Private ruling: CGT - active asset
Date of advice: 18 August 2021
Published: November 2021
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Do you satisfy the active asset basic condition for the capital gains tax (CGT) small business concession under section 152-10(1)(d) of the ITAA 1997 in relation to disposal of your interest in a commercial property? | A1: Yes. Having considered your full circumstances, you satisfy the basic conditions under section 152-10(1)(d) of the ITAA 1997 in relation to disposal of your interest in a commercial property. The property is considered to be an active asset and its main use was not to derive rent.

Relevant facts and circumstances: Person A & Person B are spouses. Person A & Person B own a commercial premise with an additional entity that is not controlled by either Person A or Person B. Person A & Person B both own 25% each of the commercial property with the remaining 50% being owned by another entity. Person A & Person B acquired their interests in the commercial property in 20XX. 1/3 of the commercial property has been and continues to be rented to an unrelated third party. 2/3 of the commercial property has been and continues to be rented to Trust A. Trust A conducts a business at the commercial premises since 20XX. Person A was director of Company A until 30 June 20XX. Person A held controlling interest of Company A with 50% of the shares until 30 June 20XX. The issued units in Company A from 20XX to 30 June 20XX were owned as follows: • Trust B - 50% • Unrelated entities - 50% Person A is the sole director and shareholder of Company B. Trust B is a discretionary trust. The profits from the business during the period that Person A was a director and shareholder were substantially greater than the rental income received from the unrelated third party. Neither Person A, Person B or Trust A are a CGT small business entity. Person A & Person B meet the maximum net asset value test with net assets less than $6 million. Person A & Person B are intending of disposing of their investment in the commercial property. Person A & Person B satisfy the basic conditions under section 152-10 of the ITAA 1997.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 152 | 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 152-47 | Income Tax Assessment Act 1997 Subsection 328-125(7)


This ruling applies for the following period: