Private ruling: CGT - small business concessions - 15yr exemption
Published: May 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to the small business 15 year exemption? | A1: No

Relevant facts and circumstances: The property was purchased in 199X for $XX. The property was purchased by you and your spouse as joint tenants. You are under 55 years of age. The property has been actively farmed since 199X. The turnover of the farm is less than $2 million per annum. The total assets of the enterprise are valued at less than $6 million. You would like to transfer your share of the property to your child. The current market value of the property is $Y million.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 152-10 | Income Tax Assessment Act 1997 Section 152-105

Reasons for decision: Detailed Reasoning - Detailed reasoning: To qualify for the small business capital gains tax (CGT) concessions, you must satisfy several conditions that are common to all the concessions. These are called the 'basic conditions'. Each concession also has further requirements that you must satisfy for the concession to apply. The Advanced guide to capital gains tax concessions for small business 2010-11 (NAT 3359) provides a detailed explanation of the conditions for each concession. | Detailed Reasoning - Basic Conditions: In your case, it is accepted that you meet the basic conditions due to the following: · a CGT event will occur when you dispose of the property · the event will result in a gain · you satisfy the maximum net asset value test · the property meets the active asset test as you have held the property for more than 15 years and you used it in your farming business for more than 7.5 years. | Detailed Reasoning - Small business 15 year exemption: To be eligible for the small business 15 year exemption you must satisfy the basic conditions and two further conditions: · you continuously owned the CGT asset for the 15-year period ending just before the CGT event happened; and · you are: o at least 55 years old at that time and the event happened in connection with your retirement From the information supplied, you will be not be over 55 years of age at the time of the disposal of the property. Accordingly, you are not entitled to the small business 15 year exemption. | Detailed Reasoning - Further issues for you to consider: This ruling has not fully considered your eligibility for any of the other small business concessions available under Division 152 of the ITAA. More information is available in the publication Advanced guide to capital gains tax concessions for small business 2011-12 (NAT 3359), which is available on our website www.ato.gov.au.