Private ruling: CGT - small business concessions
Date of advice: 15 December 2022
Published: 13 February 2023
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Did you satisfy the basic conditions in Subdivision 152-A of the Income Tax Assessment Act 1997 to be able to apply the small business capital gains tax (CGT) concessions to the capital gain you made on the early termination of the lease? | A1: Yes. A CGT event happened when the lease was terminated, and you satisfied the maximum net asset value test just before the CGT event. Also, the lease, being an intangible asset that was inherently connected with your farming operation, satisfied the active asset test.

Relevant facts and circumstances: You operated a farming business in partnership. You entered a lease of farming land that you used in your farming business. You entered a deed to vary the lease to facilitate (amongst other things) an early termination of the lease so that the farmland could be sold as a going concern. The farm owner executed a sales contract to dispose of the land, and in accordance with the deed, the lease was terminated early, and you received a lump sum payment and made a capital gain. The net value of the CGT assets of yours, any entities connected with you, your affiliates or entities connected with your affiliates did not exceed $6million just before the CGT event.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 152-A