Private ruling: Small business CGT concessions
Date of advice: 1 November 2019
Published: January 2020
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Did Person A continuously own 50% of the land (the Property) for 15 years just before the happening of a CGT event to satisfy paragraph 152-105(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. In relation to CGT, a change of ownership does not occur if you stop being the legal owner of the asset but continue to be its beneficial owner. Although Person A ceased being a legal owner of the property for a number of years, they continued to be a beneficial owner during this time. Therefore, they continuously owned 50% of the property for at least 15 years just before the CGT event. | Q2: Does the Property satisfy the active asset test under section 152-35 of the ITAA 1997? | A2: Yes. Person A and Person B satisfy the conditions of the active asset test as they have used the asset for at least 7.5 years in the course of carrying on a business and the exceptions do not apply. Further information can be found by searching 'QC 52271' on ato.gov.au

Relevant facts and circumstances: Person A and Person B are spouses and jointly purchased the Property approximately 30 years ago. The Property was used by Person A and Person B to conduct a business. Person A and Person B registered the Business approximately 10 years ago, and it formally became a general law partnership (the Partnership) at that time, in which Person A and Person B were partners, with a 50% interest each. They have sold the Property which brought to an end the Business and the Partnership, and they have retired. Legal ownership of the property Person A and Person B acquired the Property approximately 30 years ago as joint proprietors. In the years leading up to 200X, Person A was dealing with an addiction issue. Concerned that Person A might try and mortgage the Property to obtain finance to fuel their addiction, Person B insisted that Person A transfer registration of their share in the Property to Person B. Approximately 20 years ago Person A agreed to transfer title to their share of the Property to Person B and their lawyers at the time were instructed to register Person B as sole proprietor. The transfer to Person B was always on the understanding that Person A remained a beneficial owner as to 50%, but that Person B would alone be registered on the title to protect their Property (at which their family home was situated). Approximately 10 years later, Person B was satisfied that Person A had overcome their addiction issue and, at Person A's request as part beneficial owner, Person B registered Person A on title as to 50% joint proprietor in the same manner that they had originally been registered in 19XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 104-10(2) | Income Tax Assessment Act 1997 section 152-40 | Income Tax Assessment Act 1997 section 152-35 | Income Tax Assessment Act 1997 paragraph 152-105(1)(b)