Private ruling: Small business concessions - 15 year exemption - in connection with retirement.
Date of advice: 24 September 2018
Published: November 2018
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Did the capital gains tax (CGT) event as a result of the sale of the property happen in connection with your retirement in accordance with paragraph 152-110(1)(d)(i) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. Based on the information provided we accept that the sale happened in connection with your retirement as you have significantly reduced your hours worked and substantially reduced your role in the farming activity. Further issues for you to consider This ruling has not fully considered your eligibility for the Small Business 15-year Exemption; it has only addressed the condition under paragraph 152-105(1)(d)(i) of the ITAA 1997. You should ensure that you satisfy the basic conditions and the other relevant conditions for exemption. More information on small business CGT concessions is available on our website ato.gov.au.

Relevant facts and circumstances: You purchased property A and owned it for more than 15 years ago. You were the sole owner of property A. A primary production business was operated by a company on property A. The shareholders of the company include you and your spouse. You and your spouse oversaw the operation of the primary production business for the company. You and your spouse resided at property A. You and your spouse are both over 55 years of age. You and your spouse were working a large number of hours a week for the company. The company engaged a family member to work on the property so you could reduce your working hours at the property. You and your spouse purchased a retirement property. You sold property A. You made a net capital gain on the sale of property A. Prior to the sale of property A you and your spouse were seeking to retire by winding up the company’s operations before moving to the retirement property. You and your spouse reduced your working hours significantly before the sale of Property A. The family member expressed an interest in farming at the time of the sale of property A. To facilitate the family member’s interest in farming, the family’s trust purchased property B. You are the trustee of the family trust. The company operates a primary production business at property B. The family member undertakes the day to day farming activities on the farm and works a large number of hours a week at property B. The family member resides at property B. You work a small number of hours a week providing managerial support to assist the family member in operating the primary production business at property B. You and your spouse moved into the retirement property shortly after the sale of property A. The retirement property is located a substantial distance from property B. You satisfied the basic conditions under Subdivision 152-A of the ITAA 1997.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 152-A | Income Tax Assessment Act 1997 section 152-105 | Income Tax Assessment Act 1997 paragraph 152-105(1)(d)(i)