Private ruling: Income tax - capital gains tax - small business CGT concessions
Date of advice: 24 May 2021
Published: August 2021
Ruling period: Year ended 30 June 2020
Date scheme commenced: 1 July 2019

Ruling: Q1: Do you meet the basic conditions for the small business CGT concessions under section 152-10 of the Income Tax Assessment Act 1997 (ITAA 1997) in respect of the disposal of the property? Answer Yes. You satisfy the basic conditions for the following reasons. A CGT event happened in relation to a CGT asset of yours that will result in a gain. You also satisfy the conditions of the active asset test as the property has been used to carry on a business and you satisfy the maximum net asset value test. Further information on the basic conditions can be found by searching 'QC 44192' on ato.gov.au

Relevant facts and circumstances: The property was purchased and was intended to be used for a farming as was stated on the sale contract. In the XXXX your marriage broke down and no farming activity was undertaken. In the following years you undertook repairs and maintenance, purchased depreciable assets which could be used in farming, undertook some activities consistence with a farming operation, you even explored options to allow camping on the farm to generated additional income for the property. However, no income was ever generated from the property and the property was sold. You utilise sustainable farming practices. You have limited farming experience but have significant business experience which is demonstrated by the contracting and outsourcing of labour as and when was required. You set up the business model by accessing specialist experience when required to maintain the property, undertake the harvesting the honey etc. There was a comprehensive farm management plan in place where you anticipated the business would realise a profit within two years. Unforeseen weather conditions eliminated the crop on three occasions as well property theft of major assets, all contributed to an inability to turn it profitable and the eventual sale of the property. You employed two dedicated farm hands to undertake farm work.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 152-10 | Income Tax Assessment Act 1997 section 152-35 | Income Tax Assessment Act 1997 section 152-40


This ruling applies for the following period: