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jayhugo(Initiate)Initiate
28 Mar 2023

I'm trying to confirm if we (my wife and I) qualify for the Small Business 15 year exemption with regards to CGT on the sale of our industrial unit.


The facts.


Business commenced in 1991 as a partnership. Incorporated in 1994.


The industrial unit was purchased in 2006. (Purchased as individuals and leased to the company)


At the time of the purchase there were 4 owners. (Husband and wife business partners, my wife and myself)


In 2014 we bought out the other two owners resulting in a 50/50 ownership of the property between my wife and I.


We retired and closed the business in 2019 (At the time I was aged 56 and my wife was 52)


The business was operated from the industrial unit between 2006 to 2019.


From 2019 to present the property has been leased to a 3rd party (Tenant)


I'm now 60, and my wife is 55.


So my question is, based on the above, if we sell the industrial unit in 2023 or later, do we qualify for the 15 year exemption?


(edited for privacy 30/03/23)

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1,660 views
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Bruce4Tax(Taxicorn)Taxicorn
29 Mar 2023

So my question is, based on the above, if we sell the industrial unit in 2023 or later, do we qualify for the 15 year exemption?


15 year exemption is for assets sold as result of retirement.

You are already retired, so don't see how that is going to work.


https://www.ato.gov.au/Business/Small-business-entity-concessions/Concessions/CGT-concessions/small-business-15-year-exemption/#Consequences_of_applying_the_exemption


So could the retirement exemption be applied?


That requires the property to be an active asset - extended definition.


https://www.ato.gov.au/Business/Small-business-entity-concessions/Concessions/CGT-concessions/Active-asset-test/


Could be a part exemption, but you should get proper advice based on all the facts.


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Most helpful reply

Bruce4Tax(Taxicorn)Taxicorn
29 Mar 2023

So my question is, based on the above, if we sell the industrial unit in 2023 or later, do we qualify for the 15 year exemption?


15 year exemption is for assets sold as result of retirement.

You are already retired, so don't see how that is going to work.


https://www.ato.gov.au/Business/Small-business-entity-concessions/Concessions/CGT-concessions/small-business-15-year-exemption/#Consequences_of_applying_the_exemption


So could the retirement exemption be applied?


That requires the property to be an active asset - extended definition.


https://www.ato.gov.au/Business/Small-business-entity-concessions/Concessions/CGT-concessions/Active-asset-test/


Could be a part exemption, but you should get proper advice based on all the facts.


Liked by jayhugo
jayhugo(Initiate)Initiate
2 Apr 2023

Thank you for your reply, very much appreciated.


With regards to already being retired. One of the conditions says,


"when the CGT event happened you were,


at least 55 years old and the event happened in connection with your retirement"


Both my wife and I are over 55 and the sale is in connection with our retirement. The key words being "in connection with". If it said "at time of retirement" then perhaps this would disqualify our claim but it doesn't say that?


With regards to the active asset test.


We have owned the property for 17 years in total and it was an active asset for 13 years so we also satisfy that requirement?


"The active asset test is satisfied if the asset was an active asset of yours:


for a total of at least 7½ years during the test period, if you've owned it for more than 15 years"


What I'm not sure about, and something that creates a possible grey area, is the buying out of our partners share in the property that occurred in 2014.


Their ownership ended, however our ownership share increased.


So is our position one of concurrent ownership? Or did the 2014 buy out reset the ownership clock?


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