Private ruling: CGT - active asset test
Date of advice: 8 August 2023
Published: 25 September 2023
Ruling period: Year ended 30 June 2023
Date scheme commenced: 1 July 2022

Ruling: Q1: Does the property satisfy the active asset test under subsection 152-35(1) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes, you owned the property between 19XX - 20XX (over 15 years) and used it in the course of your business for the whole time. It was never rented or leased out. The property satisfies the active asset test as per subsection 152-35(1) of the ITAA 1997. | Q2: Do you satisfy the specific conditions to apply the 15-year exemption in Subdivision 152-B ITAA97? | A2: Yes. You meet the basic conditions to be eligible for the small business CGT concessions, you are over 55 years old and the property has been sold in connection with your retirement as you are reducing your working hours. You are therefore eligible to apply the small business 15-year exemption to the capital gain made on the sale of the property.

Relevant facts and circumstances: You purchased the property. You have always used the property in your business. The property has never been rented or leased to a third party. You are registered for GST. Clients and other trades do not visit the property, although deliveries are made to this site by third parties. Materials, tools and equipment are stored on the entirety of the property. The property is used daily, Monday to Friday, with occasional weekend work. Due to the nature of the work some work is completed on site, the majority is off site at client properties. You sold the property. You were in business during the year of sale. You are over 55 years old. The sale is in connection with your retirement as you are planning on reducing the hours of work. You satisfy the maximum net asset test of $6 million.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 152-35(1) | Income Tax Assessment Act 1997 Subdivision 152-B