Private ruling: Small business concessions – active asset test
Date of advice: 3 October 2018
Published: November 2018
Ruling period: Financial year ending 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Does the property meet the active asset test for the purposes of the small business CGT concessions? | A1: Yes. You satisfy the conditions of the active asset test as your connected entity has used the asset for a total of at least 7.5 years in the course of carrying on its business and the main use of the asset was not to derive rent. Further information on the active asset test can be found by searching 'QC 52271' on ato.gov.au

Relevant facts and circumstances: You have owned a commercial property for more than 15 years. XX% of the property is leased to a related company. The company has used the property in the operation of its business for over 25 years. The company is a small business entity and you are connected with the company. You satisfy the maximum net asset value test. The total commercial rent received from the property in the financial year ended 30 June 20XX was $XXX of which the company paid $XXX. The remaining amount was paid from unrelated parties that leased the other XX% of the property. The business portion of the property derived more than 90% of the total income (business income plus rental income) derived from the use of the property in the financial year ended 30 June 20XX. For at least 7.5 years the business has earned a similar percentage of business income compared to rental income.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 152-10 | Income Tax Assessment Act 1997 section 152-35 | Income Tax Assessment Act 1997 section 152-40