Private ruling: CGT - small business concessions - retirement exemption
Date of advice: 25 November 2024
Published: 13 January 2025
Ruling period: Year ended 30 June 202X | Year ended 30 June 202Y | Year ended 30 June 202Z
Date scheme commenced: 1 July 201A

Ruling: Q1: Are you eligible for the 50% discount under section 115-100 of the Income Tax Assessment Act 1997 (ITAA 1997) with regards to the sale of your property? | A1: Yes. A capital gain arising from capital gains tax (CGT) event A1 upon the sale of the property is a discount capital gain and would be eligible for the 50% discount pursuant to section 115-25 of the ITAA 1997 when the capital gain resulted from a CGT event happening to a CGT asset that was acquired at least 12 months before the CGT event. You held the property for more than 12 months. Therefore, any capital gain arising from the sale of the property is a discount capital gain and eligible for the general 50% discount. | Q2: Are you eligible for the (CGT) small business 50% active asset reduction under section 152-205 of the ITAA 1997 with regards to the sale of your property? | A2: Yes. Under section 152-205 of the ITAA 1997, the 50% active asset reduction automatically applies if the basic conditions in Subdivision 152-A of the ITAA 1997 are met. There are no further requirements. You meet the basic eligibility conditions for the small business CGT concessions as you meet the maximum net asset value test (<$6 million), and the property has been an active asset since acquisition (used in business by connected entity). You are connected to the business entity as 50% shareholder of corporate trustee and as the spouse of the sole director, who you work in concert with, with respect to the property and business. | Q3: Are you eligible for the CGT small business retirement exemption under section 152-305 of the ITAA 1997 with regards to the sale of your property? | A3: Yes.As you meet the basic conditions to apply the small business CGT concessions and you are over 55, you are eligible to claim the small business CGT retirement exemption. You can choose to disregard the capital gain up to your lifetime limit of $500,000. You must keep a written record of the amount you choose to disregard (the CGT exempt amount).

Relevant facts and circumstances: You are over 55 years old and own a commercial property which you acquired over X years ago. Since acquisition you have leased to property to a related entity, a trust. The trust uses the property to operate a business. You are a 50% shareholder in the trustee company and one of two primary beneficiaries of the trust. You are also the spouse of the sole director of the trustee company. The director acts in concert with you in all matters relating to the business and commercial property. Your net assets, including connected entities, does not exceed $X million. Your aggregated turnover is under $X million.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 115-100 | Income Tax Assessment Act 1997 section 152-205 | Income Tax Assessment Act 1997 section 152-305