Private ruling: CGT - small business concessions
Date of advice: 27 June 2024
Published: 5 August 2024
Ruling period: Income Year Ended 30 June 2025
Date scheme commenced: 1 July 2024

Ruling: Q1: Will the capital gain made in relation to the sale of the Property be disregarded under the small business 15-year exemption in subdivision 152-B of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. You have met the basic conditions in subdivision 152-A of the ITAA 1997. The Property's main use for over 7.5 years was in a small business carried on by connected entity. You have continuously owned the Property for more than 15 years. You had a significant individual for a total of at least 15 years during the whole period of ownership. The significant individual just before the sale of the Property will be over 55 years of age and the sale will happen in connection with their retirement. Therefore, the capital gain made on the disposal of the Property will be disregarded under the small business 15-year exemption.

Relevant facts and circumstances: The Company purchased a property in 19XX. The Property is a 2-storey building, with a commercial premises located downstairs (approximately XXX square metres) and a residential premises located upstairs (approximately XX square metres). The commercial premises has been occupied by Individual A. Individual A has carried on a business at the Property as a sole trader for over 15 years. Individual A is a connected entity of the Company, having been the sole director and shareholder of the Company since 19XX. The residential premises has been rented out to third parties throughout the Company's ownership period. The residential premises is managed by a real estate agent. For at least 7.5 years the lease income received by the Company from Individual A and rental income received by the Company from third parties was comparable. Individual A is over 55 years of age. The Property will be sold in connection with Individual A's retirement. Individual A has been a significant individual of the Company for more than 15 years and will be a significant individual of the Company prior to the Property's sale. Individual A had health issues which lead to hospitalisation and delayed the sale of the property. Individual A has begun winding down the business by reducing hours worked and is selling the remaining stock on hand and material. Individual A has engaged a real estate agent and the property is due to be listed in the new financial year.

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