Private ruling: Income tax - capital gains tax - CGT small business concessions
Date of advice: 20 February 2020
Published: April 2020
Ruling period: Year ending 30 June 2020
Date scheme commenced: 1 July 2019

Ruling: Q1: Are the units active assets? | A1: Yes. The Commissioner considers that the property owned by The Trust is used in the business of a connected entity and the units satisfy the 80% test. Therefore the units of the Trust are considered active assets. | Q2: Do you meet the conditions for the small business 50% reduction under Subdivision 152-C of the Income Tax Assessment Act 1997 (ITAA 1997)? | A2: Yes. You satisfy the basic conditions for the small business concession under section 152-10 of Subdivision 152-A of the ITAA 1997. It follows that the small business 50% reduction under Subdivision 152-C of the ITAA 1997 can apply upon the sale of your units. | Q3: Do you meet the conditions for the small business retirement exemption under Subdivision 152-D of the ITAA 1997 where you keep a written record of the amount you chose and the amount is less than or up to your retirement exemption limit? | A3: Yes. You satisfy the basic conditions in Subdivision 152-A of the ITAA 1997. You also satisfy the significant individual test and the concession stakeholder is over 55 years. You are eligible to reduce your gain by applying the small business retirement exemption under 152-D of the ITAA 1997 up to your life time limit of $500,000. Please ensure you keep a record of the amount you choose to disregard. Further information can be found by searching 'QC 52290' on ato.gov.au


Relevant legislative provisions: Income Tax Assessment Act 1997 - Division 152 | Income Tax Assessment Act 1997 -Subdivision 152-A | Income Tax Assessment Act 1997 - Subdivision 152-C | Income Tax Assessment Act 1997 - Subdivision 152-D | Income Tax Assessment Act 1997 - Section 152-110


Relevant facts: Entity A was established many years ago. | Entity A owns a commercial property. The commercial property houses businesses. | Entity A has a connected entity for the relevant period of time that uses the property for their business. | The unit holders of entity A include entity B and entity C | The units held by entity C were acquired in xxxx. | Entity B and entity C intend to redeem their units in entity A. | Entity B is a small business entity. | Entity A satisfies the 80% active asset rule in subsection 152-40(3) of the ITAA 1997. | Entity B is a significant individual in entity A and is over 55. | Entity A satisfies the maximum net asset value test.