Private ruling: CGT - 15 year exemption
Date of advice: 19 April 2023
Published: 17 July 2023
Ruling period: Year ending 30 June 2023 | Year ending 30 June 2024
Date scheme commenced: 1 July 2022

Ruling: Q1: Will you satisfy the basic conditions under Subdivision 152-A of the Income Tax Assessment Act 1997 (ITAA 1997) for small business relief upon the disposal of the property? | A1: Yes. A CGT event will happen when you dispose of the property, and you will make a capital gain on the disposal. In the income year of the CGT event, you will be a partner in a partnership that is a CGT small business entity that will use the property in the course of carrying on a business. Other than in partnership you will not carry on a business in the income year of the disposal of the property. You have owned the property for more than 15 years and it has been used in your foliage business for more than 7.5 years of your ownership period. As such, the property will satisfy the active asset test under section 152-35 of the ITAA 1997. | Q2: Do you meet the conditions to apply the small business 15-year exemption under section 152-105 of the ITAA 1997 to disregard the capital gain made on the disposal of the property? | A2: Yes. As the basic conditions will be satisfied when the property is sold, and, you are over 55 years of age, and the event that will occur will be in connection with your retirement, you can choose to apply the 15 year exemption, disregarding the capital gain made on the disposal of the property.

Relevant facts and circumstances: Individual A and Individual B (you) jointly acquired the property more than 20 years ago. The partnership of Individual A and Individual B (the partnership) carries on a business on the property. The aggregated turnover of the partnership is less than $2 million for the 2021-22 income year and will be less than $2 million in the 2022-23 income year. You intend selling the property and the business and will continue to operate the business until the income year in which the property is sold. You are both over 55 years of age. You will both be retiring from the business and Individual B will also be retiring from her part-time work.

Relevant legislative provisions: Income Tax Assessment Act 1997 subdivision 152-A | Income Tax Assessment Act 1997 section 152-35 | Income Tax Assessment Act 1997 section 152-40 | Income Tax Assessment Act 1997 section 152-105