Private ruling: CGT - active asset test
Date of advice: 6 December 2021
Published: March 2022
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Do the storage units satisfy the active asset test under section 152-35 and 152-40 of the Income Tax Assessment Act 1997 ? | A1: Yes. Having considered all circumstances and the relevant facts, it is accepted that a tenant/landlord relationship does not exist between the trust and the clients using the storage units. Therefore, the amounts received by the Trust are not considered rent. This means the property will satisfy the active asset test for the purpose of the small business CGT concessions.

Relevant facts and circumstances: In 20XX, the trust issued four units at $1 each to four separate individuals. They have not changed ownership. In June 20XX, the trust purchased land. Storage units were built approximately 12 months later. The property contained X storage units. The storage units were leased on a week-to-week basis and managed by a real estate. As the owner of the property, the trust was responsible for: • organising building repairs and maintenance • landscaping • rubbish collection • cleaning of units and business property • organising check on payments and credit references • managing security • managing income and expenses • removing items left on-site from previous clients • compliance with the City Council • customer relationship management. The property was sold in the 20XX income year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 152 | Income Tax Assessment Act 1997 Subdivision 152-A | 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 Paragraph 152-40(4)(e)