Private ruling: Small business concessions - retirement exemption
Date of advice: 18 December 2019
Published: March 2020
Ruling period: Year ended 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Do you satisfy the basic conditions for the small business concessions in Subdivision 152-A of the Income Tax Assessment Act 1997 (ITAA 1997) for the disposal of your trail book? | A1: Yes. The trail book is a CGT asset and CGT event A1 happened when it was sold. You carried on a business and your aggregated turnover, including your affiliates and connected entities, was under $2million. The trail book was an intangible asset that was inherently connected with your business and satisfies the active asset test. Further information on the basic conditions can be found by searching for 'QC 52266' on ato.gov.au | Q2: Can you disregard the remaining capital gain (after applying the 50% active asset reduction) made on the disposal of your trail book by choosing to apply the small business retirement exemption? | A2: Yes. As you have one shareholder, they are a significant individual and CGT concession stakeholder. The choice will be made in writing and you will pay the amount disregarded under the small business retirement exemption to the CGT concession stakeholder's superannuation account within 7 days of choosing to disregard the gain. Further information about the small business retirement exemption can be found by searching for 'QC 52290' on ato.gov.au

Relevant facts and circumstances: You are a company with a single shareholder. Your shareholder is under 55 years of age. You entered into an agreement with a bank to provide certain services. In return you were entitled to receive commissions from the bank including home loan upfront commissions and trail commissions (trail book). The agreement with the bank has terminated and the trail book was disposed of to the bank. You made a capital gain from the disposal. Your aggregated annual turnover, including affiliates and connected entities, was less than $2million. You will utilise the 50% active asset reduction to reduce the capital gain and will make the choice in writing to apply the small business retirement exemption to disregard the remaining 50% of the gain. The choice will be made in a way that ensures the CGT concession stakeholder's CGT retirement exemption limit is not exceeded. You will pay the amount disregarded under the small business retirement exemption to the CGT concession stakeholder's superannuation account within 7 days of choosing to disregard the gain.

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 | Income Tax Assessment Act 1997 section 152-305 | Income Tax Assessment Act 1997 section 152-325