1 Is the CGT event on sale of the property in connection with the retirement of an individual as required by subsection 152-110(1)(d) of the Income Tax Assessment Act 1997 (ITAA 1997)?
1 Yes. Question 2 Will the Commissioner exercise discretion to extend the time period for payment of the exempt amount to the CGT concession stakeholder until 30 June 20XX under subsection 152-125(4) of the ITAA 1997? Answer 2 Yes. This ruling applies for the following periods: Year ending 30 June 20XX Year ending 30 June 20XX Year ending 30 June 20XX Year ending 30 June 20XX Year ending 30 June 20XX Year ending 30 June 20XX Year ending 30 June 20XX Year ending 30 June 20XX Year ending 30 June 20XX The scheme commenced on: 1 July 20XX
The taxpayer acquired the property under a contract in May 20XX. The property has continuously been used in the farming operations conducted by the taxpayer and has never been used to derive rental or agistment income. One of the individuals spent approximately XX hours per week in the busy seasons and approximately X hours per week in the low season working in the business role in the business included all bookkeeping and correspondence with the accountants, all dealing with suppliers, including orders and payments, and picking up parts as and when required. The taxpayer sold the property under a contract of sale in 20XX with a deferred settlement. Settlement is to occur at the earlier of either x days after a rezoning approval occurs; x days after a Windfall Gains Tax Event occurs, an early settlement date is agreed, or x months after the date of contract. Settlement could therefore take up to x years. One of the individuals died in 20XX and since this time the other individual has controlled the trust. In June 20XX the taxpayer ceased carrying on the farming operation and the property was instead leased to one of the children.
After the signing of the contract the earliest time the taxpayer could consider ceasing business was around June 20XX due to X and X timing issues. In June 20XX once all other income had been received by the taxpayer the decision was made to formally lease the child the entire property. This lease arrangement is intended to continue until settlement of the property. The individual no longer has a role in the business operations and is fully retired since June 20XX. The individual is over 55 years of age. The individual will receive passive rental income via the taxpayer. On settlement of the property the funds are intended to be utilised for retirement. The taxpayer derived a profit on the farming operations in the 20XX income year, and this was distributed solely to the individual as income of the trust. Under the Trust Deed for the taxpayer the capital gain will comprise capital of the trust and therefore ultimately be paid by way of a capital distribution.
Income Tax Assessment Act 1997 section 152-110 Income Tax Assessment Act 1997 subsection 152-125
Question 1 Summary After considering the facts and circumstances, the Commissioner is satisfied that the CGT event occurred in connection with an individuals retirement. Detailed reasoning Paragraph 152-110(1)(d) states: An individual who was a significant individual of the company or trust just before the CGT event either: (i) Was 55 or over at that time and the event happened in connection with the individual's retirement; or (ii) Was permanently incapacitated at that time. In connection with retirement Whether a CGT event happens in connection with an individual's retirement depends on the particular circumstances of each case. The legislation does not define what is meant by the phrase 'in connection with' an individual's retirement for the purposes of the provision - it does not give any indication of what constitutes retirement, or whether partial retirement is contemplated, or whether there is any implied temporal relationship between the event in question and the individual's retirement such that retirement must occur contemporaneously with the disposal of the asset(s).
In the absence of a statutory definition of 'retirement' the term takes its ordinary meaning. The Macquarie Dictionary (online version, downloaded December 2025) defines 'retirement' to mean 'removal or retiring from service, office, or business, especially in reaching the end of one's working life', or, 'the period of one's life that follows the end of one's working life'. There would need to be at least a significant reduction in the number of hours worked or a significant change in the nature of the activities to be regarded as a retirement for the purposes of subparagraph 152-110(1)(d)(i). Additionally, the words 'in connection with' can apply where the CGT event occurs sometime after retirement. Again, this would depend on the particular facts and would need to be considered on a case-by-case basis. Application to circumstances In this case, there was XX months between the CGT event and the retirement of the individual. This was due to the timing of the X and X and the long settlement. Even though the retirement occurred sometime after the CGT event, the Commissioner is satisfied there was an actual retirement, and it was in reasonable proximity to the CGT event. Question 2
Summary Having considered the circumstances and the relevant factors, the Commissioner will grant an extension of time for payment of the exempt amount to the CGT concession stakeholder until 30 June 20XX. Detailed reasoning Under subsection 152-125(4) of the ITAA 1997 the Commissioner may extend the two-year time limit to make an exempt payment to a trust's CGT concession stakeholder. The Commissioner generally extends the time limit where the delay in receiving the capital proceeds is out of your control. In determining whether to allow an extension of time, the Commissioner considers the following factors: • whether there is evidence of an acceptable explanation for the period of extension requested and whether it would be fair and equitable in the circumstances to provide such an extension • whether there is any prejudice to the Commissioner if the additional time is allowed (however, the mere absence of prejudice is not enough to justify the granting of an extension) • whether there is any unsettling of people, other than the Commissioner, or of established practices
• the need to ensure fairness to people in like positions and the wider public interest • whether there is mischief involved, and • the consequences of the decision. In this case, the Trust signed a contract in August 20XX to sell the property on the condition the settlement date is on the earlier of the: • x days after the rezoning approval occurs; • a date that is x days after the WFT event occurs; • early settlement date; and • a date that is x months after the date of sale. Having considered the relevant circumstances, the Commissioner is satisfied there is an acceptable explanation for the need for a discretion. Additionally, the Commissioner is satisfied there is no prejudice, no unsettling of other taxpayers, no issues of fairness and no concerns of mischief involved. As such, the Commissioner will exercise his discretion and extend the two-year time limit under subsection 152-125(4) of the ITAA 1997 until 30 June 20XX.