Private ruling: Maximum net asset value test
Date of advice: 24 April 2026
Published: 13 July 2026
Ruling period: Year ended 30 June 202Y | Year ended 30 June 202Z
Date scheme commenced: 1 July 202X

Ruling: Q1: Does the asset value of the residential property at A, or the proceeds from the sale of the asset (held as a passive investment asset in the X&Y Partnership, need to be included when determining if Mr X meets the maximum net asset value (MNAV) test for eligibility for the small business CGT concessions on the sale of his shares in XY Co Pty Ltd? | A1: Yes. To meet the MNAV test, the total net value of CGT assets owned by you, entities connected with you, affiliates and entities connected with your affiliates, must not exceed $6 million. You must meet the test just before the CGT event that results in the capital gain. The MNAV test is not limited to assets that are active assets of the business.

Relevant facts and circumstances: • XY Co Pty Ltd is a company that imports products and distributes as a wholesaler to Australian businesses. • XY Co is owned by Mr X (50%) and Mrs Y (50%), with each shareholder owning one share each of issued capital of two shares. No other person or entity owns shares in XY Co Ltd. • Mr X and Mrs Y wish to sell the shares in XY Co Ltd to an unrelated entity and seek to apply the 15-year exemption under the Small Business CGT Concessions. • Mr X and Mrs Y also carry on a business in a partnership (X&Y Partnership) that owns real estate properties: - Residential investment property. Leased via a real estate agent and not related to the operations of XY Co Ltd. The residential investment is used to generate partnership income and is not used solely for the personal use and enjoyment of Mr X and Mrs Y. The residential property was sold in late 2025. - A Strata unit. The strata unit is leased by XY Co Ltd for use in its business operations. L&T Trading stores goods at the strata unit and distributes from this commercial property. • Mr X and Mrs Y are also beneficiaries of the XYZ Family Trust. The Trustees are Mr X and Mrs Y. • Mr X and Mrs Y are also shareholders in the company XYZ Co Pty Ltd

Relevant legislative provisions: Division 152 Income Tax Assessment Act 1997 | Division 328 Income Tax Assessment Act 1997