Tax Laws Amendment (2006 Measures No. 7) Act 2007 (55 of 2007)

Schedule 1   Small business relief for CGT events

Income Tax Assessment Act 1997

27   Subsections 152-20(3) and (4)

Repeal the subsections, substitute:

Net value of the CGT assets of others

(3) In working out the net value of the CGT assets of:

(a) your *small business CGT affiliate; or

(b) an entity that is *connected with your small business CGT affiliate;

include only those assets that are used, or held ready for use, in the carrying on of a *business by you or another entity *connected with you (whether the business is carried on alone or jointly with others).

(4) However, disregard assets under subsection (3) that are used, or held ready for use, in the carrying on of a *business by an entity that is *connected with you only because of your *small business CGT affiliate.

Example: You and your husband sell a florist’s business that you jointly carry on. Your husband also wholly owns a company that carries on a newsagency business. You yourself have no other involvement with the newsagency business.

Under subsection (4), you disregard the newsagency company’s assets in working out whether you satisfy the maximum net asset value test because, although the company is “connected” with you, it is so connected only because of your small business CGT affiliate (your husband).