Private ruling: Income tax - small business concessions - in connection with retirement
Date of advice: 17 September 2019
Published: November 2019
Ruling period: Year ending 30 June 2020
Date scheme commenced: 1 July 2019

Ruling: Q1: Does the capital gains tax (CGT) event which happens as a result of the disposal of Property meet the requirements of subsection 152-110(1)(d)(i) of the Income Tax Assessment Act 1997? | A1: Yes. After considering the facts and circumstances in this case the Commissioner considers that the sale of the Property is in connection with the Shareholders' retirement. Further information about whether a CGT event is in connection with retirement can be found on ato.gov.au by searching "QC 52288".

Relevant facts and circumstances: The Company was incorporated on XX April 19XX. The Shareholders each have a X% shareholding of the Company. The Shareholders are both over the age of 55. The shareholding has not changed since incorporation. The Company owned and operated the Business since XX April 19XX. On X April 19XX the Company purchased the Property. The Company has operated the Business from the property since it was purchased until XX January 201XX. The Business was sold to an unrelated party in the 20XX financial year. When the Company sold the Business it also desired to sell the Property however the purchaser was unwilling to acquire the Property at the same time. At the time of the sale of the Business there were discussions where the Company would provide the purchaser an option to purchase the Property, however this was not formally put in place. Since the sale of the Business the Property has been rented to the purchaser and it was anticipated that the purchaser would also acquire the Property. However negotiations between the Company and the purchaser in relation to the sale of the property ended in October 20XX. The purchaser provided notice that it would vacate the Property as they had acquired another property. It was then decided to place the Property on the market to find a buyer. There was a delay placing the Property on the market due to the real estate rebranding. The Property was placed on the market on XX February 20XX and has been available for expressions of interest up until XX March 20XX. XX inquiries have been made on the Property, however there have been no offers received. The Property remains on the market. The Shareholders operated the Business prior to the sale and since then have not earned any employment income. The Company has met the basic conditions to access the small business concessions. The Company has a significant individual.

Relevant legislative provisions: Income Tax Assessment Act 1993 paragraph 152-110(1)(d)(i)