Private ruling: Capital Gain and CGT Discount on the Sale of a Property
Date of advice: 31 October 2025
Published: 15 December 2025
Ruling period: 30 June 20XX

Ruling: Q1: Did CGT event A1 under section 104-10 happen the Trust sold the property? All legislative references are to the Income Tax Assessment Act 1997. | A1: Yes. | Q2: Can the Trust apply the 50% CGT discount under section 115-100 where the Property was held for more than 12 months prior to the CGT event? | A2: Yes. | Q3: Does the Trust satisfy the conditions to apply any of the small business CGT concessions under Division 152? | A3: No. | Q4: Assuming the Trust is eligible for the small business CGT concessions under Division 152, can x claim any of the CGT concessions? | A4: Not applicable

Relevant facts and circumstances: The Trust is a discretionary family trust. The trustee of the Trust is a company. The beneficiaries amongst others are x and his children. x is of retirement age and has not contributed to a superannuation fund. The Trust acquired a property at X. It sold the property for $X and the contract date was X. The settlement occurred on X. The Property is approximately X acres and was acquired in X for $X and was provided for agistment since purchase. There was no carrying on of a business. The Trust pays all the outgoings on the Property. The turnover of the Trust is less than $x million.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 152 | Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 108-5 | Income Tax Assessment Act 1997 section 115-10 | Income Tax Assessment Act 1997 section 115-25 | Income Tax Assessment Act 1997 section 115-100

Reasons for decision: Summary: CGT event A1 happened when the Trust sold the property. | Detailed Reasoning - Detailed reasoning: Subsection 104-10(1) provides that CGT event A1 happens if you dispose of a CGT asset. Subsection 108-5(1) defines a CGT asset as any kind of property or a legal or equitable right that is not a property. The Property is a CGT asset. Subsection 104-10(3) describes when CGT event A1 happens. The time of this CGT event is either when you enter into a contract for the 'disposal', or if there is no contract when the change of ownership occurs. In your case, CGT event A1 happened when the Trust entered into the contract to sell the property. | Detailed Reasoning - Question 2: Can the Trust apply the 50% CGT discount under section 115-100 where the property was held for more than 12 months prior to the CGT event? | Summary: The Trust can apply the 50% CGT discount as it held the property for more than 12 months prior to the CGT event. | Detailed Reasoning - Detailed Reasoning: Section 115-10 provides that a discount capital gain can be made by a trust. Section 115-100 provides that a 50% discount may be applied to a discount capital gain realised by a trust where the asset that gave rise to the capital gain has been owned for a period of at least 12 months prior to the CGT event (section 115-25). The Trust owned the property for more than 12 months prior to the CGT event. Therefore, the Trust can apply the 50% CGT discount. | Detailed Reasoning - Question 3: Does the Trust satisfy the conditions to apply any of the small business CGT concessions under Division 152? | Summary: The Trust does not satisfy the conditions to apply any of the small business CGT concessions under Division 152 as the property does not satisfy the active asset test in section 152-35. The active asset test is a basic condition that must be met to access any of the small business CGT concessions. | Detailed Reasoning - Detailed reasoning: The basic conditions for relief under the CGT small business concessions are outlined in Subdivision 152-A. Section 152-10(1) contains the basic conditions you must satisfy to be eligible for any of the small business CGT concessions. These conditions are (with our emphasis): (a) a CGT event happens in relation to a CGT asset of yours in an income year; (b) the event would have resulted in the gain; (c) at least one of the following applies: (i) you are a CGT small business entity for the income year; (ii) you satisfy the maximum net asset value test in section 152-15; (iii) you are a partner in a partnership that is a small business entity for the income year and the CGT asset is an asset of the partnership or; (iv) the conditions in subsection 152-10(1A) or (1B) are satisfied in relation to the CGT asset in the income year; (d) the CGT asset satisfies the active asset test in section 152-35. The Trust meets the requirements in section 152-10(1)(a-c). | Detailed Reasoning - Active Asset Test: Subsection 152-35(1) states that a CGT asset satisfies the active asset test if: (a) you have owned the asset for 15 years or less and the asset was an active asset of yours for a total of at least half of the period of ownership, or (b) you have owned the asset for more than 15 years and the asset was an active asset of yours for a total of at least 7 ½ years. Subsection 152-35(2) provides that the test period begins when you acquired the asset and ends at the earlier of: (i) the time of the CGT event; and (ii) if the relevant business ceased to be carried on in the 12 months before that time or any longer period that the Commissioner allows the cessation of the business. Subsection 152-40(1) provides that a CGT asset is an active asset at a time if it is used, or held ready for use, in the course of carrying on a business that is carried on (either alone or in partnership) by you, or your affiliate, or another entity that is connected with you. Subsection 152-40(4) further provides that an asset whose main use by you is to derive rent will not ordinarily be an active asset. The Trust has provided the Property to an unrelated party and derived agistment income. The Trust carried on no other significant activity apart from the provision of the property. In AAT Case 10,331 ; 95 ATC 404; (1995) 31 ATR 1146 Senior Member Fayle observed: Agisting another's livestock does not ordinarily constitute the carrying on of a business. Agistment fees ordinarily are in the nature of rent. However, where a landowner is charged with the management, maintenance and care of the animals agisted then it is possible that the person is carrying on a business, the reward for which is the agistment fee. This is more likely if the level of the agistment fee depended on the effective management, maintenance and care of the animals. The Trust providing the property for agistment does not constitute the carrying on of a business. The Trust did not undertake the maintenance and care of the animals agisted and the agistment fees were in the nature of rent. The property was not used or held ready for use in the course of carrying on a business by the Trust, the Trusts' affiliate, or another entity that is connected with the Trust. The property does not meet the active asset test in section 152-40, meaning the basic condition in subsection 152-10(1)(d) is not satisfied. The Trust used the property mainly to derive rent and does not meet the active asset test. The Trust cannot access any of the small business CGT concessions in Division 152. | Detailed Reasoning - Question 4: Assuming the Trust is eligible for the small business CGT concessions under Division 152, can x claim any of the CGT concessions? | Summary: The Trust is not eligible to claim any of the small business CGT concessions under Division 152 and neither is x. | Detailed Reasoning - Detailed Reasoning: The Trust and x are not eligible for any of the small business CGT concessions under Division 152.

Does IVA apply to this private ruling?: Part IVA of the Income Tax Assessment Act 1936 contains anti-avoidance rules that can apply in certain circumstances where you or another taxpayer obtains a tax benefit, imputation benefit or diverted profits tax benefit in connection with an arrangement. | If Part IVA applies, the tax benefit or imputation benefit can be cancelled (for example, by disallowing a deduction that was otherwise allowable) or you or another taxpayer could be liable to the diverted profits tax. | We have not fully considered the application of Part IVA to the arrangement you asked us to rule on, or to an associated or wider arrangement of which that arrangement is part. | If you want us to rule on whether Part IVA applies, we will need to obtain and consider all the facts about the arrangement which are relevant to determining whether Part IVA may apply. For more information on Part IVA, go to our website ato.gov.au/gaar. | Question 1: Did CGT event A1 under section 104-10 happen when the Trust sold the property?