Private ruling: Small business concessions
Date of advice: 10 October 2018
Published: December 2018
Ruling period: Year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Can you apply the small business retirement exemption to disregard the capital gain you made on the disposal of your 50% interest in the property you acquired after 20 September 1985? | A1: Yes. In this case you are over 55 and you satisfy the basic conditions. You are eligible to reduce your gain by applying the small business retirement exemption up to your life time limit of $500,000, additionally as you’re over 55 years there is no requirement to pay any amount into a complying superannuation fund or retirement savings account. However you must keep a record of the amount you choose to disregard. Further information can be found by searching QC 22165 on ato.gov.au. | Q2: Will the Commissioner allow an extension of time for you to dispose of your 50% interest in the property you acquired from your spouse on in 20XX and apply the small business 15 year exemption to disregard the capital gain you made on the disposal? | A2: Yes. Having considered your circumstances and the relevant factors, the Commissioner will allow an extension of time to dispose of the asset and apply the 15 year exemption to disregard the capital gain. Further information about this discretion can be found by searching QC 52292 on ato.gov.au

Relevant facts and circumstances: You acquired the property jointly with your spouse after 20 September 1985. The business was operated through a partnership. In the years from 19XX to 19XX, planting of the crop commenced. Your spouse operated the business full time and you actively assisted in the running of the business on a part-time basis. You were also involved with planting and harvesting the crop when required. You averaged several hours per week, but during the harvesting season your hours increased. You had full time employment elsewhere. The partnership commenced lodging tax returns in 20XX. Your spouse passed away in 20XX over the age of 55. At the time of your spouse’s death; you were also over the age of 55. The business ceased operation from the date of death. The property was placed on the market as soon as practicable and a verbal offer was accepted in 20XX. After considerable time and negotiations with the prospective buyer, this fell through. You immediately engaged another real estate agent and the property sold in 20XX. You satisfied the maximum net asset value test at the time of disposal.

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 152-15 | Income Tax Assessment Act 1997 section 152-35 | Income Tax Assessment Act 1997 section 152-80 | Income Tax Assessment Act 1997 section 152-300