Private ruling: Capital gains tax small business concessions - 15-year exemption
Date of advice: 18 December 2025
Published: 9 February 2026
Ruling period: Year ending 30 June 2026 | Year ending 30 June 2027
Date scheme commenced: 1 July 2024

Ruling: Q1: Will Person A satisfy the requirements of section 152-105 of the Income Tax Assessment Act 1997 (ITAA 1997) to apply the 15-year exemption to disregard the capital gain made on the disposal of Property A, Property B, Property C and Property D? | A1: Yes. Person A will meet the basic conditions for the small business capital gains tax (CGT) concessions when each property is disposed of, and a CGT event occurs resulting in a capital gain. Person A satisfies the maximum net asset value test, and each property has been used as an active asset for at least 7.5 years during the ownership period. Therefore, the basic conditions are met. Person A has continuously owned the CGT asset for the 15 years immediately preceding the CGT event, and the disposal of the properties will be in connection with retirement. Accordingly, Person A is eligible to apply the 15-year exemption. | Q2: Can you disregard the capital gain made on the sale of your Dwelling and attached land up to two hectares? | A2: Yes. Section 118-110 of the ITAA 1997 states that a capital gain or capital loss you make from a capital gains tax (CGT) event that happens in relation to a CGT asset that is a dwelling or your ownership interest in it is disregarded if: (a) you are an individual; and (b) the dwelling was your main residence throughout your ownership period; and (c) the interest did not pass to you as a beneficiary in, and you did not acquire it as a trustee of, the estate of a deceased person. Section 118-150 of the ITAA 1997 extends the main residence exemption to land in which you have an ownership interest (other than a life interest) if you build, renovate or repair a dwelling on the land and that dwelling becomes your main residence. This period may not exceed four years before the dwelling becomes your main residence. The dwelling must become your main residence as soon as practicable after work in building the dwelling is completed and must continue to be your main residence for at least three months. The maximum area of adjacent land covered by the main residence exemption is 2 hectares, less the area of land immediately under the dwelling. Having considered the relevant factors, the Commissioner accepts that you meet the conditions for the main residence exemption to apply to the capital gain made on the sale of your Dwelling and attached land up to two hectares. Further information about the main residence exemption can be found by searching 'QC 69710' on ato.gov.au.

Relevant facts and circumstances: Person A and Person B are spouses. Person A is a sole trader that operates a business. Person A is over the age of 55. Person A and Person B are Australian residents for taxation purposes. The Property was purchased in 19XX. The Property is over 500 acres. From acquisition, a business of horticulture and a business of mill operated on the Property. The native forest on the Property has been selectively harvested every 10 to 15 years to use in business. Person A acquired the title from their parents. The Property was valued by a registered valuer. The relevant Council approved subdivision by a family member into multiple lots: • Property A. • Property B. • Property C. • Property D. Properties A, B and D are owned in the sole name of Person A. Property C is encumbered as joint tenants in Person A and Person B's names. During ownership, Person A has operated various produce activities on the Property including: • 19XX to 19XX - horticulture operation, • 19XX to 20XX - leasing, • 20XX to 20XX - leasing, • 20XX to 20XX - leasing, • 20XX to 20XX - horticulture operation, • 19XX to 20XX - milling business off the entire Property. Person A's parents continued to live in the original house on Property B until one of Person A's parents died in 20XX. In 19XX, Person A and Person B built a dwelling on Property C (the Dwelling). They moved into the Dwelling as soon as practicable after the completion of the build and occupied it as their main residence. Person A and Person B have continued to live in the Dwelling for their entire ownership period and will remain there until the sale of the property. Property C has never been cultivated or used for leasing to other Farmers. It was only used in Person A's business. In 19XX, a loan was taken out to build a dam on Property A. In 19XX, Person A grew produce on 5 acres of Property A. In 19XX, the bathroom and kitchen of the original house located on Property B was refurbished. In 19XX, a business loan was used for works on the entire Property. Prior to the works on the Property, Person A's business was conducted on a mobile basis. From 19XX onwards income from the leasing activities was used to extend infrastructure. In 20XX, Person A grew produce on 6 acres of Property B. In 20XX to 20XX, a government grant was used to extend further infrastructure on Property B and Property D. In 20XX, Person A's parent moved into the Investment Property until approximately 20XX. From 20XX to 20XX, the original house on Property B was rented to various persons. The Investment Property is owned by Person A and Person B as joint tenants and is encumbered. The Investment Property has been rented at full market rate to various unrelated tenants. In 20XX and 20XX Person A grew produce on 37 acres of Property B. Land preparation started in 20XX. The original house was used to accommodate persons. Person A turns 70 in the upcoming income year. The horticulture activity will come to an end in the upcoming income year. Person A works approximately 35 hours per week at the business. Person B works part time permanent and intends to keep working for another 3-4 years. Person A and Person B intend to dispose of the Properties in the upcoming income years. Person A and Person B net assets will be under $6 million CGT SBC eligibility threshold. The sales turnover each year of the business is less than $1 million. Person A and Person B are looking at selling the entire property including primary main residence for under $4 million.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 118-110 | 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 152-105