Private ruling: Small business concessions
Date of advice: 9 December 2019
Published: February 2020
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Will the Commissioner allow an extension of time as provided in paragraph 103-25(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) for you to choose to apply the small business 15-year exemption? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner will grant an extension of time for you to make a choice to apply the 15-year exemption. | Q2: Can you disregard the capital gain made on the disposal of the land under the small business 15-year exemption in section 152-105 of the ITAA 1997? | A2: Yes. You won't have an assessable gain on the sale of the active asset as you have met the basic conditions, are over 55 years old and you have owned the active asset for more than 15 years. The Commissioner also considers that the CGT event has happened in connection with your retirement. Further information can be found by searching 'QC 52288' on ato.gov.au

Relevant facts and circumstances: You and your spouse purchased a property. You and your spouse entered into a partnership on a 50-50 basis. The partnership used the property to undertake a primary production business. The partnership ceased after using the property for more than 7.5 years. After owning the property for over 15 years, you and your spouse signed a contract to sell the property. Settlement occurred in the following financial year. You lodged your tax on the assumption that the CGT event in relation to the sale of the property would be assessable in the year of the settlement. You retired from all employment following the sale of the property. You approached your local accountant to prepare your tax return due to the disposal of the property, at which time you were advised that the sale of the property should have been reported in the previous tax return on the basis that capital gains are assessed when a contract is executed, not settled. Since your retirement you have not engaged in any other employment activities and rely on the interest generated from the funds deposited into your bank accounts in connection with the sale of the property in order to meet your ongoing living expenses. The sum of your assets, including those of your connected entities and affiliates, did not exceed $6million at the time of the CGT event.

Relevant legislative provisions: Income Tax Assessment Act 1997 paragraph 103-25(1)(b) | Income Tax Assessment Act 1997 section 152-35 | Income Tax Assessment Act 1997 section 152-40 | Income Tax Assessment Act 1997 section 152-105