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Edited version of private advice
Authorisation Number: 1052381747891
Date of advice: 04 April 2025
Ruling
Subject: CGT - small business concessions
Question 1
Does the Property satisfy the active asset test in section 152-35 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer 1
Yes
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
The Trust carries on a business of sport and recreational activities.
The Trust purchased The Property in March 20XX.
The trust began using the property in their business activities in 20XX.
The Property was used, and at the time of this private ruling application, is still used in carrying on a business by the trust.
The business activities are carried on all year round and affected by the seasons. The most popular time is during the holidays and weekends.
There has been interest in purchasing the Property with due diligence being taken by those interested.
The Property is anticipated to sell by year ending 30 June 20XX.
Relevant legislative provisions
Income Tax Assessment Act 1997, section 152-35
Income Tax Assessment Act 1997, section 152-45
Reasons for decision
One of the small business CGT concessions conditions is the active asset. The active asset test will be met if:
• you have owned the CGT asset for 15 years or less and the asset was an active asset of yours for a total of at least half of the period from wen you acquired it to the time of the CGT event or the cessation of the business; or
• you have owned the CGT asset for more than 15 years and the asset was an active asset of yours for a total of at least 7.5 years during the period specified in section 152-35(2). (section 152-35 of the ITAA 1997)
A CGT asset is an active asset at a time if, at that time the asset is used, or held ready for use, in the course of carrying on a business that is carried on whether by you or your affiliate or another entity that is connected with you (subsection 152-40(1) of the ITAA 1997).
Application to your circumstances
The trust has owned the Property for approximately X years and has been used in the business of the Trust for approximately X years. As the Property has been used directly by the Trust for more than half the period of ownership, the Property is considered to be an active asset in the year ending 30 June 20XX.
If the Property is disposed of the in 20XX income year, it will also be considered an active asset because it will have been owned by the Trust for approximately X years, with it being used in a business carried on by the Trust for at least X years.
Therefore, the Property will satisfy the active asset test for both the 20XX and 20XX income years.