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1 For the purposes of section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997), did CGT event A1 occur at the date of settlement, for the disposal the property?

No Question 2 For the purpose of section 152-80 of theITAA 1997, are you eligible to claim the small business relief under Division 152 of the ITAA 1997 to the disposal of the property? Answer Yes This ruling applies for the following period : Year ended 30 June 20XX The scheme commenced on: 1 July 20XX

The property was purchased in the year ended 30 June 20XX by two individuals, Person A and Person B, as tenants in common. Person A and Person B commenced a farming business as a partnership when the property was purchased. Person A and Person B were equal partners in the business. No written partnership agreement was executed. The property was not an interest in the partnership. Person A and Person B decided to sell the property. They entered a Contract of Sale for Rural Land by Offer & Acceptance in October 20XX. Person A passed in January 20XX. Settlement occurred February 20XX. Probate was granted appointing Person B as the executor and legal personal representative (LPR) for the Estate. Person A has not carried on a business in their individual capacity. Person A was less than 55 years of age at the time of their death. It will not be possible to contribute to Person A's superannuation fund. A gain was made from the sale of the property. The aggregate turnover for the business activity carried on by the partnership was less than $2 million in the 20XX-XX income year.

The business activity was carried on for the whole ownership period. The property has been an active asset for the whole period it was owned by the partnership.

Income Tax Assessment Act 1997 section 103-25 Income Tax Assessment Act 1997 section 104-10 Income Tax Assessment Act 1997 section 108-5 Income Tax Assessment Act 1997 section 128-10 Income Tax Assessment Act 1997 section 128-15 Income Tax Assessment Act 1997 section 128-20 Income Tax Assessment Act 1997 section 152-10 Income Tax Assessment Act 1997 section 152-80 Income Tax Assessment Act 1997 section 152-205 Income Tax Assessment Act 1997 section 152-305 Income Tax Assessment Act 1997 section 995-1

Question 1 Subsection 104-10(1) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a CGT event A1 event happens if you dispose of a CGT asset. The property is a CGT asset in accordance with section 108-5 of the ITAA 1997. Subsection 104-10(2) of the ITAA 1997 states that 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 the operation of law. Subsection 104-10(3) of the ITAA 1997 states the timing of the disposal of a CGT asset occurs either: •         when you enter into a contract for the disposal of the CGT asset, or •         if there is no contract, when the change of ownership occurs. The partnership entered a Contract of Sale for Rural Land by Offer & Acceptance in October 20XX to dispose of the property. In accordance with subsection 104-10(1) of the ITAA 1997 the CGT event A1 occurred when the contract for the sale of the property was entered as of October 20XX. Person A's death does not change the timing of the CGT event. Question 2 Subsection 152-80 of the ITAA 1997 provides: (1) This section applies if: (a)   a CGT asset:

(i)    forms part of the estate of a deceased individual; or (ii)   was owned by joint tenants and one of them dies; and (b)   any of the following applies: (i)    the asset devolves to the individual's legal personal representative; (ii)   the asset passes to a beneficiary of the individual; (iii)  an interest in the asset is acquired by the surviving joint tenant or tenants; (iv)  the asset devolves to a trustee of a trust established by the will of the individual; and (c)   the deceased individual referred to in subparagraph 152-80(1)(a)(i) or (ii) would have been entitled to reduce or disregard a capital gain under this Division if a CGT event had happened in relation to the CGT asset immediately before his or her death; and (d)   a CGT event happens in relation to the CGT asset within 2 years of the individual's death. (2) A person mentioned in subsection (2A) is entitled to reduce or disregard a capital gain under this Division in the same way as the deceased individual would have been entitled to as if:

(a)   paragraph 152-105(d) only required the deceased individual to have been 55 or over, or permanently incapacitated, at the time of the * CGT event referred to in paragraph (1)(c) of this section; and (b)   paragraph 152-305(1)(b) did not apply. (2A) The following persons (as the case requires) are entitled to reduce or disregard a capital gain under this Division in accordance with subsection (2): (a)   the legal personal representative of the individual; (b)   the beneficiary of the individual; (c)   the surviving joint tenant or tenants; (d)   the trustee or a beneficiary of the trust. Section 128-15 sets out what happens if a CGT asset that a taxpayer owns just before dying: (a)   devolves to your legal personal representative; or (b)   passes to a beneficiary in the taxpayer's estate. The dictionary in section 995-1 of the ITAA 1997 defines as legal personal representative as: (a)   an executor or administrator of an estate of an individual who has died; or (b)   a trustee of an estate of an individual who is under a legal disability; or (c)   a person who holds a general power of attorney that was granted by another person. The Macquarie Dictionary

(Publisher: Pan Macmillan Australia, 2025) defines devolve as: 1)    to transfer or delegate (a duty, responsibility, etc) to or upon another; pass on 2) Law to pass by inheritance or legal succession Subsection 128-15(2) states the legal personal representative or beneficiary is taken to have acquired the asset on the day of the deceased's death. Subsection 128-15(3) of the ITAA 1997 states any capital gain or capital loss the legal personal representative makes if the asset passes to a beneficiary in the deceased estate is disregarded. Subsection 128-20(1) of the ITAA 1997 states a CGT asset passes to a beneficiary of the deceased estate if the beneficiary becomes the owner of the asset under the decease's will or that will as varied by a court order or by another means outlined in this provision. It does not matter whether the asset is transmitted directly to the beneficiary or is transferred to the beneficiary by your legal personal representative.

An individual can choose to disregard all or part of a capital gain by using the small business retirement exemption, as outlined in section 152-305 of the ITAA 1997 if the basic conditions in Subdivision 152-A are satisfied for the gain. Paragraph 152-305(1)(b) requires you to contribute an amount equal to the asset's CGT exempt amount to a complying superannuation fund or an RSA if at the time you make the choice you are under 55. Due to the operation of paragraph 152-80(2)(b), the requirement to make a payment to the superannuation fund or RSA does not apply. Section 103-25 of the ITAA 1997 provides: (1)   A choice you can make under this Part or Part 3-3 must be made: (a)   by the day you lodge your income tax return for the income year in which the relevant CGT event happened; or (b)   within a further time allowed by the Commissioner. (2)   The way you (and any other entity making the choice) prepare your income tax returns is sufficient evidence of the making of the choice. (3)   However, there are some exceptions:

(aa)                 subsection 115-230(3) (relating to assessment of capital gains of resident testamentary trusts) requires a trustee to make a choice by the time specified in subsection 115-230(5); and (b) subsections 152-315(4) and (5) (relating to the small business retirement exemption) require a choice to be made in writing. In accordance with paragraph 152-80(1)(a) of the ITAA 1997, the CGT asset is the property. The property formed part of the deceased's estate. The asset devolved to the deceased's legal personal representative, in accordance with paragraph 152-80(1)(b). Under paragraph 152-80(1)(c) of the ITAA 1997, the deceased would have been entitled to reduce or disregard a capital under Division 152 if the CGT event had happened in relation to a CGT asset immediately before their death. Whilst the CGT event A1 occurred prior to the death, section 152-80 applies to allow the LPR to reduce or disregard the capital gain under Division 152 of the ITAA 1997. In accordance with section 152-205 of the ITAA 1997, you are entitled to reduce the capital gain by 50% if the basic conditions in Subdivision 152-A are satisfied.

In the case of the deceased's estate, the basic conditions for small business concessions, in accordance with subsection 152-10(1) of Subdivision 152-A of the ITAA 1997, apply in the following way: •       CGT event A1 happened in relation to the property •       a capital gain was made from disposing of the property •       the conditions mentioned in subsection 152-10(1B) are satisfied in relation to the CGT asset in the income year •       the CGT asset satisfied the active asset test Section 152-80 of the ITAA 1997 applies to the deceased estate in the following way: •       the property is a CGT asset that forms part of the estate for the deceased, •       The asset devolved to the legal personal representative, •       The deceased would have been entitled to reduce or disregard the capital gain under Division 152 because -      They had satisfied the basic conditions in Subdivision 152-A to reduce the capital gain by 50%.

-      They had satisfied the basic conditions in Subdivision 152-A The condition in paragraph 152-305(1)(b) does not apply and no payment is required to be made to the superannuation fund or RSA. The legal personal representative can choose to apply the small business retirement exemption to the capital gain as they would have been entitled to prior to his death. The choice must be made in writing. •       The CGT event happened in relation to the CGT asset in October 20XX. The deceased passed in January 20XX. Therefore, the CGT event happened within 2 years of the death. Section 152-80 of the ITAA 1997 applies to the disposal of the property. The legal personal representative, as trustee for the deceased, can choose to apply the small business 50% reduction and the small business retirement exemption and must make that choice in writing.