Private ruling: The retirement exemption
Date of advice: 10 July 2018
Published: September 2018
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Is the Company an affiliate of yours for the purposes of section 328-120 of Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner has determined that the Company is your affiliate under section 328-120 of the ITAA 1997 under the capital gains tax small business concession. Further information on the Affiliate test can be found on our website ato.gov.au and entering Quick Code QC 52285. | Q2: Does the property satisfy the active asset test in section 152-35 of the ITAA 1997? | A2: Yes. Having considered your circumstances and the relevant factors the Commissioner has determined that the property will satisfy the active asset test under section 152-35 of the ITAA 1997 with regards to the active asset test under the capital gains tax small business concession. Further information on the active asset test can be found on our website ato.gov.au and entering Quick Code QC 52271. | Q3: Are you eligible to apply the CGT small business retirement exemption under Subdivision 152D of the ITAA 1997? | A3: Yes. Having considered your circumstances and the relevant factors the Commissioner has determined that the disposal of the business will be eligible for the retirement exemption under subdivision 152-D of the ITAA 1997 under the capital gains tax small business concessions. Further information on the retirement exemption can be found on our website ato.gov.au and entering Quick Code QC 52290.

Relevant facts and circumstances: You are part of a partnership (the Partnership) with other entities. The other entities in the partnership are close family members of your trustee and beneficiaries. In early 20AA the partnership purchased a property. You had XX% ownership of the property. The property was solely used by the trading company, the Company, for the purpose of carrying on the business. The Company operated its business on the property from date of purchase until the property was sold in early 20XX. The Company has an aggregated turnover of less than $2 million. The sale of the property was in conjunction with the sale of the business. Neither the business nor the property was offered for sale separately. The property and business were sold to third parties. Rent was routinely paid by the Company to the Partnership; however, there was no formal agreement between them. The shareholders in the Company and the partners in the partnership all have a close family relationship. Many of the individuals involved in the Partnership are the same individuals who are involved in the running of the company. The business affairs of both entities were managed jointly. The Company and the Partnership had the same business premises. The Company and the Partnership used the same bank account. The individuals that managed the business also managed the Property. You have two main beneficiaries. For the 20XX/YY financial year the beneficiaries received more than 20% of the income and capital distributions. You will be placing the capital proceeds into the superannuation fund of the main beneficiaries.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 152-D | Income Tax Assessment Act 1997 Section 152-35 | Income Tax Assessment Act 1997 Section 328-120