Private ruling: Small business concessions
Date of advice: 11 December 2025
Published: 9 February 2026
Ruling period: Year ended 30 June 20XX
Date scheme commenced: Year ended 30 June 20XX

Ruling: Q1: Are the requirements of the 15-year exemption, pursuant to subdivision 152-B of the Income Tax Assessment Act 1997 (ITAA 1997) met such that W can disregard any capital gain arising from CGT event A1 happening in relation to the disposal of the property located at ADDRESS? | A1: Yes | Q2: Are the requirements of the 15-year exemption, pursuant to subdivision 152-B of the Income Tax Assessment Act 1997 (ITAA 1997) met such that H can disregard any capital gain arising from CGT event A1 happening in relation to the disposal of the property located at ADDRESS? | A2: Yes | Q3: If the answer to question 1 is yes, is a contribution made by W to W and H's Self Managed Superannuation Fund, made before W is required to lodge their income tax return for the 20YY income year and equal to all or part of their capital proceeds from the CGT event A1 referred to in Question 1, eligible for exclusion from being a non-concessional contribution under the CGT cap in accordance with subsection 292-100(1) of the Income Tax Assessment Act 1997? | A3: Yes | Q4: If the answer to question 2 is yes, is a contribution made by H to W and H's Self Managed Superannuation Fund, made before H is required to lodge his income tax return for the 20YY income year and equal to all or part of his capital proceeds from the CGT event A1 referred to in Question 2, eligible for exclusion from being a non-concessional contribution under the CGT cap in accordance with subsection 292-100(1) of the Income Tax Assessment Act 1997? | A4: Yes

Relevant facts and circumstances: Entities 1. W is over 55 years old and is an Australian resident for tax purposes. 2. H is over 55 years old and is an Australian resident for tax purposes. 3.H and W are married to each other. 4. H and W do not and have not carried on any businesses in their personal capacities or in partnership between 20YY and 20XX. 5. The 'Unit Trust' is a unit trust that has carried on a business since DDMMYY. 6. Company A is an Australian Private Company and has acted as trustee of the Unit Trust since its formation. W is the sole director of Company A. 7. The shares in Company A are owned by Company B as trustee for the 'Family Trust'. 8. 100% of the units in the Unit Trust are held by the Family Trust. 9. The Family Trust is an Australian discretionary trust. W and H are both beneficiaries of the Family Trust. 10. In the income year ending 30 June 20XY W received 100% of the distributions of income of the Family Trust. Property 11. H and W purchased a property located at ADDRESS (The Property) in MMYY as joint tenants for approximately AUD $X. 12. The Property was originally purchased as H and W's principal place of residence. 13. Since MMYY the Property has been used as a business premises for the business carried on by the Unit Trust. 14. A contract of sale was entered into on DDMMYY to sell the Property to an unrelated third party for AUD $Y. 15. The capital proceeds from the sale of The Property were more than The Property's cost base. Turnover 16. The annual turnover for the Unit Trust was less than $2million for the year ended 30 June 20XX and the year ended 30 June 20YY. 17. There are no other 'affiliates' of the Unit Trust or entities that considered to be 'connected entities' with the Unit Trust for the purposes of subsection 328-115(2) of the Income Tax Assessment Act 1997 carrying on business activities during the income year ended 30 June 20XX and 30 June 20YY. H and W's work and retirement 18. Immediately prior to the sale of The Property W was the Managing Director of the business operating from The Property and worked, on average, more than 40 hours per week. 19. Since the sale of The Property W has fully retired from work and intends to stay retired. 20. H was previously employed by an unrelated business and worked full time in this role, more than 40 hours per week, until approximately 1 year prior to the sale of The Property. 21. In MMXX, H left his full-time employment. H's intention was to retire from the workforce and spend more time with family, including grandchildren. 22. Since the cessation of his employment H provides consulting services on an ad hoc basis if required for a few hours per week. Superannuation 23. H and W are members of a Self-Managed Superannuation Fund (SMSF). 24. The SMSF is a 'complying superannuation plan' in accordance with the definition provided in section 995-1 of the Income Tax Assessment Act 1997. 25. H and W intend to make a contribution to their SMSF equal to all or part of the capital proceeds from the disposal of The Property and which is no greater than their 'CGT cap amount'. 26. H and W have not previously made contributions towards their 'CGT cap amount'. 27. H and W will make the contribution to their SMSF on or before the date they are required to lodge their income tax returns for the income year ending 30 June 20YY. 28. The contribution that H and W will make will be made in accordance with the requirements of section 292-100(9) of the Income Tax Assessment Act 1997. 29. The deed and administrative system of the SMSF can accept and record the contribution type to be contributed by H and W.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 102-5(1) | Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 Division 152 | Income Tax Assessment Act 1997 section 152-10 | 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 152-47 | Income Tax Assessment Act 1997 section 152-105 | Income Tax Assessment Act 1997 subsection 292-100(1) | Income Tax Assessment Act 1997 section 292-90 | Income Tax Assessment Act 1997 section 292-105 | Income Tax Assessment Act 1997 section 292-100 | Income Tax Assessment Act 1997 section 328-110 | Income Tax Assessment Act 1997 section 328-115 | Income Tax Assessment Act 1997 section 328-120 | Income Tax Assessment Act 1997 section 328-125 | Income Tax Assessment Act 1997 section 328-130 | Income Tax Assessment Act 1997 section 960-100

Reasons for decision: Detailed Reasoning - Issue 1: All legislative references are references to the Income Tax Assessment Act 1997 unless otherwise stated | Summary: W satisfies the small business basic conditions for relief contained in Subdivision 152-A and the specific conditions contained in section 152 -105 and as such, the requirements of the 15-year exemption, pursuant to subdivision 152-B are met. This means that W can disregard any capital gain arising from CGT event A1 happening in relation to the disposal of the property located at ADDRESS. | Detailed Reasoning - Small business capital gains tax concessions: To assist small businesses, Division 152 sets out four small business concessions which allow eligible taxpayers to disregard, reduce or defer certain capital gains tax obligations. To be eligible to apply the Division 152 concessions, the basic conditions for relief set out in Subdivision 152-A must be satisfied. Some of the concessions then have additional, specific conditions that must be satisfied. A capital gain that qualifies for the 15-year exemption in accordance with Subdivision 152-B is disregarded entirely and is not taken into account under the method statement in subsection 102-5(1). The other concessions are activated by step 4 of the method statement. | Detailed Reasoning - Basic conditions for relief: Subdivision 152-A sets out the basic conditions for relief that must be satisfied for an entity to be eligible to reduce its capital gains using the small business concessions as follows: | Detailed Reasoning - 152-10(1): A *capital gain (except a capital gain from *CGT event K7) you make may be reduced or disregarded under this Division if the following basic conditions are satisfied for the gain: (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 value asset 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 satisfied the active asset test (see section 152-12). Note: This condition does not apply in the case of CGT event D1: see section 152-12. That is, a taxpayer will satisfy the basic conditions for relief where: • a CGT event happens in relation to a CGT asset of the taxpayer in an income year and the CGT event would (if not for Division 152) result in a gain, and • one of the conditions set out in paragraph 152-10(1)(c) applies, and • the CGT asset satisfies the active asset test. CGT event A1 resulting in a gain In accordance with section 108-5, The Property is a CGT asset. Where two or more individual own a CGT asset jointly, CGT applies to each individual's interest in the asset. A capital gain or capital loss is made if a CGT event happens to a CGT asset (section 102-20 ITAA 1997), with CGT event A1 occurring when a taxpayer disposes of their ownership interest in a CGT asset (section 104-10 ITAA 1997). Thus, CGT event A1 will occur in relation to W's interest in The Property when H and W dispose of their interest in The Property. A taxpayer makes a capital gain if the capital proceeds from the disposal are more than the asset's cost base (subsection 104-10(4)). A capital gain (or capital loss) is made at the time of the event, and where there is a contract for the disposal, the time of the event is when the taxpayer enters into the contract for the disposal or (subsection 104-10(3)). As the capital proceeds from the disposal are more than The Property's cost base if not for Division 152, the sale of The Property would have resulted in a capital gain. Therefore, the basic conditions set out in subsection 152-10(1) will be met if at least one of the conditions in paragraph 152-10(1)(c) applies and if the CGT asset satisfies the active asset test. Paragraph 152-10(1)(c) As discussed above, the basic conditions require that for a capital gain to be reduced or disregarded under Division 152 at least one of the conditions set out in paragraph 152-10(1)(c) must apply. Subparagraph 152-10(1)(c)(iv) will apply where the conditions mentioned in subsection 152-10(1A) or 152-10(1B) are satisfied in relation to the CGT event in the income year. As H and W own the CGT asset (The Property) and allow it to be used by the business operated by the Unit Trust, subsection 152-10(1A) is most relevant. Subsection 152-10(1A) states: • 152-10(1A) • Passively held assets -affiliates and entities connected with you (1A) The conditions in this subsection are satisfied in relation to the *CGT asset in the income year if: (a) your *affiliate, or an entity that is *connected with you, is a *CGT small business entity for the income year; and (b) you do not carry on a *business in the income year (other than in partnership); and (c) if you carry on a business in partnership -the CGT asset is not an interest in an asset of the partnership; and (d) in any case-the CGT small business entity referred to in paragraph (a) is the entity that, at a time in the income year, carries on the business (as referred to in subparagraph 152-40(1)(a)(ii) or (iii) or paragraph 152-40(1)(b)) in relation to the CGT asset. Note 1: The meaning of connected with is affected by section 152-78. W was not, individually or in a partnership, carrying on a business in the income year and The Property is not an intangible asset. Therefore the conditions in subsection 152-10(1A) will be met in relation to The Property if the Unit Trust is a 'CGT small business entity' and is an entity that is W's 'affiliate' or an entity that is 'connected with' W; and if the Unit Trust is the entity that at any time in the income year carries on the business as referred to in subparagraph 152-40(1)(a)(ii) or (iii) in relation to the CGT asset. Is the Unit Trust an entity that is W's 'affiliate' or an entity that is 'connected with' W? Subsection 960-100(1) defines 'Entity' to include a trust. The term 'affiliate' has the meaning provided by section 328-130 which states: 328-130(1) An individual or a company is an affiliate of yours if the individual or company acts, or could reasonably be expected to act, in accordance with your directions or wishes, or in concert with you, in relation to the affairs of the *business of the individual or company. 328-130(2) However, an individual or a company is not your affiliate merely because of the nature of the business relationship you and the individual or company share. Note: For small business relief purposes, a spouse or a child under 18 years may also be an affiliate under section 152-47. Example: A partner in a partnership would not be an affiliate of another partner merely because the first partner acts, or could reasonably be expected to act, in accordance with the directions or wishes of the second partner, or in concert with the second partner, in relation to the affairs of the partnership. Directors of the same company, or the company and a director of that company, would be in a similar position. In accordance with subsection 328-130(1) only an individual or company who is carrying on a business can be an affiliate of another entity. As the Unit Trust is not an individual or company, it cannot be an affiliate of W. Is The Unit Trust an entity that is connected with W? | Detailed Reasoning - Subsection 328-125(1) states:: An entity is connected with another entity if: (a) either controls the other entity in a way described in this section; (b) both entities are controlled in a way described in this section by the same third entity. That is, W will be connected with the Unit Trust if either the Unit Trust or W control the other in a way that is described section 328-125. Control as referred to in subsection 328-125(1) can be direct (subsections 328-152(2) to 328-125(6)) or indirect (subsection 328-125(7) to 328-125(8)). The Unit Trust is a unit trust. Subsection 328-125(2) sets out when an entity directly controls another entity that is not a discretionary trust and states: An entity (the first entity ) controls another entity if the first entity, its *affiliates, or the first entity together with its affiliates: (a) except if the other entity is a discretionary trust - own, or have the right to acquire the ownership of, interests in the other entity that carry between them the right to receive a percentage (the control percentage ) that is at least 40% of: (i) any distribution of income by the other entity; or (ii) if the other entity is a partnership - the net income of the partnership; or (iii) any distribution of capital by the other entity; or (b) if the other entity is a company--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, a percentage (the control percentage ) that is at least 40% of the voting power in the company. 100% of the units in the Unit Trust are held by Company B as trustee for the Family Trust. Accordingly, the Family Trust controls the Unit Trust in accordance with subsection 328-125(1). Subsections 328-125(7) and 328-125(8) set out when an entity indirectly controls another entity for the purposes of an entity being connected with another entity in accordance with subsection 328-125(1). Subsections 328-125(7) to 328-125(8) state: Indirect control of an entity (7) This section applies to an entity (the first entity ) that directly controls another entity (the second entity ) as if the first entity also controlled any other entity that is directly, or indirectly by any other application or applications of this section, controlled by the second entity. (8) However, subsection (7) does not apply if the second entity is an entity of any of the following kinds: (a) a company *shares in which (except shares that carry the right to a fixed rate of * dividend) are listed for quotation in the official list of an * approved stock exchange; (b) a *publicly traded unit trust; (c) a *mutual insurance company; (d) a *mutual affiliate company; (e) a company (other than one covered by paragraph (a)) all the shares in which are owned by one or more of the following: (i) a company covered by paragraph (a); (ii) a publicly traded unit trust; (iii) a mutual insurance company; (iv) a mutual affiliate company. That is, as the Family Trust controls the Unit Trust, and the Unit Trust is not one of the entities listed in subsection 328-125(8), W will be taken to control the Unit Trust in accordance with subsection 328-125(7) if she directly controls the Family Trust. The Family Trust is a discretionary trust. Subsection 328-125(3) to 328-125(5) sets out when an entity is considered to directly control a discretionary trust and states: Direct control of a discretionary trust (3) An entity (the first entity) controls a discretionary trust if a trustee of the trust acts, or could reasonably be expected to act, in accordance with the directions or wishes of the first entity, its * affiliates, or the first entity together with its affiliates. (4) An entity (the first entity) controls a discretionary trust for an income year if, for any of the 4 income years before that year: (a) the trustee of the trust paid to, or applied for the benefit of: (i) the first entity; or (ii) any of the first entity's * affiliates; or (iii) the first entity and any of its affiliates; any of the income or capital of the trust; and (b) the percentage (the control percentage) of the income or capital paid or applied is at least 40% of the total amount of income or capital paid or applied by the trustee for that year. Note: Section 328 - 112 of the Income Tax (Transitional Provisions) Act 1997 affects the operation of this subsection in relation to the 2007 - 08, 2008 - 09, 2009 - 10 and 2010 - 11 income years. (5) An entity does not control a discretionary trust because of subsection (4) if the entity is: (a) an * exempt entity; or (b) a * deductible gift recipient. W is a beneficiary of the Family Trust and in the 20XX income year, W received 100% of the income of the trust. Therefore, W is considered to control the Family Trust in the income year ended 30 June 20YY in accordance with subsection 328-125(4), and in turn, is considered to indirectly control the Unit Trust in accordance with subsection 328-125(7). As W indirectly controls the Unit Trust in accordance with section 328-125, W and the Unit Trust are connected entities in accordance with subsection 328-125(1). Is the Unit Trust a 'CGT small business entity'? 'CGT small business entity' is defined in subsection 152-10(1AA) as follows: 152-10(1AA) You are a CGT small business entity for an income year (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. That is, an entity is a 'CGT small business entity' for an income year if they would meet the definition of a 'small; business entity' if the references to $10 million in that definition were replaced with references to $2million (and considering any additional applicable requirements in sections 152-48 and 152-78). 'Small business entity' has the meaning given by section 328-110 which states: 328-110(1) You are a small business entity for an income year (the current year ) if: (a) you carry on a *business in the current year; and (b) one or both of the following applies: (i) you carried on a business in the income year (the previous year ) before the current year and your *aggregated turnover for the previous year was less than $10 million; (ii) your aggregated turnover for the current year is likely to be less than $10 million. ... Therefore, an entity will be a CGT small business entity for the current income year if: • the entity carries on a business in the current year, and • one or both of the following applies: - the entity carries on a business in the previous income year before the current year and the entity's aggregated turnover for the previous year was less than $2 million; - the entity's aggregated turnover for the current year is likely to be less than $2 million. The Unit Trust is carried on a business in the 20YY income year and did so in the previous income year before the current year (that is, in the 20XX income year). Therefore, the Unit Trust will be a CGT small business entity if its aggregated turnover for the 20XX year was less than $2 million and/or it's aggregated turnover for the 20YY year is likely to be less than $2 million. 'Aggregated turnover' is a defined term in the Act and has the meaning given by section 328-115 which states: | Detailed Reasoning - 328-115(1): Your aggregated turnover for an income year is the sum of the relevant annual turnovers (see subsection (2)) excluding any amounts covered by subsection (3). | Detailed Reasoning - Note:: For small business CGT relief purposes, additional entities may be treated as being connected with you or your affiliate under sections 152-48 and 152-78. | Detailed Reasoning - (a) your *annual turnover for the income year; and: (b) the annual turnover for the income year of any entity (a relevant entity ) that is *connected with you at any time during the income year; and (c) the annual turnover for the income year of any entity (a relevant entity ) that is an *affiliate of yours at any time during the income year. | Detailed Reasoning - Your aggregated turnover for an income year does not include the following amounts:: (a) amounts *derived in the income year by you or a relevant entity from dealings between you and the relevant entity while the relevant entity is *connected with you or is your *affiliate; (b) amounts derived in the income year by a relevant entity from dealings between the relevant entity and another relevant entity while each relevant entity is connected with you or is your affiliate; | Detailed Reasoning - (c) amounts derived in the income year by a relevant entity while the relevant entity is not connected with you and is not your affiliate.: That is, an entity's aggregated turnover for an income year is comprised of its own annual turnover, together with the annual turnover of any entity that is 'connected with' it or is an 'affiliate' of it at any time during the income year. 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 (subsection 328-120(1)). It has been confirmed by the applicant that the annual turnover for the Unit Trust was less than $2million for the year ended 30 June 20XX and for the year ended 30 June 20YY and that there are no affiliates or connected entities that are carrying on business activities (and therefore no further annual turnovers that are required to be included in the aggregated turnover calculation for the Unit Trust). Therefore, the Unit Trust is a 'CGT small business entity' for the 20YY income year. CGT asset satisfies the active asset test Paragraph 152-10(1)(d) of the basic conditions requires that in order for a capital gain to be disregarded under Division 152, the CGT asset must satisfy the active asset test. The CGT active asset test is set out in section 152-35 as follows: 152-35(1) A * CGT asset satisfies 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 period specified in subsection (2); 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 7 ½ years during the period specified in subsection (2). 152-35(2) The period: (a) begins when you *acquired the asset; and (b) ends at the earlier of: (i) the *CGT event; and (ii) if the relevant business ceased to be carried on in the 12 months before that time or any longer period that the Commissioner allows - the cessation of the business. The term 'active asset' is defined in subsection 152-40(1) as: 152-40(1) A *CGT asset is an active asset at a time if, at that time: (a) you own the asset (whether the asset is tangible or intangible and it is used, or held ready for use, in the course of carrying on a *business that is carried on (whether alone or in partnership) by: (i) you; or (ii) your *affiliate; or (iii) another entity that is *connected with you; or (b) if the asset is an intangible asset - you own it and it is inherently connected with a business that is carried on (whether alone or in partnership) by you, your affiliate, or another entity that is connected with you. H and W purchased the property in September YYYY. Between July 20AA and July 20YY, the property was used as a business premises for the business carried on by the Unit Trust. As concluded above, the Unit Trust is an entity that is 'connected with' W. Therefore, the active asset test is satisfied in relation to W in accordance with section 152-35. Basic conditions conclusion As all of the conditions contained in paragraphs 152-10(1)(a) to 152-10(1)(d) are satisfied in relation to CGT event A1 happening in relation to The Property, W is eligible to apply the small business concessions to reduce their capital gain (or disregard where additional requirements are met). | Detailed Reasoning - 15-year exemption: Where the basic conditions set out in Subdivision 152-A are met, an entity may be able to disregard a capital gain arising from a CGT asset that it has owned for at least 15 years if certain additional conditions are met. | Detailed Reasoning - (ii) you are permanently incapacitated at the time of the CGT event.: That is W can disregard the whole of the capital gain that arose from CGT event A1 happening in relation to The Property if: • the basic conditions in Subdivision 152-A are satisfied for the gain, and • she continuously owned the CGT asset for the 15 year period ending just before the CGT event, and • either she is 55 or over at the time of the CGT event and the event happens in connection with their retirement; or she is permanently incapacitated at the time of the CGT event. As discussed above W satisfies the basic conditions in Subdivision 152-A for the gain and she continuously owned The Property for the 15-year period ending just before the CGT event. W is over 55 years old and therefore, she will meet the requirements of section 152-105 if the CGT event happened in connected with their retirement or she is permanently incapacitated at the time of the CGT event. | Detailed Reasoning - In connection with retirement: The Explanatory Memorandum to the New Business Tax System (Capital Gains Tax) Bill 1999 (EM 1999) makes the following statement about the requirement to be permanently incapacitated or retiring as one of the conditions for the 15-year exemption: '1.68 One of the requirements of this concession for an individual small business taxpayer is that they must be either permanently incapacitated at the time of the CGT event, or at least 55 years old and using the capital proceeds for their retirement.' The phrase 'in connection with' was considered in Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 ( Pozzolanic ), where the Full Court of the Federal Court stated at 288: The words 'connected with' are capable of describing a spectrum of relationships ranging from the direct and immediate to the tenuous and remote. As Sheppard and Burchett JJ observed in Australian National Railways Commission v Collector of Customs (SA ) [(1985) 69 ALR 367 at 377-378; 8 FCR 264, at 265] the meaning of the word 'connection' is wide and imprecise, one of its common meanings being 'relation between things one of which is bound up with, or involved in, another': Shorter Oxford English Dictionary . 'In connection with' in the context of being connected to the retirement of an individual was considered in Claremont Petroleum NL v Cummings (1992) 110 ALR 239 (Claremont). Wilcox J made the following observations regarding the phrase 'in connection with' in this context: The phrase "in connection with" is one of wide import, as I had occasion to observe in a different context in Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465 at p479-80; 77 ALR 577 at pages 591-2: The words 'in connexion with'...do not necessarily require a causal relationship between the two things: see Commissioner for Superannuation v Miller (1985)8 FCR 153 at 154, 160, 163; 63 ALR 237at 238, 244, 247. They may be used to describe a relationship with a contemplated future event: see Koppen v Commissioner for Community Relations (1986) 11 FCR 360 at 364, Johnson v Johnson [1952] P 47 at 50-1. In the latter case the United Kingdom Court of Appeal applied a decision of the British Columbia Court of Appeal, Re Nanaimo Community Hotel Ltd [1945] 3 DLR 225, in which the question was whether a particular court, which was given 'jurisdiction to hear and determine all questions that may arise in connection with any assessment made under this Act', had jurisdiction to deal with a matter which preceded the issue of an assessment. The trial judge held that it did, that the phrase 'in connection with' covered matters leading up to, or which might lead up to an assessment. He said...: 'One of the very generally accepted meanings of "connection" is "relation between things one of which is bound up with or involved in another"; or, again "having to do with". The words include matters occurring prior to as well as subsequent to or consequent upon so long as they are related to the principal thing. The phrase "having to do with" perhaps gives as good a suggestion of the meaning as could be had.' The ATO had previously issued ATO Interpretative Decision ATO ID 2003/864 Income Tax CGT small business concessions: 15 year exemption - retirement (ATO ID 2003/864) which has since been withdrawn on the basis that the ATO view it contained is reflected in the publication 'Advanced guide to capital gains tax concessions for small business' (Guide). The Guidediscusses that whether a CGT event happens in connection with an individual's retirement depends on the particular circumstances of each case. A CGT event may be 'in connection with your retirement' even if it occurs at some time before or after retirement. It is not necessary for there to be a permanent and everlasting retirement from the workforce, but there needs to at least be a significant reduction in the number of hours the individual works, or a significant change in the nature of their present activities. Immediately prior to the sale of The Property W was the Managing Director of the Unit child care business operating from the property and worked on average more than 40 hours per week. Since the sale of The Property W has fully retired from work and intends to stay retired. The Commissioner accepts that it is reasonable to conclude that CGT event A1 occurring in relation to The Property occurred in connection with W's retirement for the purposes of subsection 152-105(d). Summary When CGT event A1 occurred in relation to The Property, the basic conditions in Subdivision 152-A were met; H and W continuously owned The Property for the 15 year period ending just before the CGT event, W is over the age of 55 and the CGT A1 event that occurred was in connection with their retirement. As such, the Commissioner is satisfied that in these circumstances the requirements of the 15-year exemption, pursuant to subdivision 152-B are met, meaning that W can disregard any capital gain arising from CGT event A1 happening in relation to the disposal of the property located at ADDRESS? | Summary: H satisfies the small business basic conditions for relief contained in Subdivision 152-A and the specific conditions contained in section 152-105 and as such, the requirements of the 15-year exemption, pursuant to subdivision 152-B are met. This means that H can disregard any capital gain arising from CGT event A1 happening in relation to the disposal of the property located at ADDRESS. | Detailed Reasoning - Detailed reasoning: Refer to the reasoning discussed in question 1 above. The same reasoning be applied to conclude in relation to H that the basic conditions set out in subsection 152-10(1) will be met if at least one of the conditions in paragraph 152-10(1)(c) applies. Paragraph 152-10(1)(c) Refer to the discussion of paragraph 152-10(1)(c) above. For the same reasons that applied to W, the conditions in subsection 152-10(1A) will be met in relation to The Property if the Unit Trust (concluded to be a 'CGT small business entity for the income year ended 30 June 20YY is an entity that is H's 'affiliate' or an entity that is 'connected with' H. Is the Unit Trust an entity that is H's 'affiliate' or an entity that is 'connected with' H? As per the discussion at question 1 above, as the Unit Trust is not an individual or company, it cannot be an affiliate of H (subsection 328-130(1)). Is The Unit Trust an entity that is connected with H? H will be connected with the Unit Trust if either the Unit Trust and H control the other in a way that is described section 328-125. The Unit Trust is a unit trust and as concluded above, the Family Trust controls the Unit Trust in accordance with subsection 328-125(1) and like W, H will be taken to control the Unit Trust in accordance with subsection 328-125(7) if he is considered to directly control the Family Trust. As discussed above, the Family Trust is a discretionary trust and subsection 328-125(3) to 328-125(5) sets out when an entity is considered to directly control a discretionary trust. Subsection 328-125(4) provides that an entity will control a discretionary trust if the trustee of the trust paid or applied for the benefit of any of the entity's affiliates, any of the income or capital of the trust and the percentage of income or capital is at least 40% of the total amount of income or capital paid or applied to be paid by the trustee for that year. As discussed above, in the 20XX income year, W received 100% of the income of the trust. Therefore, H will be considered to control the Family Trust for the relevant years if W is his 'affiliate'. Section 125-47 sets out special rules that prescribe that spouses are taken to be affiliates for certain passively held assets. Section 125-47 states: Spouses or children taken to be affiliates for certain passively held CGT assets (1) This section applies if: (a) one entity (the asset owner) owns a *CGT asset (whether the asset is tangible or intangible); and (b) either: (i) the asset is used, or held ready for use, in the course of carrying on a *business in an income year by another entity (the business entity ); or (ii) the asset is inherently connected with a business that is carried on in an income year by another entity (the *business entity ); and (c) the business entity is not (apart from this section) an *affiliate of, or *connected with, the asset owner. Note: The meaning of connected with an entity is affected by section 125-78. (2) For the purposes of this Subdivision, in determining whether the business entity is an *affiliate of, or is * connected with, the asset owner, take the following to be affiliates of an individual: (a) a *spouse of the individual; (b) a *child of the individual, being a child who is under 18 years. (3) If an entity is an *affiliate of, or *connected with, another entity as a result of subsection (2), then the *spouse or *child mentioned in that subsection is, in addition, taken to be an affiliate of the individual for the purposes of this Subdivision, and for the purposes of sections 328-110 to 328-125 to the extent that they relate to this Subdivision. Example: The spouse or child mentioned in subsection (2) is taken to be an affiliate of the individual for the purposes of working out which entities are affiliates of or connected with entities under section 152-48. (4) To avoid doubt, subsection (2) applies: (a) for the purposes of reducing or disregarding, under this Division, any *capital gain from any *CGT asset but (b) only while: (i) a *spouse remains a spouse; or (ii) a *child remains a child who is under 18 years. H and W are spouses in accordance with section 995-1. In accordance with the requirements of subsection 125-47(1), for the purposes of determining whether the Unit Trust is connected with H per section 328-125, H and W are taken to be affiliates of each other. As discussed above, in the income year ended 30 June 20XX W received 100% of the income of the Family Trust and therefore paragraph 328-125(4)(a)(ii) and subsection 328-125(4)(b) are satisfied in relation to H in that year. Therefore, H is considered to directly control the Family Trust in the relevant year (income year ended 30 June 20YY) in accordance with subsection 328-125(4). For the same reasons as discussed above in relation to W, H is therefore considered to indirectly control the Unit Trust in accordance with subsection 328-125(7). As H indirectly controls the Unit Trust in accordance with section 328-125, H and the Unit Trust are connected entities in accordance with subsection 328-125(1). For the same reasons that applied to W in question 1, The Property satisfies the active asset test in relation to H in accordance with section 152-35. Basic conditions conclusion As all of the conditions contained in paragraphs 152-10(1)(a) to 152-10(1)(d) are satisfied in relation to CGT event A1 happening in relation to The Property, H is eligible to apply the small business concessions to reduce his capital gain (or disregard where additional requirements are met). | Detailed Reasoning - 15-year exemption: As discussed above, H satisfies the basic conditions contained in Subdivision 152-A and he and W continuously owned The Property for the 1 5-year period ending just before the CGT event. Like W, H is over 55 years old and will therefore meet the requirements of section 152-105 if the CGT event happened in connection with his retirement (or if he is permanently incapacitated at the time of the CGT event). H was previously employed by The Agency Real Estate Group as the Managing Director and worked full time in this role, more than 40 hours per week until August 20XX. In August 20XX, H left his full time employment. H's intention was to retire from the workforce and spend more time with family including grandchildren. Since the cessation of his employment H provides consulting services on an ad hoc basis if required for a few (4-6) hours per week. The Commissioner accepts that it is reasonable to conclude that CGT event A1 that occurred in relation to The Property occurred in connection with both H's retirement for the purposes of subsection 152-105(d). Summary When CGT event A1 occurred in relation to The Property, the basic conditions in Subdivision 152-A were met; H and W continuously owned The Property for the 15 year period ending just before the CGT event, H is over the age of 55 and the CGT A1 event that occurred was in connection with his retirement. As such, the Commissioner is satisfied that in these circumstances the requirements of the 15-year exemption, pursuant to subdivision 152-B are met, meaning that H can disregard any capital gain arising from CGT event A1 happening in relation to the disposal of the property located at ADDRESS? | Summary: As concluded in question 1 above, the requirements of the 15-year exemption, pursuant to subdivision 152-B are met and W can disregard any capital gain arising from CGT event A1 happening in relation to the disposal of the property located at ADDRESS. Where W makes a contribution to their SMSF equal to all or part of their capital proceeds from the disposal of The Property (not exceeding their 'CGT cap amount') and makes the contribution in accordance with the requirements of section 292-100, the contribution will be eligible for exclusion from being a non-concessional contribution under the CGT cap in accordance with subsection 292-100(1). | Detailed Reasoning - Detailed Reasoning: Section 292-90 sets out what amounts are included and what amounts are excluded from being non-concessional contributions to superannuation. Section 292-90 states: 292-90 Your non - concessional contributions for a financial year (1) The amount of your non-concessional contributions for a *financial year is the sum of: (a) each contribution covered under subsection 2); and (aa) each amount covered under subsection (4); and (b) the amount of your *excess concessional contributions (if any) for the financial year. ... Non - concessional contributions and amounts (2) A contribution is covered under this subsection if: (a) it is made in the *financial year to a *complying superannuation plan in respect of you; and (b) it is not included in the assessable income of the *superannuation provider in relation to the *superannuation plan, or, by way of a *roll-over superannuation benefit, in the assessable income of any *complying superannuation fund or *RSA provider in the circumstances mentioned in subsection 290-170(5) (about successor funds); and (c) it is not any of the following: (i) a Government co - contribution made under the Superannuation (Government Co - contribution for Low Income Earners) Act 2003 ; (ii) a contribution covered under section 292-95 (payments that relate to structured settlements or orders for personal injuries); (iii) a contribution covered under section 292-100 (certain CGT - related payments), to the extent that it does not exceed your * CGT cap amount when it is made; ... Section 292-105 defines what is meant by 'CGT cap amount' as referred to in subparagraph 292-90(2)(c)(i): CGT cap amount (1) Your CGT cap amount at the start of the 2007-2008 *financial year is $1,000,000. Note: For transitional rules about contributions made in the period from 10 May 2006 to 30 June 2007, see section 292-80 of the Income Tax (Transitional Provisions) Act 1997. Reductions and increases (2) If a contribution covered by section 292-100 is made in respect of you at a time, reduce your CGT cap amount just after that time: (a) if the contribution falls short of your * CGT cap amount at that time--by the amount of the contribution; or (b) otherwise--to nil. (3) At the start of each * financial year after the 2007 - 2008 financial year, increase your CGT cap amount by the amount (if any) by which the index amount for that financial year exceeds the index amount for the previous financial year. (4) For the purposes of subsection (3), the index amount for the 2007-2008 *financial year is $1,000,000. The index amount is then indexed annually. Note: Subdivision 960-M shows how to index amounts. However, annual indexation does not necessarily increase the index amount: see section 960- 285. That is, in accordance with subparagraph 292-90(2)(c)(iii), a contribution covered under section 292-100 to the extent that it does not exceed an individuals 'CGT cap amount' as defined in section 295-105 above, is excluded from being a non-concessional contribution in accordance with paragraph 292-90(1)(a). Section 292-100 sets out when a contribution will be covered by section 292-100 (and is therefore excluded from being a non-concessional contribution to the extent that it does not exceed the individuals 'CGT cap amount' and states: Contribution relating to some CGT small business concessions (1) A contribution is covered under this section if: (a) the contribution is made by you to a *complying superannuation plan in respect of you in a *financial year; and (b) the requirement in subsection (2), (4), (7) or (8) is met; and (c) you choose, in accordance with subsection (9), to apply this section to an amount that is all or part of the contribution. (2) The requirement in this subsection is met if: (a) the contribution is equal to all or part of the * capital proceeds from a * CGT event for which you can disregard any * capital gain under section 152-105 (or would be able to do so, assuming that a capital gain arose from the event); and (b) the contribution is made on or before the later of the following days: (i) the day you are required to lodge your *income tax return for the income year in which the CGT event happened; (ii) 30 days after the day you receive the capital proceeds. (3) For the purposes of paragraph (2)(a), ignore the requirement in paragraph 152-105(b) if you are permanently incapacitated at the time of the * CGT event but were not permanently incapacitated at the time the relevant * CGT asset was acquired. (4) The requirement in this subsection is met if: (a) just before a * CGT event, you were a * CGT concession stakeholder of an entity that could, under section 152-110, disregard any * capital gain arising from the CGT event (or would be able to do so, assuming that a capital gain arose from the event); and (b) the entity makes a payment to you before the later of: (i) 2 years after the CGT event; and (ii) if the CGT event happened because the entity * disposed of the relevant * CGT asset--6 months after the latest time a possible * financial benefit becomes or could become due under a * look - through earnout right relating to that CGT asset and the disposal; and (c) the contribution is equal to all or part of your stakeholder's participation percentage (within the meaning of subsection 152-125(2)) of the * capital proceeds from the CGT event (but not exceeding the amount of the payment mentioned in paragraph (b)); and (d) the contribution is made within 30 days after the payment mentioned in paragraph (b). (5) In determining whether the conditions in subsection (2) or (4) are satisfied for a • CGT event in relation to a * pre - CGT asset, treat the asset as a * post - CGT asset. (6) For the purposes of paragraph (4)(a), ignore the requirement in paragraph 152 - 110(1)(b) if a *significant individual was permanently incapacitated at the time of the * CGT event but was not permanently incapacitated when the relevant * CGT asset was acquired. (7) The requirement in this subsection is met if: (a) the contribution is equal to all or part of the * capital gain from a * CGT event that you disregarded under subsection 152 - 305(1); and (b) the contribution is made on or before the later of the following days: (i) the day you are required to lodge your *income tax return for the income year in which the CGT event happened; (ii) 30 days after the day you receive the * capital proceeds from the CGT event. (8) The requirement in this subsection is met if: (a) just before a * CGT event, you were a * CGT concession stakeholder of an entity that could, under subsection 152 - 305(2), disregard all or part of a * capital gain arising from the CGT event; and (b) the entity makes a payment to you that satisfies the conditions in section 152-325; and (c) the contribution is equal to all or part of the capital gain arising from the CGT event (but not exceeding the amount of the payment mentioned in paragraph (b)); and (d) the contribution is made within 30 days after the payment mentioned in paragraph (b). (9) To make a choice for the purposes of paragraph (1)(c), you must: (a) make the choice in the * approved form; and (b) give it to the *superannuation provider in relation to the * complying superannuation plan on or before the time when the contribution is made. As concluded in Question 1 above, the requirements of the 15-year exemption, pursuant to subdivision 152-B are met and W can disregard any capital gain arising from CGT event A1 happening in relation to the disposal of the property located at ADDRESS in accordance with section 152-105. Therefore, a contribution to their SMSF will be covered by section 292-100 if: • The contribution made by W is made to a 'complying superannuation plan' in respect of their in the financial year • The contribution is equal to all of part of the 'capital proceeds' from the CGT event A1 happening in relation to the disposal of The Property • The contribution is made on or before the later of the day W is required to lodge their income tax return for the income year in which the CGT event happened or 30 days after she received the capital proceeds • W makes a choice to apply section 292-100 to an amount that is all or part of the contribution and that choice is made in the 'approved form' and given to the 'superannuation provider' in relation to the 'complying superannuation plan' on or before the time when the contribution is made. H and W are members of a SMSF which is a 'complying superannuation plan' in accordance with the definition provided in section 995-1 . H and W have not previously made contributions under towards their 'CGT cap amount'. H and W intend to make a contribution to their SMSF equal to all or part of the capital proceeds from the disposal of The Property and which is no greater than their 'CGT cap amount' and they will make the contribution on or before the date they are required to lodge their income tax returns for the income year ending 30 June 20YY and in accordance with the requirements of section 292-100(9). A contribution made in this manner will be eligible for exclusion from being a non-concessional contribution under the CGT cap in accordance with subsection 292-100(1). | Summary: As concluded in question 2 above, the requirements of the 15-year exemption, pursuant to subdivision 152-B are met and H can disregard any capital gain arising from CGT event A1 happening in relation to the disposal of the property located at ADDRESS. Where H makes a contribution to his SMSF equal to all or part of his capital proceeds from the disposal of The Property (not exceeding their 'CGT cap amount') and makes the contribution in accordance with the requirements of section 292-100, the contribution will be eligible for exclusion from being a non-concessional contribution under the CGT cap in accordance with subsection 292-100(1). | Detailed Reasoning - Detailed Reasoning: Refer to the reasoning in Question 3 above. The same reasoning can be applied to conclude that a contribution made by H will similarly be eligible for exclusion from being a non-concessional contribution under the CGT cap in accordance with subsection 292-100(1).