Private ruling: capital gains tax - small business 15-year exemption
Published: February 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Can you apply the small business 15-year exemption to disregard the capital gain you made on the disposal of your property? | A1: Yes

Relevant facts and circumstances: You carried on business as a sole trader. You are a small business entity for the year ended 30 June 2015. You acquired a property more than 15 years ago and used it in your business. You decided to retire. You continuously owned the property for the 15-year period ending just before disposing of it. You made a capital gain on the disposal. You were over 55 years old when the property was sold. Assumption(s) None.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 152-A | Income Tax Assessment Act 1997 section 152-10 | Income Tax Assessment Act 1997 section 152-105

Reasons for decision: Summary: Section 152-105 of the Income Tax Assessment Act 1997 (ITAA 1997) provides a small business 15-year exemption for individuals. Under this section, you can disregard the capital gain made on the disposal of a CGT asset if you: (a) satisfy the basic conditions for the small business CGT concessions in Subdivision 152-A of the ITAA 1997 (b) continuously owned the CGT asset for the 15-year period ending just before the CGT event, and (c) are at least 55 years old at the time of the CGT event and the event happens in connection with your retirement, or are permanently incapacitated at that time. In your case, the basic conditions contained in Subdivision 152-A of the ITAA 1997 are satisfied because: • a CGT event occurred when you disposed of the property • the event resulted in a gain • you were a small business entity at the time of the event, and • you owned the property for more than 15 years and the property was used in your business for a total of at least 7½ years of your ownership period. In addition, • you continuously owned the property for the 15-year period ending just before the CGT event • you were at least 55 years old when you disposed of the property, and • the disposal happened in connection with your retirement. You qualify for the small business 15-year exemption in section 152-105 of the ITAA 1997 in relation to the farming property. You can disregard the capital gain you made on its disposal.