

You and your sibling had an ongoing dispute around the property.

You and your sibling went to the State Supreme Court to resolve the dispute. A statutory trustee was appointed for the purpose of subdividing the property.

The court order did not give the statutory trustees power to dispose of the property.

The property vested with the statutory trustees while it was held by the statutory trust.

The property was converted from a Crown Lease to freehold tenure on a specified date. At this date you and your sibling both maintained a 50% share interest each in the property.

The property was partitioned into 2 new lots being, one being your lot and the other your sibling's lot. Your lot of land was transferred to you shortly after the partition.

You sold your lot of land shortly after it was transferred.

You retired (and were over 55 years of age) after the sale of the land.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 104-10(2)

Income Tax Assessment Act 1997 section 152-105

Income Tax Assessment Act 1997 section 152-10

Income Tax Assessment Act 1997 subsection 152-35(b)

Income Tax Assessment Act 1997 section 152-40