Private ruling: Small business concessions active asset - affiliates
Date of advice: 16 September 2025
Published: 17 November 2025
Ruling period: Year ended 30 June 20XX
Date scheme commenced: DD MM 20XX

Ruling: Q1: Was your child an affiliate of your spouse under section 328-130 of the Income Tax Assessment Act 1997 (ITAA 1997) during the relevant period? | A1: Yes. We consider that your child would have been your late spouse's affiliate under subsection 328-130(1) of the ITAA 1997. This means that your child's use of the deceased's property for their business is included for the purposes of applying the active asset test.

Relevant facts and circumstances: You inherited a property on the death of your spouse. You sold the property within 2 years of the deceased's death. The property was acquired by your late spouse on DD MM 20XX. Since acquisition, it was used to operate a business. The business was originally operated by a partnership consisting of your late spouse and your child. The partnership ceased on DD MM 20XX. From the cessation of the partnership until the date of the deceased's death, the business was operated by your child as a sole trader. More services were introduced, and another aspect of the business was created in addition to the original business. During this time, your late spouse was still involved in the business, including being involved in both the decision-making and the provision of services of the business. A nominal value was paid by your child as rent. There was no formal lease agreement in place. No fee was paid by your child to your late spouse for the use of your spouse's equipment in the business. Your late spouse offered guidance to your child on matters related to the day-to-day decision making of the business. This involvement did not significantly change when your child began operating the business as a sole trader. Your late spouse did not receive any financial remuneration for their services to the business during the period that it was operated by your child as sole trader.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 328-130(1)