Private ruling: Small business concessions - active asset test
Date of advice: 30 August 2023
Published: 16 October 2023
Ruling period: Year ending 30 June 2022
Date scheme commenced: 2 July 2021

Ruling: Q1: Have Individual A and Individual B carried on business in partnership in relation to Property A and Property B for a sufficient period of time for the properties to satisfy the active asset test in section 152-35 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. On review of the factors outlined in Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production? (TR 97/11), we are satisfied that the Partnership carried on a business in relation to both properties for more than 7 ½ years during their ownership period of more than 15 years. This period of business use by the Partnership sufficient for the active asset test in section 152-35 of the ITAA 1997 to be satisfied for both properties. | Q2: Did Individual A and Individual B satisfy the basic conditions for relief in subsection 152-10(1) of the ITAA 1997 in relation to the sale of Property A and Property B. | A2: Yes. The sale of the properties was a CGT event resulting in a gain for Individual A and Individual B, paragraph 152-10(1)(a) and (b) of the ITAA 1997 were satisfied. Individual A and Individual B satisfied the maximum net asset test in the income year the properties were sold, satisfying paragraph 152-10(1)(c) of the ITAA 1997. Per the answer to question 1, Individual A and Individual B's use of the properties was for a period of time sufficient to satisfy active asset test satisfying paragraph 152-10(1)(d) of the ITAA 1997.

Relevant facts and circumstances: Individual A and Individual B jointly acquired Property A and Property B more than 20 years ago. Individual A and Individual B operated a primary production activity in partnership (the Partnership) for a period of more than 7 ½ years in relation to Property A and Property B.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 152-10(1) | Income Tax Assessment Act 1997 section 152-35