Private ruling: CGT event and the small business concessions
Date of advice: 9 November 2020
Published: January 2021
Ruling period: Period end 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is XX XX 20XX, the earliest time you started holding the Property as trading stock? | A1: Yes. From the information you have provided the Commissioner is satisfied that the land was held for resale and the business activity involving the dealing of land commenced on XX XX 20XX. The definite and continuous cycle of operations designed to lead to the sale of the land commenced on XX XX 20XX and the Property will be treated as trading stock on the same date. | Q2: Did CGT event K4 occur on XX XX 20XX and therefore in the income year ending XX XX 20XX? | A2: Yes, if you make the election under section 70-30(1)(a) of the Income Tax Assessment Act 1997 in the year ended XX XX 20XX. CGT event K4 happens when you start holding the Property as trading stock and you elect under section 70-30(1)(a) to be treated as having sold the Property for its market value. | Q3: Are you eligible for the Capital Gains Tax small business 15-year exemption under Subdivision 152-B of the ITAA 1997 when CGT event K4 occurs in relation to the Property? | A3: Yes. You satisfy the conditions contained in Subdivision 152-A and 152-B of the ITAA 1997. You can disregard any capital gain made from CGT event K4 on XX XX 20XX when you start holding the Property as trading stock.

Relevant facts and circumstances: You satisfy the basic conditions for the Small Business CGT concessions. You have owned farming land for more than 15 years on capital account. Your business uses the farming land for primary production activities. You entered into a Development Agreement to develop, subdivide and sell subdivided vacant lots of land. A planning permit has been issued by the Council. On-site construction has commenced.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-220 | Income Tax Assessment Act 1997 Subdivision 152-A | Income Tax Assessment Act 1997 Subdivision 152-B