Private ruling: CGT - small business concessions
Date of advice: 12 December 2024
Published: 20 January 2025
Ruling period: Year Ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Do the properties satisfy the active asset test under section 152-35 and section 152-40 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. We consider the properties owned by the trust to be an active asset. The trust owned the properties for over 15 years. One of the properties were used by a company connected with them in the course of carrying on a business for over 7.5 years. The other property was rented to a non-related third party. The main use of the properties was not to derive rent during the years which the business operated.

Relevant facts and circumstances: The trust purchased the properties as one title in XXX 20XX. Property A had been used to operate a business by the company since XXX 20XX. Person A and person B are directors of the company - with person A being the sole shareholder. Both person A and person B are beneficiaries of the trust. The time between acquisition of the properties and the start of business use was spent fitting out the premise. Property B had been rented to non-related parties since December 2005, with a few periods on vacancy while looking for tenants, fitting out for new tenants etc. The properties are similar in size, with property A being the slightly larger of the two. The income derived from the business has made up around 90% of total income of the properties with rent from property B being the remaining 10%. The properties sold in XXX 20XX. The business is still trading but at a smaller premise.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 152-35 | Income Tax Assessment Act 1997 section 152-40 | Income Tax Assessment Act 1997 section 328-125