Private ruling: CGT - small business concessions
Date of advice: 11 March 2026
Published: 28 April 2026
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Do you qualify for the small business 50% reduction in section 152-205 of the Income Tax Assessment Act 1997 (ITAA 1997) to reduce your share of the capital gain made on the sale the Property? | A1: Yes. You are entitled to the small business 50% active asset reduction under section 152-205 of the ITAA 1997. A capital gain arose on the disposed of the Property, and the basic conditions for the small business CGT concessions are satisfied. The Property was used in carrying on a business and was not mainly used to derive rent. As the Property qualifies as an active asset, the 50% reduction applies automatically to the capital gain. | Q2: Do you meet the conditions to apply the small business retirement exemption in section 152-305 of the ITAA 1997 to disregard all or part of your share of the capital gain made on the sale of the Property? | A2: Yes. The conditions to apply the small business retirement exemption in section 152-305 of the ITAA 1997 are satisfied. As the basic conditions for the small business CGT concessions are met and you are over 55, the exemption can be applied without requiring contribution to a superannuation fund. Accordingly, up to the available lifetime limit of $500,000 may be disregarded. To access the exemption, a written choice specifying the exempt amount must be made before lodging the relevant income tax return.

Relevant facts and circumstances: Person A and Person B are over 55 years of age (together referred to as 'you'). You owned the Property as joint tenants. The Property consists of x bedrooms, x bathrooms. The Property was acquired with a contract date of January 20XX, demolished and then rebuilt. In July 20XX you were granted, approval to use the Property for your business. A business was set up as a partnership and was registered with the ATO in 20XX. The Partnership carried on the business. The business operations commenced in 20XX and continued every year until the property was sold. In October 20XX, you resided in less than 50% of the Property. The remaining percentage was used for your business. Based on an inspection of the Property, the business area of the house represented XX% and the remaining balance was private use. The Property was advertised through relevant business platforms. The activity became profitable in the 20XX financial year. The annual turnover of the business for the full period of operating the business was less than $2 million. The Property was sold under a contract. You have not used any of your $500,000 lifetime retirement exemption limit. You will make a choice in writing to use the small business retirement exemption prior to lodging the relevant income tax return.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 103-25 | 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 152-205 | Income Tax Assessment Act 1997 section 152-210 | Income Tax Assessment Act 1997 section 152-305 | Income Tax Assessment Act 1997 section 152-310 | Income Tax Assessment Act 1997 section 152-315 | Income Tax Assessment Act 1997 section 152-320 | Income Tax Assessment Act 1997 section 328-110