Private ruling: mall business concessions
Date of advice: 23 February 2026
Published: 20 April 2026
Ruling period: Income year ending 30 June 202x
Date scheme commenced: 1 July 202y

Ruling: Q1: Will the CGT small business 15-year exemption under section 152-105 of the Income Tax Assessment Act 1997 (ITAA 1997) apply to the gift of land? | A1: Yes

Relevant facts and circumstances: X is at retirement age, and the registered and beneficial owner of farming property (the Land) acquired after 19 September 1985. The Land is zoned primary production/farmland and used in a primary production business. A discretionary trust (the Trust) was established more than 15 years ago. The Trustee is a registered Australian Proprietary Company where all issued shares have been held by X since incorporation. X is also a director and secretary of the Trustee. The Trust has been operating the primary production business on the Land at all relevant times. Each year's annual turnover for the Trust, for the income years ending 30 June 202z and 30 June 202y, and a reasonable estimate of the annual turnover for the income year ending 30 June 202x, are all below $2 million. Since establishment of the Trust, X has received distributions of income of 50% or more at least once every four years. No other beneficiary received 40% or more of the income distributions from the Trust over the income years. X is intending to dispose of the Land as a part of their retirement plans. X will most likely not pass the $6 million maximum net asset value test under section 152-15 of the ITAA 1997. X does not carry on a business as a sole trader, or in a partnership. X does not hold an interest of 40%, or more, in any other entities that carry on a business. The Trustee does not hold any interests in any other entities, that carry the right to receive at least 40% of any income or capital distribution, or the right to exercise, or control the exercise of 40%, or more, of the voting power. The Trustee has not received income or capital distributions, from any other discretionary trusts in the last four income years.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 104-10(1) | Income Tax Assessment Act 1997 subsection 104-10(2) | Income Tax Assessment Act 1997 subsection 104-10(3) | Income Tax Assessment Act 1997 subsection 104-10(4) | Income Tax Assessment Act 1997 section 108-5 | Income Tax Assessment Act 1997 subsection 108-5(1) | Income Tax Assessment Act 1997 subsection 116-20(1) | Income Tax Assessment Act 1997 subsection 116-30(1) | Income Tax Assessment Act 1997 Subdivision 152-A | Income Tax Assessment Act 1997 section 152-10 | Income Tax Assessment Act 1997 subsection 152-10(1) | Income Tax Assessment Act 1997 paragraph 152-10(1)(a) | Income Tax Assessment Act 1997 paragraph 152-10(1)(b) | Income Tax Assessment Act 1997 paragraph 152-10(1)(c) | Income Tax Assessment Act 1997 subparagraph 152-10(1)(c)(iv) | Income Tax Assessment Act 1997 paragraph 152-10(1)(d) | Income Tax Assessment Act 1997 subsection 152-10(1AA) | Income Tax Assessment Act 1997 subsection 152-10(1A) | Income Tax Assessment Act 1997 paragraph 152-10(1A)(a) | Income Tax Assessment Act 1997 paragraph 152-10(1A)(b) | Income Tax Assessment Act 1997 paragraph 152-10(1A)(c) | Income Tax Assessment Act 1997 paragraph 152-10(1A)(d) | Income Tax Assessment Act 1997 section 152-15 | Income Tax Assessment Act 1997 section 152-35 | Income Tax Assessment Act 1997 subsection 152-35(1) | Income Tax Assessment Act 1997 subsection 152-35(2) | Income Tax Assessment Act 1997 subsection 152-40(1) | Income Tax Assessment Act 1997 Subdivision 152-B | Income Tax Assessment Act 1997 subsection 152-105 | Income Tax Assessment Act 1997 paragraph 152-105(a) | Income Tax Assessment Act 1997 paragraph 152-105(b) | Income Tax Assessment Act 1997 paragraph 152-105(c) | Income Tax Assessment Act 1997 paragraph 152-105(d) | Income Tax Assessment Act 1997 subparagraph 152-105(d)(i) | Income Tax Assessment Act 1997 subsection328-110(1) | Income Tax Assessment Act 1997 section 328-115 | Income Tax Assessment Act 1997 section 328-125 | Income Tax Assessment Act 1997 subsection 328-125(1) | Income Tax Assessment Act 1997 subsection 328-125(3) | Income Tax Assessment Act 1997 subsection 328-125(4) | Income Tax Assessment Act 1997 subsection 995-1(1)

Reasons for decision: Summary: X satisfies the requirements for the basic conditions for relief in Subdivision 152-A of the ITAA 1997 upon the disposal of the Land. Further, as the transfer will be in connection with their retirement and X also satisfies the requirements to utilise the 15-year retirement exemption in Subdivision 152-B, they are eligible to disregard any capital gain upon the transfer of the Land. | Detailed Reasoning - Detailed Reasoning: To be eligible for the small business CGT 15-year exemption in Subdivision 152-B of the ITAA 1997, the basic eligibility conditions in Subdivision 152-A must first be satisfied. | Detailed Reasoning - Basic conditions: The basic conditions for relief under the small business CGT concessions are outlined in subsection 152-10(1) of the ITAA 1997. These conditions are: (a) a *CGT event happens in relation to a *CGT asset of yours in an income year; Note: This condition does not apply in the case of CGT event D1: see section 152-12 (b) the event would (apart from this Division) have resulted in the gain; (c) at least one of the following applies: (i) you are a *CGT small business entity for the income year; (ii) you satisfy the maximum net asset value test (see section 152-15); (iii) you are a partner in a partnership that is a CGT small business entity for the income year and the CGT asset is an interest in an asset of the partnership; (iv) the conditions mentioned in subsection (1A) or (1B) are satisfied in relation to the CGT asset in the income year; (d) the CGT asset satisfies the active asset test (see section 152-35). Each of these requirements will be discussed below. | Detailed Reasoning - First basic condition - paragraph 152-10(1)(a) of the ITAA 1997: A CGT asset is defined in subsection 108-5(1) of the ITAA 1997 as any kind of property, or a legal or equitable right that is not property. Note 1 to subsection 108-5(1) of the ITAA 1997 lists land and buildings as an example of a CGT asset. As the farming properties that are included in the Land are property, they are CGT assets as defined by section 108-5 of the ITAA 1997. Subsection 104-10(1) of the ITAA 1997 provides that CGT event A1 happens if you dispose of a CGT asset. You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law (subsection 104-10(2) of the ITAA 1997). X is disposing of the Land which are CGT assets pursuant to subsection 104-10(1) of the ITAA 1997 and CGT event A1 will occur. Consequently, the requirement in paragraph 152-10(1)(a) of the ITAA 1997 is satisfied. | Detailed Reasoning - Second basic condition - paragraph 152-10(1)(b) of the ITAA 1997: Subsection 104-10(4) of the ITAA 1997 provides that you make a capital gain from CGT event A1 if the capital proceeds from the disposal are more than the asset's cost base. X will make a capital gain on the disposal of the Land under subsection 104-10(4) of the ITAA 1997. Consequently, the requirement of paragraph 152-10(1)(b) of the ITAA 1997 is satisfied. | Detailed Reasoning - Third basic condition - paragraph 152-10(1)(c) of the ITAA 1997: Paragraph 152-10(1)(c) of the ITAA 1997, states that at least one of the requirements listed at subparagraphs (i) to (iv) must apply. For the purposes of this ruling, we are considering if the condition in subparagraph 152-10(1)(c)(iv) will be met. For subparagraph 152-10(1)(c)(iv) of the ITAA 1997 to apply the conditions mentioned in subsection 152-10(1A) or (1B) must be satisfied in relation to the CGT asset in the income year. Subsection 152-10(1B) is not relevant in this case. Subsection 152-10(1A) of the ITAA 1997 provides as follows: The conditions in this subsection are satisfied in relation to the *CGT asset in the income year if: (a) your *affiliate, or an entity that is *connected with you, is a *CGT small business entity for the income year; and (b) you do not carry on a *business in the income year (other than in partnership); and (c) if you carry on a business in partnership - the CGT asset is not an interest in an asset of the partnership; and (d) in any case - the CGT small business entity referred to in paragraph (a) is the entity that, at a time in the income year, carries on the business (as referred to in subparagraph 152-40(1)(a)(ii) or (iii) or paragraph 152-40(1)(b) in relation to the CGT asset. Paragraph 152-10(1A)(a) of the ITAA 1997 For paragraph 152-10(1A)(a) of the ITAA 1997 to be satisfied X must have an affiliate or an entity connected with them, that is a CGT small business entity for the income year. Subsection 328-125(1) of the ITAA 1997 provides that an entity is connected with another entity if: (a) either entity controls the other entity in a way described in this section; or (b) both entities are controlled in a way described in this section by the same third entity. There are different control tests in section 328-125 of the ITAA 1997 that apply depending on what type of entity is being tested. For an entity that is a discretionary trust subsection 328-125(3) of the ITAA 1997 states that: An entity (the first entity ) controls a discretionary trust if the trustee of the trust acts, or could reasonably be expected to act, in accordance with the directions or wishes of the first entity, its affiliates, or the first entity together with its affiliates. Alternatively, subsection 328-125(4) of the ITAA 1997 provides: An entity (the first entity ) controls a discretionary trust for an income year if, for any of the 4 income years before that year: (a) the trustee of the trust paid to, or applied for the benefit of: (i) the first entity; or (ii) any of the first entity's *affiliates; or (iii) the first entity and any of its affiliates; any of the income or capital of the trust; and (b) the percentage (the control percentage ) of the income or capital paid or applied is at least 40% of the total amount of income or capital paid or applied by the trustee for that year. In this case, X is the director and sole shareholder of the Trustee for the Trust. The Trustee has also applied at least 40% of the income of the Trust for X's benefit in the last 4 income years before the current year. X satisfies the direct control of a discretionary trust tests in subsections 328-125(3) and 328-125(4) of the ITAA 1997 for the Trust. As X controls the Trust, they will also be connected to it under subsection 328-125(1), just before the transfer of the Land. CGT small business entity The definition in subsection 995-1(1) of the ITAA 1997 provides that: CGT small business entity has the meaning given by subsection 152-10(1AA). Subsection 152-10(1AA) of the ITAA 1997 provides that you are CGT small business entity for an income year if: (a) you are a *small business entity for the income year; and (b) you would be a small business entity for the income year if each reference in section 328-110 to $10 million were a reference to $2 million. Subsection 328-110(1) of the ITAA 1997 provides that you are a small business entity for an income year if: (a) you carry on a *business in the current year; and (b) one or both of the following applies: (i) you carried on a business in the income year (the previous year) before the current year and your *aggregated turnover for the previous year was less than $10 million; (ii) your aggregated turnover for the current year is likely to be less than $10 million. Section 328-115 of the ITAA 1997 explains that the aggregated turnover for an entity in an income year is the annual turnover plus the annual turnovers of any business entities that are affiliates or that are connected with them. The Trust does not have any business entities that are affiliates or that are connected with it. The Trust is carrying on a farming business in the current year, and it had an aggregated turnover in the income year ending 30 June 202y of less than $2 million. Therefore, subsection 152-10(1AA) of the ITAA 1997 is met and the Trust is a CGT small business entity. In this case, X is connected to a small business entity, the Trust, in the income year ending 30 June 202x and paragraph 152-10(1A)(a) of the ITAA 1997 is satisfied. Paragraphs 152-10(1A)(b) and 152-10(1A)(c) of the ITAA 1997 As X does not carry on a business either as a sole trader or in a partnership, and the Land is not an interest in an asset of a partnership, paragraphs 152-10(1A)(b) and 152-10(1A)(c) are satisfied Paragraph 152-10(1A)(d) of the ITAA 1997 The Trust is a CGT small business entity, that carries on a business in the income year ending 30 June 202x on the Land, therefore paragraph 152-10(1A)(d) is satisfied. X meets all of the conditions in subsection 152-10(1A) of the ITAA 1997 in relation to the Land in the income year ending 30 June 202x, therefore the third basic condition in paragraph 152-10(1)(c) is satisfied. | Detailed Reasoning - Fourth basic condition - paragraph 152-10(1)(d) of the ITAA 1997: The fourth basic condition to be met is for the CGT asset to satisfy the active asset test in section 152-35 of the ITAA 1997. A CGT asset satisfies the active asset test in subsection 152-35(1) of the ITAA 1997 if: (a) you have owned the asset for 15 years or less and the asset was an *active asset of yours for a total of at least half of the period specified in subsection (2); or (b) you have owned the asset for more than 15 years and the asset was an active asset of yours for a total of at least 7½ years during the period specified in subsection (2). Subsection 152-35(2) of the ITAA 1997 provides that the test period is from when the asset is acquired until the CGT event. If the business ceases within the 12 months before the CGT event (or such longer time as the Commissioner allows) the relevant period is from acquisition until the business ceases. Subsection 152-40(1) of the ITAA 1997 provides that a tangible CGT asset is an active asset if it is owned by you and is used or held ready for use in a business carried on (whether alone or in partnership) by you, your affiliate, or an entity connected with you. The Trust has carried on a primary production business on the farming properties included in the Land that X acquired. These farming properties that are included in the Land have been both owned by X and used as an active asset by the Trust in the course of carrying on its primary production business for more than 15 years. As X has been connected to the Trust since he acquired the farming properties included in the Land and this period is more than 7.5 years, the active asset test in paragraph 152-35(1)(b) of the ITAA 1997 is satisfied. As the Land satisfies the active asset test, the condition in paragraph 152-10(1)(d) is satisfied. | Detailed Reasoning - Conclusion on the Basic Conditions for CGT small business concessions: Based on the above analysis, X satisfies in the basic conditions in Subdivision 152-A of the ITAA 1997 to be eligible for the CGT concessions for small business relief in Division 152. | Detailed Reasoning - Small business 15-year exemption: The 15-year exemption in section 152-105 of Subdivision 152-B of the ITAA 1997 provides that an individual can disregard any capital gain arising from a CGT event if all of the following conditions are satisfied: (a) the basic conditions in Subdivision 152-A of the ITAA 1997 are satisfied for the gain; (b) you continuously owned the CGT asset for the 15-year period ending just before the CGT event; (c) if the CGT asset is a share in a company or an interest in a trust - the company or trust had a significant individual for at least 15 years (even if the 15 years was not continuous and it was not always the same significant individual) during which you owned the CGT asset; (d) either: (i) you are 55 or over at the time of the CGT event and the event happens in connection with your retirement, or (ii) you are permanently incapacitated at the time of the CGT event. Each of these requirements is discussed below. | Detailed Reasoning - (a) the basic conditions in Subdivision 152-A of the ITAA 1997: The basic conditions in Subdivision 152-A of the ITAA 1997 are satisfied for the gain, the requirement in paragraph 152-105(a) of the ITAA 1997 is satisfied. | Detailed Reasoning - (b) asset continuously owned for the 15-year period before the CGT event;: X acquired and has continuously held each of the farming properties that are included in the Land for greater than 15 years and will continue to do so up to the CGT event, the requirement in paragraph 152-105(b) of the ITAA 1997 is satisfied. | Detailed Reasoning - (c) a share in a company or an interest in a trust: Th requirement in paragraph 152-105(c) of the ITAA 1997 is not applicable as the Land is not a share in a company or an interest in a trust. | Detailed Reasoning - (d)(i) you are 55 or over at the time of the CGT event and the event happens in connection with your retirement: The term in connection with your retirement as used in subparagraph 152-105(d)(i) of the ITAA 1997 is explained in ATO Interpretative Decision ATO ID 2003/864 (Withdrawn) Income Tax CGT small business concessions: 15 year exemption - retirement. This ATO ID, although withdrawn is still illustrative i.e. the reason for its withdrawal at the time was that the ATO view on this matter is reflected in the publication "Advanced guide to capital gains tax concessions for small business". ATO ID 2003/864 (Withdrawn) explains: Whether there is a 'retirement' for the purposes of the 15-year exemption will depend on the circumstances of each particular case. However, it is considered for the term to be satisfied, there must at least be a significant reduction in the number of hours the individual is engaged in present activities, or a significant change in the nature of present activities. It is not necessary for there to be a permanent and everlasting retirement from the workforce. This view is, inter alia, expressed on the ATO website which also provides that: • A CGT event may be 'in connection with your retirement' even if it occurs at some time before retirement . Whether particular cases satisfy the conditions depends very much on the facts of each case. • Similarly, the words 'in connection with' can apply where the CGT event occurs sometime after retirement . Again, this type of case would depend on its own particular facts and would need to be considered on a case-by-case basis. At retirement age, the disposal of the Land is a part of X's retirement plans. Consequently, X satisfies the requirements of subparagraph 152-105(d)(i) of the ITAA 1997. In conclusion, X satisfies the requirements to utilise the 15-year retirement exemption in Subdivision 152-B of the ITAA 1997, and they are eligible to disregard any capital gain made upon the disposal of the farming properties that are included in the Land.