Edited version of private advice

Authorisation Number: 1052300212008

Date of advice: 10 September 2024

Ruling

Subject: CGT - small business concessions

Question 1

Are you an affiliate to person 1 and person 2 under section 328-130 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

You are an affiliate of person 1 and person 2 under section 328-130 of the Income Tax Assessment Act (ITAA) 1997. This is because person 1 and person 2 rely on you for business consultation and approval for the business they run on the Property, and it is reasonably expected that they would act in accordance with your directions or wishes, or in concert with you in relation to the affairs of their business.

Question 2

Are you eligible to apply the CGT small business retirement exemption under Subdivision 152-D of the ITAA 1997 in relation to the sale of the Property?

Answer

Yes. You are eligible for the 50% CGT reduction because you satisfy the basic conditions set out in section 152-10 of the ITAA 1997. You satisfy the basic conditions because a CGT event occurred in relation to the Property which resulted in a gain, you satisfy the maximum net asset value test, and the Property satisfies the active asset test.

Question 3

Are you eligible to apply the CGT small business retirement exemption under Subdivision 152-D of the ITAA 1997 in relation to the sale of the Property?

Answer

Yes. You are eligible for the CGT small business retirement exemption because you satisfy the basic conditions set out in section 152-10 of the ITAA 1997. Furthermore, because you are over the age of 55, you do not have to make a contribution to a complying superannuation fund.

This ruling applies for the following period:

X of XX 20XX to X of XX 20XX

The scheme commenced on:

X of XX 20XX

Relevant facts and circumstances

You were born on X of X 19XX

You live on the Property.

You raise animals on the as a hobby.

You declare income on your income tax return of less than $2 million.

You are the mother of person 1 and mother-in-law of person 2.

Person 1 and person 2 are married.

Person 2 began operating a business of primary production as a sole trader on the Property. You maintained your use of the Property as a hobby-farm.

Person 2 operated the business through her sole trader ABN with person 1's assistance.

Income from the business was declared in person 2's income tax return. Person 2 carried on the sole trader business in the year of disposal and declared assessable income of less than $2 million.

You provided guidance to person 1 and person 2 with knowledge on animal health, calving, and day-to-day farm operations.

You and person 2 agreed to clear bushland on the Property with your approval. The land was then converted into pasture, including damns which allowed for more cattle on the Property.

Person 1 and person 2 entered into a partnership. All the livestock under the sole tradership were sold and the business continued to operate under the partnership. The partnership declares assessable income in its income tax returns of less than $2 million.

You made an agreement with person 1 and person 2 to sell the Property to them.

The business partnership continues to operate on the Property.

You continue to aid the partnership in the running of the business.

You are now considering retirement.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 328-130

Income Tax Assessment Act 1997 section 152-10

Income Tax Assessment Act 1997 section 152-15

Income Tax Assessment Act 1997 subdivision 152-D

Income Tax Assessment Act 1997 subdivision 152-C

Income Tax Assessment Act 1997 section 328-110