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1: Are the net proceeds from the sale of Parcels 1, 2 and 3, or any part of them, included in your assessable income as ordinary income pursuant to section 6-5 or statutory income pursuant to 6-10 of the Income Tax Assessment Act 1997 [1] ?

: Yes, the capital receipts from the sale of the Farmland are to be included in your assessable income as statutory income pursuant to section 6-10. Question 2: If all or part of the net proceeds from the sale of Parcels 1, 2 and 3 are included in your assessable income as statutory income pursuant to section 6-10 and that amount is a discount capital gain under Division 115, can that amount being the associated capital gains arising from the sale be disregarded pursuant to Subdivision 152-A? Answer: Yes. Question 3: If the answer to Question 2 is yes, does Subdivision 152-B (Small Business 15-Year Exemption) apply to any part of the gain? Answer: Yes. Question 4: If the answer to Question 3 is no, does Subdivision 152-C (Small Business 50% Reduction) or Subdivision 152-D (Small Business Retirement Exemption) apply to any part of the gain? Answer: Yes. This private ruling applies for the following period: Year ended 30 June 20xx and 30 June 20xx. The scheme commences on: 1 July 20xx

This private ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are different from these facts, this private ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. Background facts: 1.         You are an Australian resident. 2.         Your spouse passed away on xxxx and was also an Australian resident. Properties: 3.         On xxx (pre-1985), you and your spouse jointly acquired a parcel of land (Parcel 1). 4.         On xxx (post-1985), you and your spouse jointly acquired an adjoining property to Parcel 1 (Parcel 2). 5.         You acquired another adjoining parcel of land (Parcel 3) to Parcels 1 and 2 on xxx (post-1985). You acquired this property solely in your name. 6.         Collectively, the above 3 parcels of land will be referred to as the 'Farmland' for the purposes of this ruling. 7.         You state that from the time of the time of the acquisition of Parcel 1, there were no circumstances or events that resulted in the land becoming a post-capital gains tax (CGT) asset within the meaning of Division 149. Farming activities:

8.         You and your spouse carried on farming activities on the 3 parcels of land. 9.         You became the sole owner of the farming business and its assets following you spouse's death and continued to carry on the business in your name as sole trader from this time. You are registered for GST and state that you are a small business entity. 10.      You oversee and are responsible for the management and control of your farming business. You keep and maintain proper books and records relating to the transactions undertaken in running the business. When and where necessary, you procure the services of third parties to assist in the day-to-day activities of your business. 11.      Your adult child carries out and implements your decisions and continually reports to you about the day-to-day affairs affecting the your farming activities. 12.      Your aggregated turnover was less than $2 million, and there are no other entities that are included in the turnover calculation. All farming activities are reported in your business activity statements and your personal tax returns. Main residence:

13.      From the time of the acquisition of Parcel 1 until approximately xxx, you and your spouse occupied your main residence on this parcel. Following your spouse's death, you continued to hold one pre-CGT interest in Parcel 1 and one post CGT interest (being the interest you acquired following your spouse's death). The land size was greater than 2 hectares. 14.      From around xxx until xxx, your adult child resided in the main residence. From around xxx until current, your grandchild has resided at the main residence. You do not receive any rental income in relation to your main residence and you rely on the 'absence rule' in section 118-145. Compulsory acquisition: 15.      On xxx, part of Parcel 1 and part of Parcel 2 were compulsorily acquired by a government agency. Sale of remaining Farmland: 16.      On xxx, you (as Vendor) and xxx (as Purchaser), and unrelated entity, executed 2 contracts of sale for the remaining Farmland.

17.      The sale contracts are interdependent, providing that settlement will occur x years from the date of sale and if either of the contracts ends for any reason (other than the Purchaser's default) then the Purchaser may terminate the other contract by written notice to the Vendor. a.            You did not have any involvement in any of the planning applications undertaken or submitted by the Purchaser relating to the future development of the land. Moreover, you were contractually prevented from any of the planning dealing that occur between any government body and the Purchaser. 18.      You intend to continue to carry on your farming business up until the settlement for the sale of the Farmland is complete, which is expected on or around xxx. You submit that the CGT event happened in connection with your retirement. 19.      At no time since the commencement of your farming business have you (or your spouse) had any previous involvement in the development of property. Assumptions: The answers to the questions raised in this Notice of Private Ruling are based on the following assumptions: 1.            You are carrying on a business of cattle farming.

2.            You are not carrying on a business of selling land nor are the profits from the sale of Parcels 1, 2 or 3 from an isolated business transaction. 3.            You are eligible to claim the main residence exemption in Subdivision 118-B in relation to the disposal of her post-CGT interest in Parcel 1. If the assumptions listed above are inaccurate, or the actual arrangement is not implemented in the manner described in the facts of this Notice, this private ruling has no effect, and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

Section 6-5 of the Income Tax Assessment Act 1997 Section 6-10 of the Income Tax Assessment Act 1997 Section 102-5 of the Income Tax Assessment Act 1997 Section 100-25 of the Income Tax Assessment Act 1997 Section 104-10 of the Income Tax Assessment Act 1997 Subdivision 118-B of the Income Tax Assessment Act 1997 Division 115 of the Income Tax Assessment Act 1997 Section 152-10 of the Income Tax Assessment Act 1997 Section 152-15 of the Income Tax Assessment Act 1997 Section 152-35 of the Income Tax Assessment Act 1997 Section 328-110 of the Income Tax Assessment Act 1997 Section 152-40 of the Income Tax Assessment Act 1997 Subdivision 152-A of the Income Tax Assessment Act 1997 Subdivision 152-B of the Income Tax Assessment Act 1997 Subdivision 152-C of the Income Tax Assessment Act 1997

This is to explain how we reached our decision. This is not part of the private ruling. Question 1 Are the net proceeds from the sale of Parcels 1, 2 and 3, or any part of them, included in your assessable income as ordinary income pursuant to section 6-5 or statutory income pursuant to 6-10? Detailed reasoning: EXPLANATION OF THE LEGISLATION: Taxation treatment of receipts from the sale of land: 1.         There are 3 ways that profits from property sales can be treated for taxation purposes: a.         as ordinary income under section 6-5 from carrying on a business of property development, involving the sale of property as trading stock. Where a taxpayer carries on a business, gross trading receipts are brought to account as assessable income and deductions are allowed for expenses. All trading stock on hand at the start of the year and at the end of the year are taken into account in working out the taxpayer's taxable income (Division 70)

b.         as ordinary income under section 6-5 from an isolated business transaction entered into by a non-business taxpayer or outside the ordinary course of business of a taxpayer carrying on a business, which is the commercial exploitation of an asset acquired for a profit-making purpose, and c.         as statutory income under the capital gains tax (CGT) legislation (sections 6-10 and 102-5) on the basis that a mere realisation of a capital asset has occurred. Carrying on a business of property development: 2.         Whether the sale of land is a disposal in the course of business is determined by examining and weighing all the relevant facts and circumstances taken as a whole. 3.         The principles in Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production? (TR 97/11) provide guidance on whether a taxpayer is carrying on a business and can be applied in various contexts. Specifically, paragraph 13 of TR 97/11 provides a list of indicators that are relevant in determining whether a taxpayer is carrying on a business. In general, the indicators are: a.            whether the activity has a significant commercial purpose or character

b.            whether the taxpayer has more than just an intention to engage in business c.             whether the taxpayer has a purpose of profit as well as a prospect of profit from the activity d.            whether there is repetition and regularity of the activity e.            whether the activity is of the same kind and carried on in a similar manner to that of the ordinary trade in that line of business f.              whether the activity is planned, organised and carried on in a businesslike manner such that it is directed at making a profit g.            the size, scale and permanency of the activity, and h.            whether the activity is better described as a hobby, a form of recreation or a sporting activity. 4. Miscellaneous Taxation Ruling MT 2006/1 The New Tax System: the meaning of entity carrying on an enterprise for the purposes of entitlement to an Australian Business Number explains the circumstances in which transactions involving the subdivision and sale of land, are considered to be a profit-making undertaking or scheme, as opposed to the mere realisation of a capital asset.

5.         Relevantly, activities do not need to be conducted by the taxpayer for the taxpayer to be considered to be carrying on a business - it can be by the taxpayer, on behalf of the taxpayer or in conjunction with others: see for example, Hance & Anor v Federal Commissioner of Taxation 2008 ATC 20-085 where the court confirmed that businesses can take many forms, and can include a silent partner who delegates all responsibility for the business to another individual and consequently individual investors would be considered to be carrying on a business. 6.         When an asset is ventured into the business of development, subdivision and sale is a matter of fact (see, for example, ATO Interpretative Decision ATO ID 2004/532 Income Tax: business of subdivision - time when land becomes trading stock ). 7.         TD 92/124 recognises that repetitive buying and selling of property is not necessary to establish that a business of property acquisition, development and sale is being carried on. If a 'definite and continuous cycle of operations' has been initiated, a business of property development has commenced. Profits from an isolated transaction:

8.         Profits from an isolated business transaction entered into by a non-business taxpayer, or outside the ordinary course of business of a taxpayer carrying on a business, which is the commercial exploitation of an asset acquired for a profit-making purpose may be ordinary income and assessable pursuant to section 6-5. 9.         Guidance on where profits from isolated transactions is income can be found in Taxation Ruling TR 92/3 Income Tax: whether profits on isolated transactions are income (TR 92/3). Paragraph 1 of TR 92/3 states the term 'isolated transactions' refers to: (a)           those transactions outside the ordinary course of business of a taxpayer carrying on a business; and (b) those transactions entered into by non-business taxpayers. 10.      Specifically, paragraph 6 of TR 92/3 states that an isolated transaction will generally be assessable income if the following two elements are present: (a)           the intention or purpose of the taxpayer in entering into the transaction was to make a profit or gain, and

(b)           the transaction was entered into, and the profit was made, in the course of carrying on a business or in carrying out a business operation or commercial transaction 11.      It is important to note however, that the 2 characteristics above are not necessary in every circumstance for receipts from isolated transactions to be assessable income. These characteristics are merely indicators that are often present. Taxpayer's intention or purpose: 12.      In determining whether a transaction results in assessable income or capital it is important to consider the taxpayer's intention from an objective consideration of the circumstances of the case. 13.      In the decision of the Full Court of the High Court of Australia in Federal Commissioner of Taxation v. The Myer Emporium Ltd [2]

, the court determined that receipts from an isolated or non-ordinary business transaction were assessable income as the taxpayer had entered into the transaction for the purpose of making a profit and in the course of the taxpayer's business. The court held that it was not relevant that the transaction was not in the ordinary operations of the business and that 'if the circumstances are such as to give rise to the inference that the taxpayer's intention or purpose in entering into the transaction was to make a profit or gain, the profit or gain will be income'. 14.      TR 92/3 supports this view by stating in paragraph 10 that 'if a transaction or operation is outside the ordinary course of a taxpayer's business, the intention or purpose of profit-making must exist in relation to the transaction or operation in question'. Statutory income: 15.      Section 6-10 provides that statutory income comprises amounts (cash and non-cash benefits) that are not ordinary income but are included in a taxpayer's assessable income pursuant to a specific provision of the Income Tax Assessment Act 1936 (ITAA 1936) or ITAA 1997. Capital receipts:

16.      Not every receipt of cash or non-cash benefit by a taxpayer is ordinary income according to the legislation. Capital receipts are not ordinary income and are not assessable under section 6-5. However, section 102-5 provides that capital receipts are to be included in a taxpayer's assessable income as statutory income. 17.      The distinction between capital and income is important, as capital receipts may frequently have a substantially different treatment under the tax law than ordinary income, often with considerable tax concessions available for certain taxpayers or certain CGT events. CGT asset: 18.      Subsection 100-25(2) lists a number of assets that are CGT assets and includes land and buildings. Disposal of a CGT asset: CGT event A1 19.      Section 104-5 sets out a list of CGT events. CGT event A1 is the disposal of a CGT asset pursuant to subsection 104-10(1). Subsection 104-10(2) states that a taxpayer will dispose of a CGT asset if a change of ownership occurs from the taxpayer to another entity. [3]

20.      Paragraph 104-10(3)(a) provides that the timing of the CGT event will be when the contract to dispose of the asset is entered into by the taxpayer. Paragraph 104-10(3)(b) explains that if there is no contract, the time of disposal will be when the change of ownership occurred. Capital gain: 21.      Subsection 104-10(4) provides that a taxpayer will make a capital gain if the capital proceeds from the disposal are more than the asset's cost base. The capital gain is calculated by determining the capital proceeds from the disposal, less the asset's cost base. Main residence exemption: 22.      Broadly, Subdivision 118-B allows taxpayers to ignore a capital gain or loss made from a CGT event that occurs with regards to a dwelling that is their main residence (main residence exemption). 23.      The basic rules that must be satisfied in order for a taxpayer to be eligible for the main residence exemption are provided in section 118-110. Specifically, subsection 118-110(1) provides that a capital gain or loss from a CGT event in relation to a taxpayer's main dwelling, or ownership interest in it, is disregarded if: a.            the taxpayer is an individual

b.            the dwelling was the individual's main residence throughout the ownership period, and c.             the interest did not pass to the individual as a beneficiary in, and was not acquired as a trustee of, a deceased estate. 24.      Subsection 118-110(2) further explains that the main residence exemption is only available in relation to CGT events A1, B1, C1, C2, E1, E2, F2, K3, K4 and K6. 25.      The meaning of the term 'dwelling' is defined in subsection 118-115 as a unit of accommodation that is a building and consists of wholly or mainly of residential accommodation. Section 118-120 broadly provides that the land adjacent to the dwelling, to a maximum for 2 hectares, will be included in the definition of dwelling. 26.      Section 118-145 provides that if a dwelling was a taxpayer's main residence and ceases to be so, the taxpayer may choose to treat that dwelling as their main residence. Where part of the dwelling was used to produce assessable income, subsection 118-145(2) provides that the maximum period of time that the dwelling can be treated as the taxpayer's main residence is 6 years while the dwelling is used to produce assessable income.

a.            If the dwelling is not used for an assessable income producing purpose, subsection 118-145(3) provides that it can be treated as a main residence indefinitely. 27.      Subsection 118-145(4) further provides that if a taxpayer makes the choice to continue to treat a dwelling as their main residence after it was their main residence, they cannot treat another dwelling as their main residence. [4] APPLICATION TO YOUR CIRCUMSTANCES: 28.      In order to determine whether any of the proceeds from the sale of the Farmland are required to be included in your assessable income pursuant to sections 6-5 or 6-10, it is necessary to consider whether: a.            you carry on a business of property development b.            the sale is an isolated business transaction, or c.             the realisation of a capital asset.

29.      For the purposes of this ruling, it has been assumed that you are carrying on a business of farming, you are not carrying on a business of selling land or property development and the profits from the sale of the Farmland is not from an isolated business transaction. Given this, the proceeds will not be included in your assessable income pursuant to section 6-5. 30.      On xxx, you (as Vendor) and xxx (as Purchaser) executed 2 contracts of sale for the remaining Farmland. As the Farmland is a CGT asset, you disposed of a CGT asset and event A1 occurred in accordance with subsection 104-10(2). The timing of the CGT event was xxx, being the date on which the contracts were executed, pursuant to paragraph 104-10(3)(a). Consequently, section 102-5 requires the capital receipts from the sale of the Farmland to be included in your assessable income as statutory income pursuant to section 6-10. Main residence exemption:

31.      You will choose to rely upon the absence ruling in section 118-145 for the main residence and the 2 hectares adjacent to the dwelling such that Subdivision 118-B will allow you to ignore the capital gain made from the sale of the dwelling. Given this, the portion of land covered by the main residence exemption has been excluded from the explanation of how the law applies in Questions 2 to 4. Question 2: If all or part of the net proceeds from the sale of Parcels 1, 2 and 3 are included in your assessable income as statutory income pursuant to section 6-10 and that amount is a discount capital gain under Division 115, can that amount being the associated capital gains arising from the sale be disregarded pursuant to Subdivision 152-A? EXPLANATION OF THE LEGISLATION: Calculation of a net capital gain: 32.      Subsection 104-10(5) provides that a capital gain or loss is disregarded if a taxpayer acquired an asset before 20 September 1985. 33.      Subsection 102-5(1) provides that the assessable income of a taxpayer includes any net capital gains made during the income year and explains how to calculate a net capital gain, as follows: [5] Step 1

: reduce the capital gain by any capital loss made during the year Step 2 : apply any unapplied net capital losses from earlier years Step 3 : reduce by any relevant discount percentage Step 4 : if any of the capital gain qualifies for the small business concessions [6] , apply those concessions, and Step 5 : add up any amounts of capital gains remaining after Step 4. The sum is the capital gain. Discount on capital gains: 34.      Division 115 sets out the discount on capital gains and the circumstances in which they are available to a taxpayer. 35.      A taxpayer is entitled to a discount on any capital gains made if they satisfy the requirements outline in section 115-5. The necessary requirements are that: a.            the taxpayer is an individual, complying superannuation entity, trust or certain life insurance companies [7] b.            the capital gain is made after 21 September 1999 [8] c.             the capital gain does not have an indexed cost base, [9] and d.            the capital gain was made on an asset held for at least twelve months. [10]

36.      Sections 115-10 and 115-100 state that the discount percentage is 50% if the capital gain is made by an individual or a trust (that is not a complying superannuation entity or FHSA trust). Basic conditions for relief: 37.      The basic conditions in subsection 152-10(1) are that: a.            the capital gain was made in relation to your CGT asset in an income year b.            but for this Subdivision, the event would have resulted in a gain c.             at least one of the following conditions are met: i.              you are a CGT small business entity for the income year, ii.            you satisfy the maximum net asset value test in section 152-15, iii.           you are a partner in a partnership that is a CGT small business entity and the CGT asset is an interest in an asset of the partnership, iv.           the conditions in subsections 152-10(1A) and 152-10(1B) are satisfied in relation to the CGT asset, and d.            the CGT assets satisfied the active asset test in section 152-35. CGT small business entity test:

38.      Broadly, paragraph 152-10(1AA) and subsection 328-110(1) provide that the following conditions must be met for an entity to be a CGT small business entity for a particular year of income: a.            the entity carries on a business in the particular year, and b.            one or both of the following applies: (i)            the entity carried on a business in the previous income year and its aggregated turnover for the previous year was less than $2 million, and (ii)           the entity's aggregated turnover for the current year is likely to be less than $2 million. 39.      Aggregated turnover for the current year for the purposes of subparagraph 152-10(1)(b)(ii) is calculated in the manner described in subsection 328-110(2), as follows: a.            as at the first day of the current year, or a.            if the entity starts carrying on a business during the current year, as at the day the entity starts to carry on the business.

40.      Further, paragraph 152-10(1AA) and subsection 328-110(3) provide that an entity will not be a small business entity if the entity carried on a business in each of 2 of the proceeding years before the current year and its aggregated turnover for each of those years was $2 million or more. Active asset: 41.      Relevantly, subsection 152-35(1) provides that a CGT asset satisfied the active asset test 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). 42.      Subsection 152-35(2) provides that the period begins when you acquired the asset and ends at the earlier of the CGT event and the cessation of the business. 43.      Subsection 152-40(1) states that a CGT asset is an active asset at a time if, at that time: you own the asset (whether the asset is tangible or intangible) and it is

used, or held ready for use, in the course of carrying on a business that is carried on (whether alone or in partnership)) by: i. you; or ii. your affiliate; or iii. another entity that is connected with you; or if the asset is an intangible asset - you own it and it is inherently connected with a business that is carried on (whether alone or in partnership) by you, your affiliate, or another entity that is connected with you. [emphasis added]. APPLICATION TO YOUR CIRCUMSTANCES: 44.      As explained under Question 1, you are required to include the capital receipts from the sale of your Farmland in your assessable income as statutory income pursuant to section 6-10. Farmland acquired prior to 20 September 1985: 45.      Any capital gain you make in relation to the portion of the Farmland you acquired before 20 September 1985 will be disregarded pursuant to subsection 104-10(5). Farmland acquired after to 20 September 1985: Discount capital gain:

46.      In relation to the Farmland you acquired after 20 September 1985, as you are an individual and have held the land for more than 12 months, you will be eligible for a discount capital gain in accordance with Division 115 only if you calculate the cost base without reference to indexation. The discount percentage is 50% pursuant to section 115-10 and 115-100. Basic conditions for relief 47.      You have a capital gain and, but for Subdivision 152-A, the event would have resulted in a gain and paragraphs 152-10(1)(a) and (b) are satisfied. 48.      For the purposes of this ruling it has been assumed that you are carrying on a farming business. You explain that you will continue to carry on this farming business until settlement date. Together with the fact that your aggregate turnover for the in the year of the CGT event was less than $2 million, you satisfy the conditions to be a CGT small business entity and you satisfy paragraph 152-10(1)(c). 49.      The Farmland is an active asset because:

a.            You acquired a portion of Parcels 1 and 2 of the Farmland after the passing of your spouse and therefore have held these portions for less than 15 years. For all the period you held these portions of the Farmland, it has been continuously used in your farming business and paragraph 152-35(1)(a) is satisfied. b.            You have held the remaining portions of the Farmland for more than 15 years before the CGT event and have continuously used them in your cattle farming business and paragraph 152-35(1)(b) is satisfied. 50.      You have therefore satisfied the conditions in Subdivision 152-A to allow the gain associated from the post-CGT portion of the Farmland to be reduced or disregarded. Question 3: If the answer to Question 2 is yes, does Subdivision 152-B (Small Business 15-Year Exemption) apply to any part of the gain? EXPLANATION OF THE LEGISLATION: Small business 15-year exemption (Subdivision 152-B): 51.      Subdivision 152-B allows a CGT small business entity to disregard a capital gain arising from a CGT asset that it has owned for at least 15 years if certain conditions are met. 52.      Relevantly, for an individual, section 152-105 provides:

If you are an individual, you 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 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 a total of 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. Application to your circumstances: 53.      As explained in above, you meet the basic conditions for relief in Subdivision 152-A such that paragraph 152-105(a) is satisfied. Portion of the Farmland acquired after the passing of your spouse:

54.      You inherited a portion of the Farmland after the passing of your spouse. Consequently, you have not continuously held this portion of the Farmland for greater than 15 years. Paragraph 152-105(b) will not be satisfied and you will not be eligible for the 15-year exemption in Subdivision 152-B for the portion of the land that was originally held by your spouse. Remaining portion of the post-CGT Farmland: 55.      You acquired the remaining portion of the post-CGT Farmland in 1993 (half of Parcel 2) and 2002 (Parcel 3). Consequently, at the time of the sale of the Farmland, you had held the portion of the remaining Farmland continuously for greater than 15 years and paragraph 152-105(b) is satisfied. 56.      The Farmland is not a share in a company or an interest in a trust such that paragraph 152-105(c) has no application. 57.      You are older than 55 years of age. You will continue your farming activities until the settlement of the Farmland and the sale is connected with your retirement and you will be eligible to disregard the capital gain pursuant to Subdivision 152-B. Question 4:

If the answer to Question 3 is no, does Subdivision 152-C (Small Business 50% Reduction) or Subdivision 152-D (Small Business Retirement Exemption) apply to any part of the gain? EXPLANATION OF THE LEGISLATION: Small business 50% reduction (Subdivision 152-C): 58.      If the gain meets the basic conditions in Subdivision 152-A, section 152-205 provides that the amount of the capital gain remaining after Step 3 (paragraph 33) from the calculation method explained in subsection 102-5(1) is reduced by 50%. [11] a. This means that if the relevant conditions are met, the combined effects of applying the discount percentage and the 50% reduction in Subdivision 152-C will reduce the original capital gain by 75%. Small business retirement exemption (Subdivision 152-D): 59. Subdivision 152-D contains the small business retirement exemption. You may choose to disregard all or part of a capital gain under the small business retirement exemption if you satisfy certain conditions. 60.      Specifically, subsection 152-305(1) provides that an individual may choose to disregard all or part of a capital gain if the basic conditions in Subdivision 152-A and:

a.            if the individual is under 55 years of age just before the choice is made, you contribute an amount equal to the asset's CGT exempt amount to a complying superannuation fund or an RSA, and b.            the contribution is made; i.              for CGT events J2, J5 or J6 - when you made the choice, or ii.             otherwise - at the later of when you made the choice and when you received the proceeds. 61.      Where an individual has made a choice to disregard any part of the capital gain from the CGT asset, that part of the capital gain to its CGT exempt amount is disregarded. 62.      Section 152-315 then broadly provides that where an individual has made the choice to disregard part or all the gain, the choice must not exceed the CGT retirement exemption limit and the CGT exempt amount is specified in writing. 63.      Section 152-320 explains the CGT retirement exemption limit. Specifically, subsection 152-320(1) provides that an individual's CGT retirement limit at a time is $500,000 reduced by CGT exempt amounts of CGT assets specified in choices previously made. Application to your circumstances: Small business 50% reduction (Subdivision 152-C):

64.      In the event that a portion of the gain from the sale of the Farmland is not disregarded pursuant to Subdivision 152-B, as you satisfy the basic conditions in Subdivision 152-A, you will be eligible for the small business exemption in Subdivision 152-C. Small business retirement exemption (Subdivision 152-D): 65.      In the event that a portion of the gain from the sale of the Farmland is not disregarded pursuant to Subdivision 152-B, as you satisfy the basic conditions in Subdivision 152-A you will be eligible to choose to disregard part of the capital gain under the small business retirement exemption in Subdivision 152-D in relation to the CGT retirement limit of $500,000 minus any CGT exempt amounts of CGT assets specified in choices previously made. > [1] All future legislative references are to the Income Tax Assessment Act 1997 , unless otherwise stated. [2] (1987) 163 CLR 199; 87 ATC 4363; 18 ATR 693. [3] However, subsection 104-10(2) of the ITAA 1997 also provides that a change in ownership will not occur is the taxpayer ceases to be the legal owner of the asset but continues to be its beneficial owner. [4]

except if section 118-140 applies (which is not relevant to the current case). [5] section 6-10 of the ITAA 1997 broadly provides that a taxpayer's assessable income also includes statutory income. [6] in Subdivisions152-C, 152-D and 152-E. [7] Section 115-10 of the ITAA 1997. [8] Section 115-15 of the ITAA 1997. [9] Section 115-20 of the ITAA 1997. [10] Section 115-25 of the ITAA 1997. [11] Section 152-220 provides that the taxpayer may choose not to apply section 152-205.