Private ruling: Income tax - small business concessions - 15 year exemption
Date of advice: 17 February 2021
Published: April 2021
Ruling period: Year ended 30 June 2021
Date scheme commenced: 1 July 2020

Ruling: Q1: Do you satisfy the conditions to apply the capital gains tax (CGT) small business 15-year exemption in section 152-105 of the Income Tax Assessment Act 1997 (ITAA 1997) to the gain made from the sale of properties? | A1: Yes. In your case, we consider that you satisfy the conditions to apply the small business 15-year exemption to the sale of the three properties. You were a small business entity in the income year in which the CGT event occurred, and the properties satisfy the active asset test. You owned the properties over 15 years and you permanently incapacitated at the time of the disposal. The capital gain upon the sale of the properties is therefore disregarded.

Relevant facts and circumstances: The Public Trustee has been appointed as the administrator of your financial matters. You have ownership interests in three properties. You were in a partnership that undertook a business activity. The Deed of Family Arrangement states that the partnership commenced in XXXX and the partnership ended with lodgement of the Deed of Dissolution of Partnership with the Dissolution date XXXX. Person XXXX is in the course of purchasing the properties 1, 2 and 3. Based on the information provided, the net capital gain is estimated to be $XXXX for property 1 and 2, and net Capital Gain of $XXXX for property 3. The maximum net asset value of the partnership is less than $6 million. The partnership's turnover has been less than $2 million. The properties were used by the related partnership to carry out the business activities. You are permanently incapacitated.

Relevant legislative provisions: 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 152-105