Private ruling: CGT - small business relief
Date of advice: 9 August 2023
Published: 25 September 2023
Ruling period: Year ended 30 June 2024
Date scheme commenced: 1 July 2023

Ruling: Q1: Are you eligible to choose to apply the small business retirement exemption in Subdivision 152-D of the Income Tax Assessment Act 1997 (ITAA 1997) to the capital gain you make on the disposal of Property A? | A1: Yes. The basic conditions in Subdivision 152-A of the ITAA 1997 will be satisfied for the capital gain and you will satisfy the significant individual test just before the disposal. In addition, you will satisfy the company or trust conditions in section 152-325 of the ITAA 1997 in relation to the amount and timing of payments to your capital gains tax (CGT) concession stakeholders. As such, you are eligible to choose to disregard all or part of the net capital gain you make on the disposal under the small business retirement exemption.

Relevant facts and circumstances: You are a unit trust with a corporate trustee. Your units are owned equally by 2 discretionary trusts. You acquired Property A after 19 September 1985. You used Property A in a business you carried on for approximately 7 years until your main business operations were restructured from you into Company A, with Company A renting Property A from you since that point in time onwards. Company A is your affiliate. You intend to sell Property A during the year ended 30 June 2024. CGT concession stakeholders in you are over 55 years of age; however, the disposal of Property A will not be made in connection with any of their retirements. The net value of the CGT assets of yours, any entities connected with you, your affiliates or entities connected with your affiliates will not exceed $6million just before the disposal. You will satisfy the company or trust conditions in section 152-325 of the ITAA 1997. You will choose to apply the small business retirement exemption in a way that ensures that the CGT retirement exemption limit of each individual for whom the choice is made is not exceeded.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 152-A | Income Tax Assessment Act 1997 section 152-15 | Income Tax Assessment Act 1997 section 152-50 | Income Tax Assessment Act 1997 section 152-60 | Income Tax Assessment Act 1997 Subdivision 152-D | Income Tax Assessment Act 1997 subsection 152-305(2) | Income Tax Assessment Act 1997 section 152-315 | Income Tax Assessment Act 1997 section 152-325 | Income Tax Assessment Act 1997 section 328-130