Private ruling: Small business concession
Date of advice: 7 May 2019
Published: June 2019
Ruling period: 1 July 2018 to 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Do you satisfy the basic conditions for the small business CGT concession as per subdivision 152-A of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to the intangible assets? | A1: Yes. You satisfy the basic conditions for the small business concession under section 152-10 of Subdivision 152-A in relation to the intangible assets, upon the sale of your business. | Q2: Do you satisfy the conditions for the 15-year exemption? | A2: Yes. You are over 55 years old and you have owned the active asset for more than 15 years. The Commissioner also considers that the CGT event has happened in connection with your retirement. | Q3: Is capital gain payable on the sale of the business? | A3: No. You won’t have an assessable gain on the sale of the intangible assets of the business as you have met the basic conditions. Any capital gain will be disregarded under the 15-year exemption.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are over 55 years. You sold your business which you commenced over 15 years ago. The sale price is subject to earn out payments contingent on the revenue the business makes in the next years. The sale price may be lower depending on revenue of the business post sale. As part of the terms of the sale, you are required to continue to work full-time for a short period to ensure a maximum retention of clients. You will either completely retire or substantially reduce your working hours (to a maximum of 10 hours per week). The aggregated turnover of the business is under $2 million. You have provided a copy of the business sale and purchase agreement document. You are registered for GST.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 108-5 | Income Tax Assessment Act 1997 Division 152 | Income Tax Assessment Act 1997 Subdivision 152-A | Income Tax Assessment Act 1997 Section 152-10 | Income Tax Assessment Act 1997 Section 152-105 | Income Tax Assessment Act 1997 Subsection 152-10(1AA) | Income Tax Assessment Act 1997 Subsection 152-35(1) | Income Tax Assessment Act 1997 Subsection 152-35(2) | Income Tax Assessment Act 1997 Section 152-40 | Income Tax Assessment Act 1997 Section 152-40(1) | Income Tax Assessment Act 1997 Section 152-110