Private ruling: Capital gains tax – small business concessions – 15 year exemption
Date of advice: 11 April 2019
Published: May 2019
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 20XX

Ruling: Q1: Can you disregard the gain from the sale of the property under the 15 year exemption? | A1: Yes. The entity satisfied the basic conditions to access the small business concessions and also meets the additional conditions to access the 15 year exemption. The Commissioner also considered that the sale of the property was in connection with the retirement of a signification individual.

Relevant facts and circumstances: The deceased acquired an original parcel of land in 19XX, and became sole owner of the land in the 19XX. In 19XX a considerable part of this land was reduced for development purposes. This resulted in land being isolated and access became restricted to the remaining land. The deceased had a family business on this land for many years providing customer service. In 19XX a Government plan was introduced to this suburb and surrounding areas on the permitted developments that would take place over many years to come. As the land had restricted access the deceased required the land zoning to be altered. From 19XX – 19XX there was no business activity. In 19XX the deceased passed away and left a will appointing trustees and executors. Probate was granted in 19XX. The executors operated the business for over ten years on the land. The attempt to change the zoning on the land was still underway. In 20XX the estate commenced turning their mind to selling the land. In 20XX the estate entered into an agreement with the local Government. Over a four year period the estate had to negotiate with the local Government and other infrastructure developers and corporations in an attempt to sell the property. During this time, one of the executors’ personal circumstances changed and reduced their working hours. The business was reducing and the rezoning issues were still unresolved. The business ceased in 20XX and the significant individual retired. In 20XX, an offer was made but this fell through due to the uncertainty of the zoning areas. This occurred again in 20XX. The zoning issues were resolved in 20XX. The estate continued to market the property for sale and a contract of sale was exchanged in 20XX. There was a significant individual for over 15 years and at the time of the CGT event; the maximum net asset value test was satisfied.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 152-10 | Income Tax Assessment Act 1997 Section 152-35 | Income Tax Assessment Act 1997 Section 152-80 | Income Tax Assessment Act 1997 Section 152-110 | Income Tax Assessment Act 1997 Section 152-215