Private ruling: Capital gains tax – small business concessions – Commissioner’s discretion – choice
Date of advice: 3 July 2018
Published: September 2018
Ruling period: Year ended 30 June 20XX. | Year ended 30 June 20XX. | Year ending 30 June 20XX.
Date scheme commenced: 1 July 20XX.

Ruling: Q1: Will the Commissioner grant an extension of time as provided in paragraph 103-25(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) for you to make a choice to utilise the small business capital gains tax (CGT) concessions? | A1: Yes.

Relevant facts and circumstances: You held shares in a company (the Company). You directly held more than a 20% interest in the Company. The remaining interests in the Company were owned by unrelated entities. You had held the shares in the Company for more than 12 months. You sold your shares pursuant to a share sale agreement (the agreement). Under the agreement: ● You sold the shares in the Company ● You received a specified amount in the sale year ● You received the right to receive up to X further payments in years following the sale year Your income tax return for the sale year included a capital gain of the specified amount, and applied the Division 115 50% discount. No other concessions or reductions were applied in relation to the capital gain on the sale of the shares in the Company. At the time of lodging your income tax return for the sale year, you and your tax agent did not consider the application of the small business CGT concessions. You subsequently received preliminary advice from a new tax agent that further concessions may be available in relation to the capital gain you made on the sale of shares. You then briefed a tax lawyer to ascertain your eligibility for any further concessions and received written advice confirming that the gain on the sale of the shares was eligible to be discounted under section 152-205 and section 152-305.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 103-25. | Income Tax Assessment Act 1997 Division 115. | Income Tax Assessment Act 1997 Division 152. | Income Tax Assessment Act 1997 Subdivision 152-A. | Income Tax Assessment Act 1997 Section 152-205. | Income Tax Assessment Act 1997 Section 152-305.

Reasons for decision: Summary: You did not make a valid choice at the time you lodged your income tax return for the relevant year. Having considered your situation, it is reasonable to grant a short extension of time to make a choice to utilise the small business CGT concessions. We have limited our ruling to the question raised in your application. In your request you have indicated that you qualify for the relevant small business CGT concessions. The Commissioner has not considered your eligibility for the small business CGT concessions in this ruling. You should ensure that you satisfy the basic conditions and any other relevant conditions. More information is available in the publication Capital gains tax concessions for small business , which is available on our website www.ato.gov.au .