Private ruling: Small business CGT concessions - 15-year exemption
Date of advice: 31 August 2015
Published: August 2015
Ruling period: Income tax year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Will you meet the 15-year period of ownership in order to be able to apply the 15-year exemption on the disposal of the business premises? | A1: Yes

Relevant facts and circumstances: You are a private company with two shares. One individual has continuously owned one of those shares. You are considering selling your business premises on or after a specified date and winding up the business. Once the premises are sold, the individual will retire. That individual is over 55 years of age. The original purchase contract of the premises has been lost. Information from a state government department has confirmed that the information on their computer system shows a certain date as the "execution date" of the contract. Due to the length of time that has passed, they have no physical records of that transaction. You have requested this ruling to confirm that the Commissioner will accept that date as the start of the 15-year period for the application of the 15-year exemption for capital gains tax (CGT) purposes.

Relevant legislative provisions: Subdivision 152-A of the ITAA 1997 | Subdivision 152-B of the ITAA 1997 | Section 152-110 of the ITAA 1997

Reasons for decision: Summary: Providing you do not enter into a contract to sell your business premises prior to the date you have specified, the Commissioner accepts that you will have owned the premises for the 15-year period required in order to apply the 15-year exemption in accordance with section 152-110 of the ITAA 1997. | Detailed Reasoning - Detailed reasoning: As a company, section 152-110 of the ITAA 1997 provides that you may disregard any capital gain arising from a CGT event if the following conditions are satisfied: (a) The basic conditions for small business relief in Subdivision 152-A of the ITAA 1997 are satisfied; (b) The company continuously owned the CGT asset for the 15-year period ending just before the CGT event; (c) The company had a significant individual for a total of at least 15 years during which the company owned the CGT asset; (d) An individual who was a significant individual of the company just before the CGT event was 55 or over at the time, and that the event happened in connection with that individual's retirement. You have advised that you cannot find the original contract for when you purchased the business premises. Records with a state government department show a certain date as the execution date of this contract. For CGT purposes, it is the date of entering into a contract that is relevant, not the date of settlement of a contract. It is unclear from the information you have provided whether the 'date of execution' is the contract or settlement date. However, the Commissioner will accept that you entered into this contract on that date and therefore that the 15 year period commenced from this date. The individual is over 55 years of age. Because this individual has always owned 50% of the shares they have been a significant individual of the company for that time. The sale of the business premises will be done in connection with that individual's retirement. You have indicated a desire to sell the business premises on or after a specified date. Providing you do not enter into a contract of sale prior to that date, the Commissioner accepts that you will meet the 15-year period required. Therefore, you will be able to apply the 15-year exemption if you meet the other conditions within Subdivision 152-A of the ITAA 1997 at the time of the sale of the business premises.