Private ruling: CGT - relief
Date of advice: 24 February 2025
Published: 7 April 2025
Ruling period: Year ended 30 June 20XX and 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Will the Applicant satisfy the basic conditions for small business CGT relief under Subdivision 152-A of the Income Tax Assessment Act 1997 in relation to any capital gains to be made upon disposal of the Property? | A1: Yes.

Relevant facts and circumstances: Background 1. Company B as trustee for Unit Trust A owns 100% of shares in the Applicant and Company B. 2. The unitholders of Unit Trust A are: • Individual A; and • Company C as trustee for Family Trust A. 3. The shareholders of Company B (i.e. the trustee of Unit Trust A) are: • Individual A; and • Family Trust A. (These entities are collectively described as the XYZ Group). 4. Individual A and Individual B are directors of Company B, the Applicant and Company A. Relationship between the parties 5. Individual A and Individual B are unrelated parties. 6. Individual B and their spouse own the shares in and are the directors of Company C (i.e the trustee of Family Trust A). 7. Family Trust A also owns shares in Company D. Company D has no other connections with any of the other entities in the XYZ Group. 8. There are no other connections or affiliations for the purposes of Division 152 of the ITAA 1997. Purchase of Property 1 ('Property') 9. The Applicant purchased the Property in 20WW. 10. The Property had a XXXX, which was originally built in XXXX, situated on it. 11. The purchase of the Property was funded from contributions by the equity holders as well as external bank finance. 12. At the time the Property was purchased by the Applicant, the XXXX operations and the building was badly run down. However, the XXXX had heritage and name recognition, being one of the oldest XXXX in State A. 13. The building and the operations required significant investment in the form of new management and staff, a new business plan, extensive reconfiguration and refurbishment of the building. 14. Not long after the purchase of the Property, the XXXX operations were closed for several months to allow for the capital works and to facilitate a change in the type of clientele. The intention was to relaunch of the XXXX to attract a new clientele to improve the profitability of the operations. Operations up to XXXX 15. The XXXX operations were conducted by Company A from the time the Applicant acquired the Property (other than the time it was closed for refurbishment). 16. Improvements were made to the Property, and in the management and operation of the business. 17. Company A paid rent to the Applicant under the terms of a written lease. The term of the lease had expired, at which time Company A continued to occupy the Property under a monthly tenancy on the same terms. 18. In early 2020, the COVID-19 pandemic (COVID) disrupted business operations. 19. At this point the loan facilities with the external financier were around $XX and subject to annual renewal, which represented a significant financial risk to the equity holders. 20. The Applicant waived 100% of the rent which was to be paid by Company for a period of time. The waiver was to allow Company A to survive the effects of COVID. The full rental was to be reinstated. 21. Following COVID, a decision was made to appoint a new general manager to reboot the business and realise its full potential. 22. During the first quarter of 20AA, Individual A was on site regularly with the new general manager to assist with the reboot of the business. 23. Business operations improved as a result of the general manager and Individual A's efforts. 24. Prior to COVID, Individual A and Individual B received around $XX each in director fees per year. This was suspended during COVID in order to reduce costs of the business. 25. In XXX 20AA, an agreement was made to recommence payment of the directors' fees. 26. On XX XXX 20AA there was a fire at the XXXX which resulted in a total loss of the building, other than the heritage facade and ground level sandstone walls. Circumstance following the XXXX fire 27. The site was immediately designated as an emergency site the city council. 28. Individual A spent the following months in crisis management and response, engaged with external parities and had meeting with the general manager and staff. 29. The emergency response on the site was complicated by the following factors: • The street facing facade remained. It became apparent after the fire that at some point it had received heritage designation, which meant that it required emergency pinning and engineering onto the street to make it safe. The engineered pinning later needed to be removed from the street and replicated inside the site, a process that was only recently finalised in terms of further engineering works and certification. • The two and three story adjoined double brick building required demolition and removal. This took a substantial period of time as there was a large amount of debris due the size of the building and that it was a double brick building. Removal of the debris was also difficult due to its location in the CBD, as well as managing the removal of the debris with the facade in place with only limited access to the street; and • The site was declared an asbestos risk, significantly complicating the cost, speed and logistics of demolition, removal and disposal of waste. 30. Individual A took on the responsibility, supported by the general manager, to attend to the insurance, the rebuild project, financial control, creditors, staff redundancies and welfare, the Council, public relations and the external financier. 31. An investigation was undertaken by the State A fire service which required Individual A and the general manger to meet with and work with the relevant authorities for a number of months. They were also required to manage and respond to an independent investigation undertaken by the insurance underwriter, as well as a lawsuit instigated (but later withdrawn) by a neighbouring business. 32. Individual A took sole responsibility for all decision-making, communications, risk management and insured party responses and negotiations with the insurance company from the time of the fire until the claim was settled. 33. Following the fire, the general manager and their spouse were the only employees who were retained. As the general manager had been instrumental in the success of the XXXX operations before the fire, they continued to be employed as it was critical to the relaunch of the business to have an experienced manager. Therefore, the XYZ Group wanted to retain the general manager as it was difficult to attract such talent. The general manager and their spouse's roles were to assist with onsite management, the insurance process, the plan to rebuild of the XXXX and planning for the relaunch of the XXXX operations. 34. The insurance process involved: • acceptance of the claim • emergency site response, demolition and making the site safe • business interruption claims to maintain solvency and pay out creditors and ongoing business and holding costs; and • expenditure on architects and other advisors and contractors as part of the steps to rebuild the XXXX. 35. The weekly directors' fees were maintained up until XXX 20BB and were covered by business interruption insurance cover. Other than the directors' fees, the entirety of the insurance proceeds were spent on the emergency and site response, the two employees, servicing the bank loan, paying for ongoing business holding costs and engaging consultants. 36. Through the second half of the 20AA and all of the 20BB, there were multiple designs and extensive advice from the architects, the project manager and quantity surveyors who worked closely with the Council in relation to the rebuilding of the XXXX. The Council had provided consent to proceed with the rebuilding of the XXXX, which largely replicated a modern version of the prior building (ground floor XXXX with one floor of XXXX). 37. XYZ Group had also applied for and received approval for a $XX million state government loan under a state government scheme. 38. However, the costs of construction and to relaunch the operations continued to inflate, with a final estimate of approximately $XX million in late 20BB. The insurance cover available was subject to a cap of $XX million (of which a sizable amount had already been claimed to cover site and business interruption costs and the costs to date in relation to the rebuild project). 39. The rolling renewals on the external finance facility had remained conditional on XYZ Group demonstrating to the external financier that there was a viable pathway forward to fund the rebuild. 40. During this time, monthly interest and bank costs in relation to the external credit facility were still required to be serviced. 41. In late 20BB, the external financier reviewed and declined a request for additional support in terms of approval for a larger loan to help fund the rebuild. 42. It became evident to Individual A and Individual B that the amount of the loan required to rebuild was not supportable. There was also the risk around attracting and engaging a quality construction firm and particularly whether there would be additional costs over and above the estimates to the build. 43. In early 20CC, the decision was made that the rebuild could not proceed and that a lump sum settlement should be negotiated with the insurance company. 44. This involved settlement for a sum significantly below the insurance cap available to rebuild, but it was sufficient to repay the external finance facility and leave surplus funds of approximately $XXX. 45. The Applicant continued charging Company A rent after the fire. This continued for the period until XX XXX 20CC. However, the rent, although charged was not paid by Company A due to cashflow issues. A decision was made in XXX 20CC for the Applicant to reverse the rent which was charged to Company A. This was due to the decision not to proceed with the rebuilding of the XXXX, and to wind up the Applicant (meaning that Company A would not be in the position to generate revenue to repay the rent). Insurance proceeds 46. The insurance proceeds in relation to the claim totalled $XX. The proceed were received in the 20BB and 20CC income year. 47. Following the insurance settlement and repayment of external finance facility: • The general manager and their spouse continued to be employed until XX XXX 20CC. Following the insurance settlement, they were given notice and continued to oversee the site management; and • The Applicant continued to incur expenditure in relation to the land as well as site management costs, including further engineering works and recertification of the facade as well as a new site perimeter safety works in 20DD. 48. After the decision was made to abandon the rebuilding of the XXXX, Individual A and Individual B began exploring options for the sale of the Property. 49. The Applicant has engaged advisors to provide the equity holders with options of how to realise the maximum the value of the Property. 50. Over the past 12 months it has become apparent that Council planning and building regulations are undergoing major changes, with significant implications for the potential highest and best use of the site. 51. It is expected that the Property will be marketed for sale early in the 20XX calendar year, and that a contract will be signed in the 20XX income year (and therefore the Applicant will have a CGT event in the 20XX income year). However, it is possible that the contract may not be signed until the 20YY income year (in which case the Applicant will have a CGT event in the 20YY income year). Connected entities and turnover 52. The following entities are connected entities for the purposes of Division 152 of the ITAA 1997, with reference to operation of Subdivision 328-C of the ITAA 1997: • The Applicant • Company A • Unit Trust A • Family Trust A • Individual A, and • Company D 53. Family Trust A and Individual A are not carrying on business. 54. The Applicant provided details regarding the revenue received for each the above entities during the 20AA to 20DD income years. 55. The aggregated turnover for the entities listed above in 20CC was less than $2 million. 56. The net market value of the assets of the XYZ Group exceeds $6 million.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 115 | Income Tax Assessment Act 1997 section 115-10 | Income Tax Assessment Act 1997 section 115-105 | Income Tax Assessment Act 1997 section 115-115 | Income Tax Assessment Act 1997 Division 152 | Income Tax Assessment Act 1997 Subdivision 152-A | Income Tax Assessment Act 1997 section 152-10 | Income Tax Assessment Act 1997 subsection 152-10(1) | Income Tax Assessment Act 1997 paragraph 152-10(1)(a) | Income Tax Assessment Act 1997 paragraph 152-10(1)(b) | Income Tax Assessment Act 1997 subparagraph 152-10(1)(c)(iv) | Income Tax Assessment Act 1997 paragraph 152-10(1)(d) | Income Tax Assessment Act 1997 subsection 152-10(1AA) | Income Tax Assessment Act 1997 subsection 152-10(1A) | Income Tax Assessment Act 1997 section 328-125 | Income Tax Assessment Act 1997 paragraph 328-125(1)(a) | Income Tax Assessment Act 1997 subsection 328-125(2)

Reasons for decision: Summary: The Applicant will satisfy the basic conditions for the CGT small business concessions in section 152-10 in relation to the disposal of the Property. | Detailed Reasoning - Basic conditions in Subdivision 152-A of the ITAA 1997: 1. An entity may choose to use the small business relief provisions in Division 152 to reduce or disregard a capital gain they make from the sale of a CGT asset if the entity can satisfy the basic conditions set out in Subdivision 152-A. 2. The basic conditions for relief are set out in subsection 152-10(1) as follows: (a) a *CGT event happens in relation to a CGT asset of yours in an income year; Note: This condition does not apply in the case of CGT event D1: see section 152-12. (b) the event would (apart from this Division) 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 (see section 152-15); (iii) you are a partner in a partnership that is a *CGT small business entity for the income year and the CGT asset is an interest in an asset of the partnership; (iv) the conditions mentioned in subsection (1A) or (1B) are satisfied in relation to the CGT asset in the income year; (d) the CGT asset satisfies the active asset test (see section 152-35). Note: This condition does not apply in the case of CGT event D1: see section 152-12. | Detailed Reasoning - The first and second basic conditions - paragraphs 152-10(1)(a) and (b): 3. CGT event A1 happens if you dispose of a CGT asset. [1] You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. [2] The time of the event is when you enter into the contract for disposal, or if there is no contract when the change of ownership occurs. [3] 4. When the Applicant dispose of the Property which is a CGT asset, in either the 20XX or the 20YY income year, it will trigger CGT event A1. Where this results in a capital gain, the first 2 basic conditions in paragraphs 152-10(1)(a) and (b) will be met. | Detailed Reasoning - The third basic condition - paragraph 152-10(1)(c): 5. Of the 2 basic conditions remaining, the condition in paragraph 152-10(1)(c) is that at least one of the requirements in subparagraphs 152-10(1)(c)(i) to 152-10(1)(c)(iv) applies. 6. One of the requirements is that you are a CGT small business entity for the income year. 7. Pursuant to subsection 152-10(1AA): You are a CGT small business entity for an income year if: (a) you are a *small business entity for the income year; and (b) you would be a small business entity for the income year if each reference in section 328-110 to $10 million were a reference to $2 million. Note: For the purposes of subsection (1A) or (1B), in determining whether an entity would be a small business entity, see also sections 152-48 and 152-78. 8. As defined in section 995-1, a small business entity has the meaning given in Subdivision 328-C. 9. Broadly, section 328-110 requires that to qualify as a small business entity, the entity must: • be carrying on a business; and • satisfy any 1 of 3 tests based on turnover: - the entity carried on a business in the income year (the previous year) before the current year and the entity's *aggregated turnover for the previous year was less than $2 million* (subparagraph 328-110(1)(b)(i) & paragraph 152-10(1AA)); - the entity's aggregated turnover for the current year is likely to be less than $2 million* provided the turnover when the business was carried on in both of the 2 previous years was not $2 million* or more (subparagraph 328-110(1)(b)(ii); subsection 328-110(3) & paragraph 152-10(1AA)); or - the aggregated turnover of the entity for the current year (worked out as at the end of that year) is less than $2 million* (subsection 328-110(4) & (paragraph 152-10(1AA)). 10. Additionally, there is a special provision under subsection 328-110(5) that allows an entity to work out whether it is a small business entity in the CGT event year when the entity is winding up a business it previously carried on. The entity will be taken to be still carrying on the business if: (i) it is winding up a business it previously carried on; and (ii) it was a small business entity in the income year the entity ceased business. | Detailed Reasoning - Carrying on a business: 11. Taxation Ruling TR 2019/1 Income tax: when does a company carry on a business? (TR 2019/1) sets out the Commissioner's view on when a company is carrying on a business, in the general sense, within the meaning of section 328-110. 12. Relevantly, TR 2019/1 explains that: Companies are typically formed for the purpose of carrying on a business. Where a company aims to make and has a prospect of profit, it is presumed that it intends to, and does in fact, carry on a business. The profit-making activities of a company, and those activities it carries on with a profit-making purpose, normally have a commercial character unlike those of an individual or trust. These differences have led the courts to observe that profit-making activities, such as receiving rent from property, do not give rise to a presumption that an individual is carrying on a business, whereas it would if those same activities are undertaken by a company. The degree of repetition or regularity of the company's activities is relevant to determining whether it carries on a business Companies have been held to carry on a business where its ongoing activities are relatively limited and its key activities consist of letting the company's premises for rent on an ongoing basis. The activities of a company that holds assets which generate ongoing returns may be limited to its ongoing management, ensuring it meets ASIC regulatory requirements, decisions (whether express or implicit) to continue holding a relatively static investment portfolio, the receipt and distribution (or retention) of income and other matters of an administrative nature. While relatively limited, this level of activity is sufficient to amount to the carrying on of a business. 13. Taxation Determination TD 2021/2 Income tax: can a company that carries on a business in a general sense as described in Taxation Ruling TR 2019/1 Income tax: when does a company carry on a business? but whose only activity is renting out an investment property claim the capital gains tax small business concessions in relation to that investment property? (TD 2021/2) confirms that such companies would be carrying on a business in the general sense. 14. The Applicant have been carrying on a business in the general sense as described in TR 2019/1. Ceasing to carry on a business 15. TR 2019/1 explains when a change in activities and purpose of the company may amount to the cessation of business: ... 55. Whether a company ceases to carry on any business requires careful consideration of all the facts. A company that becomes dormant and where there is no further activity or no intention to resume its former or any other business, may cease to carry on a business. This is not likely to be the case where its activities are simply limited in nature (see paragraph 39 of this Ruling). It is also not likely if activities are paused, even for a lengthy period, where there is an intention to resume them. As with starting a business, care needs to be taken to distinguish situations where the company has ceased a particular business, from the situation where the company has ceased carrying on any business. For example, a company may cease trading operations permanently but retain some investments. For this reason, it may still be carrying on a business in the general sense. 56. Where a company has entered liquidation, the courts consider whether there has been a change in the company's activities, their purpose and nature. If the liquidator is no longer carrying on any of the company's profit-making activities and whose only aim is to realise the company's assets in the most advantageous manner for the purpose of liquidating the company and distributing assets to its creditors and members, it may no longer carry on a business. In contrast, if it continues to trade in the process of winding a business down, it likely still carries on that business. If a company sells the entirety of its former business it ceases to carry on that business from the date it is sold. ... 16. It is considered that you ceased carrying on business in the 20CC income year, in support of this conclusion the following factors were taken into account: a) The Applicant charged rent in relation to the Property until XX XXX 20CC. b) There was still an intention to derive income from the Property regardless of the fact the building had been destroyed and was not available for use. c) There was an intention to rebuild the building so that you could derive rent in relation to the Property. d) It was not until early 20CC that the decision was made that the rebuild would not proceed. e) The aim is to realise the value of the assets in winding up the business. 17. As the Applicant ceased carrying on business in the 20CC income year, we have to consider if the Applicant were a small business entity in that income year. As a result, the aggregated turnover for the 20CC income year will need to be determined. Aggregated turnover 18. Section 328-115 gives the meaning of 'aggregated turnover.' Broadly, an entity's aggregated turnover for an income year is the sum of the annual turnovers of itself, its connected entities, and its affiliates, excluding dealings with or between any connected entities or affiliates. 19. 'Annual turnover' is explained in section 328-120. Subsection 328-120(1) says: An entity's annual turnover for an income year is the total *ordinary income that the entity *derives in the income year in the ordinary course of carrying on a *business. 20. Subsections 328-120(2), 328-120(3) and 328-120(4) exclude some items from annual turnover (broadly, GST, retail fuel sales, and non arm's length dealings with associates). Subsection 328-120(5) requires that if an entity does not carry on a business for a whole income year, its annual turnover is worked out using a reasonable estimate of what it would be if it carried on a business for the whole income year. 21. Subject to the exceptions in section 328-115 and 328-120, a receipt will be included in aggregated turnover if it is both: • 'ordinary income', and • derived in the 'ordinary course' of carrying on a business. Ordinary income -general principles 22. Section 995-1 says that 'ordinary income' has the meaning given by section 6-5. Subsection 6-5(1) says assessable income includes income according to ordinary concepts, which is called ordinary income. 23. 'Income according to ordinary concepts' is not defined. However, there is a substantial body of case law addressing whether receipts are ordinary income under section 6-5 or similar predecessor provisions. Taxation Ruling 2006/3: Income tax: government payments to industry to assist entities (including individuals) to continue, commence or cease business at paragraph 85 summarises some general guidelines, taken from this case law. Broadly: • whether receipts are classified as 'income' for a business taxpayer depend on the circumstances of the receipt and the nature of the taxpayer's business • receipts are not income if they are characterised as 'capital' - such as payments for realising capital assets or part of the business' profit earning structure • receipts are likely to be income if they are received periodically, regularly, or on a recurring basis, or are consideration for the performance of services • receipts from isolated transactions, entered into with the intention to profit, may be income in some circumstances. [4] 24. An amount paid to compensate for a loss generally acquires the character of that for which it is substituted ( Federal Commissioner of Taxation v. Dixon (1952) 86 CLR 540; (1952) 5 AITR 443; 10 ATD 82). Compensation payments which substitute income have been held by the courts to be income under ordinary concepts ( Federal Commissioner of Taxation v. Inkster (1989) 24 FCR 53; (1989) 20 ATR 1516; 89 ATC 5142, Tinkler v. FC of T (1979) 10 ATR 411; 79 ATC 4641, and Case Y47 (1991) 22 ATR 3422; 91 ATC 433). 25. On the other hand, if the compensation is paid for the loss of a capital asset then it will be regarded as a capital receipt and not ordinary income. 26. Therefore, the insurance proceeds for the loss or destruction of the Property were not ordinary income in the ordinary course of carrying on business. 27. As outlined in the facts, several entities are connected entities for the purposes of Division 152, therefore, their turnovers will need to be included: 28. As per the facts provided, the aggregated turnover for the Applicant was less than $2 million. Application of subsection 328-110(5) 29. Pursuant to subsection 328-110(5) an entity is a small business entity if the entity is winding up a business it formerly carried on and it was a CGT small business entity in the income year that it stopped carrying on the business. 30. As such, the Applicant will be considered a small business entity, including at the time the Applicant commence winding up its leasing business to the time when the Property is sold consistent with the aim of disposing of the Property in winding down of the leasing business on the basis that a business previously carried on was being wound up and when that business stopped the Applicant was a small business entity. 31. Therefore, the Applicant will be a CGT small business entity for the relevant year in which it dispose of the Property. | Detailed Reasoning - Fourth basic condition - paragraph 152-10(1)(d): 32. The final basic condition is for the CGT asset to satisfy the active asset test in section 152-35. 33. For the disposal of your Property to qualify for the CGT small business concessions, your interest, must satisfy the active asset test. 34. Under subsection 152-35(1), a CGT asset will satisfy 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 test period, 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 7½ years during the test period. 35. Subsection 152-35(2) provides that the relevant period begins when you acquired the asset and ends at the earlier of the CGT event or the cessation of the business. 36. The term 'active asset' is defined at section 152-40. Subsection 152-40(1) provides that a CGT asset is an active asset at a given time if, at that time, you own it and: • it is used (or held ready for use) in the course of carrying on a business by you, your affiliate or an entity connected with you (paragraph 152-40(1)(a)); or • it is an intangible asset that is inherently connected with a business that is carried on by you, your affiliate, or an entity connected with you (paragraph 152-40(1)(b)). 37. The combined effect of sections 152-35 and 152-40 is that the asset will meet the active asset test if the asset was used, or held ready for use, in the course of carrying on a business by you, a connected entity or affiliate for at least half of the time period it was owned. This is subject to any exceptions in subsection 152-40(4). 38. Relevantly, paragraph 152-40(4)(e) excludes, among other things, assets whose main use is to derive rent. Such assets are excluded even if they are used in the course of carrying on a business. TD 2021/2 confirms that while a company may be considered to be carrying on a business under TR 2019/1, where its investment property is used to derive rent, the question of whether the investment property is an active asset under section 152-40 and satisfies the active asset test in section 152-35 is a separate consideration for the purposes of the CGT small business concessions in Division 152. 39. As the Applicant have not used the Property directly in a business of its own, it need to rely on the business use of your asset by connected entities. 40. Under subsection 328-125(1), an entity is connected with another entity if: • either entity controls the other entity, or • both entities are controlled by the same third entity in a manner described in the section. 41. Section 328-125 sets out the various ways an entity is taken to control another entity. Subsection 328-125(2) sets out the direct control of an entity other than a discretionary trust: • except if the other entity is a discretionary trust, Entity A controls Entity B if Entity A, its affiliates, or Entity A together with its affiliates own, or have the right to acquire the ownership of, interests in Entity B that carry between them the right to receive at least 40% (the control percentage) of any income or capital distribution by Entity B (general control test) pursuant to paragraph 328-125(2)(a); or • Entity A also controls Entity B that is a company if Entity A, its affiliates, or Entity A together with its affiliates own, or have the right to acquire the ownership of, equity interests in the company that carry between them the right to exercise, or control the exercise of, at least 40% of the voting power in the company (voting control test) pursuant to paragraph 328-125(2)(b). 42. Unit Trust A holds 100% shares in the Applicant and Company A which gives it the right to all income, capital and voting rights. Therefore, Unit Trust A controls both the Applicant and Company A. As a result, the Applicant and Company A are connected entities. 43. Subsection 152-40(4A) says, in determining the main use of an asset: disregard any personal use or enjoyment of the asset by you and treat any use by your affiliate, or an entity that is connected with you, as your use. 44. The Applicant have owned the Property for more than 15 years as the Property was purchased on XX XXX 20ZZ. It is necessary to establish if the Property will be an active asset for a total of at least 7.5 years during the test period. 45. The Property will satisfy the active asset test because of the following: • Company A is connected with the Applicant. • Company A, the Applicant's connected entity, used the Property to carry on its business for a period of more than 7.5 years; and • the Property was never used to derive rent from an entity outside the XYZ Group. | Detailed Reasoning - Conclusion: The Applicant will satisfy the basic conditions for the CGT small business concessions in section 152-10 in respect of the disposal of the Property. [1] Subsection 104-10(1). [2] Subsection 104-10(2). [3] Subsection 104-10(3). [4] Taxation Ruling 92/3: Income tax: whether profits on isolated transactions are income ('TR 92/3') discusses the circumstances in which isolated transactions may be income according to ordinary concepts.