Does Individual X satisfy the basic conditions to apply the small business capital gains tax (CGT) concessions in Subdivision 152-A of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to the disposal of the real estate property jointly owned with their sibling and sold in the financial year ended 30 June 20XX?
Yes. A CGT event happened when Individual X and their sibling disposed of the real estate property, resulting in a capital gain. Individual X's affiliate, a CGT small business entity in the 20XX income year, used the real estate property in carrying on a business and it satisfies the active asset test. This ruling applies for the following period : Year ended 30 June 20XX The scheme commenced on: DDMM20XX
The X Family includes Individual X together with their sibling and their parents. The X Family are farmers and have been running a business in primary production. In 19XX, Individual X, together with their sibling (the X Siblings) bought land on one title, close to the Home Property (the Land). The X Siblings purchased the Land, with the purpose of extending the family business. The X Parents together with the X Siblings initially ran the family business in a partnership (the X Family Partnership) and the X Siblings contributed the Land to the new partnership of the four family members. All profits were distributed equally between the X Family Partners. Due to the close family relationship, the partnership was not formally documented. The X Parents were still involved in the family business during this period as partners in the Family Partnership. The X Siblings contributed to the management of the business and the decision-making process of the business. The X Family Partners did not hold any specific roles or responsibilities in the business.
In 19XX, the X Family incorporated the Company. The X Family business was then solely operated in the Company. Individual X was a director of the Company and held XX% of the ordinary shares in the Company. Individual X was involved in day-to-day duties of the Company business, in the same way that had been operated under the X Family Partnership. Individual X was involved in all decision-making regarding the operation of the Company. Individual X dealt with all the business banking, administration and other business operations that involved paperwork. Individual X has provided additional facts and detailed information about their involvement in the decision making and business affairs of the Company. The Company's annual turnover was lower than $2 million in the relevant income years. The sale of the Land settled in 20XX.
Income Tax Assessment Act 1997 section 104-10 Income Tax Assessment Act 1997 subsection 108-5(1) Income Tax Assessment Act 1997 Division 152