Private ruling: CGT - small business concessions
Date of advice: 24 November 2022
Published: 23 January 2023
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will you satisfy the basic conditions in Subdivision 152-A of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to the disposal of your 50% interest in Block A? | A1: Yes. A CGT event will happen when you dispose of your 50% interest in Block A, the event will result in a gain and Block A will be used by your affiliate in their business in the year of the event. Also, Block A will satisfy the active asset test as it has been used in businesses carried on by you or your affiliate for a total of at least 7½ years of your ownership period and none of the exceptions apply.

Relevant facts and circumstances: You and your sibling acquired a property as tenants in common. You used the property in a business carried on in partnership with your sibling for a number of years. After you ceased the partnership business you leased your share in the property to your sibling for use in a sole trader business they carried on. Your sibling is your affiliate. You and your sibling will subdivide the property into 2 blocks. Following the subdivision you will have a 50% ownership interest in each of the subdivided blocks. So that you and your sibling can own one block each you will dispose of your 50% interest in one of the blocks (Block A) to your sibling and will acquire your siblings 50% interest in the other subdivided block. You will make a capital gain on the disposal of your 50% interest in Block A.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 152-A | Income Tax Assessment Act 1997 subsection 152-10(1A) | Income Tax Assessment Act 1997 subsection 152-40(4A)