Private ruling: Active asset test
Date of advice: 3 December 2025
Published: 27 January 2026
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the property an active asset and satisfies the active asset test under section 152-35 and 152-40 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. As the property was used or held ready for use in the course of carrying on your business, that was carried on by you in a partnership, for at least half of the ownership period, the property is an active asset and satisfies the active asset test.

Relevant facts and circumstances: You purchased a property under a contract in the 20XX-XX financial year. On the same date, you entered into a partnership agreement to operate a primary production business. The property was vacant land requiring substantial development before cultivation could commence. Improvements included fencing to separate growing areas, soil conditioning with fertilisers, clay breakers and manure, installation of irrigation lines and covers, and the purchase of a tractor. Expenditure was incurred for plant, equipment, seed, and fertiliser. The primary production business continued until the 20XX-XX financial year. The business net turnover was less than $2 million. The land remained undeveloped for residential purposes, with no structures built, no private use, and no intention to construct a dwelling. The property was sold under a contract in the 20XX-XX financial year, resulting in a capital gain.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 152-10 | Income Tax Assessment Act 1997 section 152-35 | Income Tax Assessment Act 1997 section 152-40