Private ruling: SB CGT relief
Date of advice: 10 April 2026
Published: 6 July 2026
Ruling period: Year ending 30 June 2026 | Year ending 30 June 2027 | Year ending 30 June 2028
Date scheme commenced: 1 July 2015

Ruling: Q1: Is Person A (you) a CGT small business entity as defined in subsection 328-110 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes, you carried on a business in the current and previous years, and your aggregated turnover is less than $2 million. Accordingly, you satisfy the conditions to qualify as a small business entity. | Q2: Is Person B an affiliate of Person A as defined under section 328-130 of the ITAA 1997? | A2: Yes, as your spouse and co-owner of the land used in the course of carrying on the business, Person B is treated as your affiliate, even though the business is not itself an affiliate or connected entity. | Q3: Does the subdivided land satisfy the active asset test under section 152-35 of the ITAA 1997? | A3: Yes , the property qualifies as an active asset. You and Person B have owned the CGT asset for more than 15 years and the land was an active asset of yours, used in your farming business for at least 7.5 years. | Q4: Does Person A satisfy the basic conditions under Subdivision 152-10 of the ITAA 1997 for the small business relief? | A4: Yes. For the lots sold, CGT event A1 occurs when you entered into contract to sell the land that gives rise to a capital gain. You are a CGT small business entity in the current income year and the asset is an active asset. Accordingly, you meet the basic conditions allowing access to the small business relief in Division 152. | Q5: Does Person B satisfy the basic conditions under subsection 152-10(1A) of the ITAA 1997 for the small business relief? | A5: Yes, Person B owns a CGT asset that is an interest in land. The land was used in carrying on Person A's business and was an active asset of theirs. Accordingly, pursuant to subsection 152-10(1A) of the ITAA 1997, Person B satisfies the basic conditions for the small business CGT concessions.

Relevant facts and circumstances: Person A (you) and your spouse, Person B purchased a property at a specified location as joint tenant for a specified amount. A condition of the offer to purchase the property was that a safer access point to the property be secured through negotiation with the vendor's son, who owned the adjoining lot. When these negotiations were unsuccessful, you and your spouse acquired the adjoining property for a specified amount. Settlement occurred in a specified period, and you commenced use of the adjoining property from a specified date. You had use of the original property from a specified period prior to settlement on a specified date. A business plan was prepared in relation to the property. A farming business has been conducted from the property by Person A as a sole trader and registered for GST. From the outset, you intended to carry on a farming business with a view to making a profit, and you have maintained financial records relating to your business activities. At the time of purchase, your intention was to carry on farming activities on the land. There was no intention to subdivide the land for sale, and the configuration of the lot precluded subdivision at that time. You intended to increase the value of the land by improving its agricultural capacity. Works were undertaken on the land to enable the establishment of a dwelling. The property became your main residence from a specified period. A relevant authority undertook construction of a road servicing the area. Following the completion of the road in a specified period, safe access to the property became available. In a specified period, you applied for a line of credit for a specified amount to fund the development of the farming business. In a specified period, neighbouring landowners pursued the possibility of subdivision and, as a result, a joint rezoning proposal was prepared. Without your knowledge, the neighbours lodged the rezoning proposal with the local government in a specified period. You and Person B subsequently joined the application. The local council later requested that the rezoning application be withdrawn, as it intended to undertake a broader rezoning of the area. This rezoning was subsequently finalised and gazetted in a specified period. In a specified period, you experienced several issues in relation to your health and employment. On medical advice, you took an extended period of leave. During this time, a neighbour assisted with the operation of the farming business. During the years you were employed, you worked on the farm in the mornings before attending work and undertook farming activities on weekends. Other than during a specified period when you experienced health issues, you generally spent approximately a specified number of hours per week working on the farm. Following your retirement, you remained intent on further developing both the farm and the farming business. The previously approved line of credit was not drawn down due to the impact of the global financial crisis. On a specified date, Company A, acting on your behalf, lodged an application with the relevant authority to subdivide the land into a specified number of lots to fund your living and farming costs. This application was refused. In a specified period, you engaged Company B, which recommended that you accept the subdivision. The Plan was approved on a specified date. You also applied for subdivision of the adjoining property on a specified date. Based on the endorsed plan, a subdivision application was lodged in respect of the property on a specified date and was approved on a specified date. In a specified period, you engaged Company C to manage the subdivision process, identify engineering issues, prepare a preliminary design and provide cost estimates. The property was subsequently subdivided into a specified number of lots. Throughout these events, you continued to carry on the farming business on the property. Each lot was used solely for farming purposes, other than the area used for your residence, until a specified period, at which point portions of the farm were progressively sold. You lodged Business Activity Statements showing farming income and expenditure. The net profit/(loss) position from the farming business was provided for the relevant years. Details of the net profit or loss from the farming business for the relevant years have been provided. The aggregated turnover of you and Person B was below $2 million in each of the relevant years. Some lots have been sold. You and Person B have claimed the small business 50% active asset concession in some years. You have also claimed the retirement exemption in some years. The remaining unsold subdivided lots continue to be used in carrying on farming business.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 152-A | Income Tax Assessment Act 1997 section 152-10 | Income Tax Assessment Act 1997 section 152-10(1A) | Income Tax Assessment Act 1997 section 152-35 | Income Tax Assessment Act 1997 section 152-40 | Income Tax Assessment Act 1997 section 152-47 | Income Tax Assessment Act 1997 subsection 152-47(1) | Income Tax Assessment Act 1997 subsection 152-47(2) | Income Tax Assessment Act 1997 section 328-110 | Income Tax Assessment Act 1997 section 328-130 | Income Tax Assessment Act 1997 subsection 328-130(1)