Private ruling: mall business concessions
Date of advice: 4 February 2026
Published: 30 March 2026
Ruling period: Year ended 30 June 20xx
Date scheme commenced: 1 July 2020

Ruling: Q1: Will the basic conditions in Subdivision 152-A of the Income Tax Assessment Act 1997 (ITAA 1997) be satisfied for any capital gain arising for the company from the disposal of the property? | A1: Yes.

Relevant facts and circumstances: The company was incorporated in 19XX but remained dormant until X March 19XX. The company acquired the property on X December 19XX and constructed a commercial building. The company began operating a business from the property in early 19XX. The business was sold in March 20XX. The property was then rented out to a third party at market rate on normal commercial terms from X March 20XX. The company's aggregated turnover was less than $2 million in the 20XX, 20XX financial years and will be less than $2 million in the 20XX financial year. A CGT event will happen in relation to the CGT asset in 20XX financial year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 152-A | Income Tax Assessment Act 1997 section 152-10

Reasons for decision: Summary: All references are to the Income Tax Assessment Act 1997 (ITAA 1997) unless stated otherwise. Division 152 provides small business relief from capital gains tax (CGT) provisions subject to a number of conditions being met. The basic conditions for relief under Division 152 are contained in section 152-10 of Subdivision 152-A. Subsection 152-10(1) reads as follows: 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; (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 small business entity for the income year; (ii) you satisfy the maximum net asset value test (see section 152-15) (iii) you are a partner in a partnership that is a small business entity for the income year and the CGT asset is an interest in an asset of the partnership; (iv) the conditions mention in subsections (1A) or (1B) are satisfied in relation to the CGT asset is an interest in an asset of the partnership (d) the CGT asset satisfies the active asset test (see section 152-35) Subsection 152-10(1A) relates to passively held assets where the assets are held respectively by your affiliates or entities connected with you, while subsection 152-10(1B) relates to assets held by a partnership in which you are a partner. In view of the facts of your case and the statement provided by you neither provision applies to you. Subsection 152-10(2) specifies some additional basic conditions for shares in a company or interests in a trust but that provision does not apply to this case. Subsection 152-10(3) notes that there are extra conditions for some concessions and that these are set out in the relevant Subdivisions. Those extra conditions do not need to be considered here because this question is limited to the basic conditions. Finally, subsection 152-10(4) deals with special rules for certain CGT events. Those events are CGT events J2, J5 and J6. Those events involve respectively a change to a replacement asset after roll-over; the failure to acquire a replacement asset after roll-over; and the cost of acquisition of a replacement asset after roll-over; however, none of those events occurs in this case. Consequently, in this discussion the examination of the basic conditions is confined to subsection 152-10(1). In the present case paragraphs 152-10(1)(a) and (b), subparagraph 152-10(1)(c)(i) and paragraph 152-10(1)((d) are relevant and must be considered. The facts as stated above show that the basic conditions in paragraphs 152-10(1)(a) and (b) are satisfied. However, the conditions in subparagraph 152-10(1)(c)(i) and paragraph 152-10(1)(d) need further consideration because the interpretation of each of those provisions turns on the terms of another provision. Subparagraph 152-10(1)(c)(i) requires that the entity is a "small business entity" and that term is defined in subsection 995-1(1) to have the meaning given by section 328-110. Section 328-110 relevantly reads: You are a small business entity for an income year (the current year ) if: (a) you carry on 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 income year and your *aggregated turnover for the previous year was less than $2 million; (ii) your aggregated turnover for the current year is likely to be less than $2 million. Broadly, a taxpayer's aggregated turnover is the sum of their annual turnover together with the annual turnover of any entity that is an affiliate or is connected to the taxpayer - see sections 328-115, 328-130 and 328-125 of the ITAA 1997. Taxation Ruling TR 2019/1 Income Tax: when does a company carry on a business? (TR 2019/1) sets out the Commissioner's views on when a company carries on a business within the meaning of section 328-110 of the ITAA 1997. It provides an example of a company that holds commercial property which is rented to a third party at market rate on normal commercial terms. No additional services are provided and the company conducts no other activities. TR 2019/1 concludes that the company carries on business. The circumstances in this case are similar and it is accepted that the company carries on business and that the turnover is less than $2 million. Thus, the company is a small business entity and therefore the company satisfies the condition in subparagraph 152-10(1)(c)(i). Paragraph 152-10(1)(d) requires that the active asset test in section 152-35 is met. The term "active asset" is defined in subsection 995-1(1) to have the meaning given by section 152-40. Section 152-40 relevantly reads: 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. In the present case the CGT asset, being the real property that was acquired by you in early 19XX, has been the location from which the business has operated since acquisition of the property until March 20XX for X years. Therefore, the property is an active asset. Section 152-35 regarding the active asset test relevantly reads: 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 your for a total of at least half of the period specified in subsection (2); (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 7½ 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 property has been owned for over X years and has been an active asset for X years. Therefore, the active asset test in section 152-35 will be met and in turn the condition in paragraph 152-10(1)(d) will be met. Accordingly, all the relevant basic conditions in subsection 152-10(1) of Subdivision 152-A, as identified above, are or will be satisfied.