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Edited version of private advice
Authorisation Number: 1052412878405
Date of advice: 24 June 2025
Ruling
Subject: CGT - small business concessions
Question 1
Is the property an active asset in accordance with section 152-40 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer 1
Yes, the property is an active asset as it was used or held ready for use in the course of carrying on a business that is carried on by you and another entity that is connected with you for more than half the ownership period.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
Trust A is a discretionary trust.
The trustee of Trust A is Company A.
Person A and Person B were appointed as directors and commenced as shareholders of Company A upon its inception and have continued since.
Person A and Person B are beneficiaries and act as appointors of Trust A since its inception.
Trust A purchased a property.
Trust A carried on a business on the property from when the settlement for the property occurred.
The business was transitioned to Company B to operate.
Company B is not an affiliate of yours because Company B does not act, or could be reasonably expected to act, in accordance with your directions or wishes, or in concert with you, in relation to the affairs of the business of Company B.
The sole shareholder of Company B is Company C. Person A and Person B are directors and shareholders of Company C. Person A and Person B were appointed as directors and commenced as shareholders of Company C since its inception and have continued since.
Company C is the trustee of Trust B.
Trust B is a discretionary trust. Person A and Person B commenced as beneficiaries upon inception and have continued since.
During the years of ownership of the property, the trustees of either discretionary trusts did not nominate any of their respective beneficiaries to be controllers of their respective trust in any income year for which the trustee did not make a distribution of income or capital if the trust had a tax loss or no net income for each relevant year.
The contract for sale for the sale of the property was signed on during the year ended 30 June 20XX by all parties.
Trust A owned the property for less than X years.
The property was used or held ready for use in the course of carrying on a business for more than half the ownership period.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 106-50
Income Tax Assessment Act 1997 section 152-10
Income Tax Assessment Act 1997 section 152-35
Income Tax Assessment Act 1997 section 152-40
Income Tax Assessment Act 1997 section 328-130