Private ruling: Capital gains tax small business 15 year exemption
Date of advice: 30 October 2017
Published: March 2018
Ruling period: Year ending 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Are you entitled to apply the capital gain tax small business 15 year exemption in relation to the portion of the property you acquired after 20 September 1985? | A1: Yes In your case, we consider that you satisfy the required conditions to be eligible to apply the CGT small business 15 year exemption. You did not carry on business but your asset, the property is used in a business carried on by a small business entity that is your affiliate. The asset is used as an active asset in your affiliate’s business. You have held your interest in the property for over 15 years and you are permanently incapacitated. Further information on CGT small business 15 year exemption can be found in the Advanced guide to capital gains tax concessions for small business on ato.gov.au

Relevant facts and circumstances: You acquired a 1/3 interest in the property before 20 September 1985 and a further 1/3 interest in the property after 20 September 1985. You have owned the 1/3 interest in the property acquired after 20 September 1985 for more than 15 years. A family member (X), acquired the remaining 1/3 interest in the property before 20 September 1985. You, your spouse and X ran a business on the property since acquisition until the death of your spouse. You continued to run the farm in partnership with X after the death of your spouse. You then decided to cease to be a partner of the partnership. X continued to run the farming business on the property, now in partnership with their spouse. Upon ceasing to be a partner in the partnership, you had a verbal agreement with X that X would continue to run the business in accordance with the way you and your late spouse had run the business Although you no longer work in the business, X consults you on matters concerning the running of the business and you provide advice and assistance with decisions relating to the running of the business. You are permanently incapacitated. You and X intend to sell the property.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 152-B | Income Tax Assessment Act 1997 section 152-10 | Income Tax Assessment Act 1997 section 152-35 | Income Tax Assessment Act 1997 subsection 152-40(1) | Income Tax Assessment Act 1997 section 152-105 | Income Tax Assessment Act 1997 subsection 328-130(1)


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