Private ruling: Small business - concession
Date of advice: 12 March 2026
Published: 29 June 2026
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Do you satisfy the basic conditions under section 152-10 of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to the capital gain derived on the sale of the original interest in the land? | A1: Yes. You sold the land, giving rise to a capital gain, and your maximum net asset position was under $6 million. The land was held for more than 15 years and was an active asset. As the land was used in carrying on a business by a connected entity and was not mainly used to derive rent, you satisfy the basic conditions in section 152-10 of the ITAA 1997 and may choose to apply the small business 15-year exemption to disregard the resulting capital gain. | Q2: Can you access the 15-year exemption under section 152-105 of the ITAA1997 in relation to the capital gain derived on the sale of the original interest in the land? | A2: Yes. You may choose to apply the 15-year exemption to disregard the capital gain arising from the sale of the land, as you meet the conditions of being over 55 years and the sale happened in connection with your retirement under section 152-105 if the ITAA 1997. | Q3: Can you access the small business relief under section 152-80 of theITAA 1997to apply the 15-year exemption in relation to the capital gain made on the disposal of the deceased interest in the land? | A3: Yes. You may choose to apply the 15-year exemption to disregard the capital gain you made on the sale of the land as the deceased would have satisfied all the relevant requirements under section 152-105 of the ITAA 1997 in relation to the sale of the property, immediately before their death. Accordingly, by operation of section 152-80 of the ITAA 1997, the beneficiary may reduce or disregard the gain to the same extent the deceased would have been entitled to immediately before death.

Relevant facts and circumstances: You are over the age of 55. You jointly owned several adjacent lots of land with a parent and siblings. The land was used to carry on a primary production business, carried on through a discretionary trust. The trustee of the Trust is a private company (the Trustee Company). You and your siblings are directors of the Trustee Company, and each holds one-third of the issued shares in the Trustee Company. The Trust carried on the business on the land for more than 30 years. In the relevant year, 50% of the land was sold to a third party. Following this transaction, the land remained an active asset, as the Trust continued to operate the business in partnership with the third party. The partnership operated the business for X years. After the partnership ceased, the family members then repurchased the third party's interest in equal shares. The Trustee did not make any distributions of income or capital for approximately X years, during which the Trust continued to use the land to carry on the business. The Trust intends to lodge beneficiary nominations for the above years under section 152-78 of the ITAA 1997. The Trust continued to operate the business on the parent's interest in the land until the parent's death, after which the parent's interest was transferred to you and your siblings in equal shares. The land was sold, and the Trust ceased its business operations at that time. You retired from farming activities in conjunction with the sale of the land. In the relevant year, the Trust made an interim distribution of profits to you and your siblings to facilitate the sale of the business operations and allocate profits for that year. The distributed profits were added to your existing unpaid present entitlement and were included in the calculation of the maximum net asset value test. You satisfy the maximum net asset test of less than $6 million.

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 | Income Tax Assessment Act 1997 section 152-78 | Income Tax Assessment Act 1997 section 152-80 | Income Tax Assessment Act 1997 section 152-105 | Income Tax Assessment Act 1997 section 328-125