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

20   Subsection 152-10(2)

Repeal the subsection (including the example), substitute:

(2) If the *CGT asset is a *share in a company or an interest in a trust (the object company or trust ), one of these additional basic conditions must be satisfied just before the *CGT event:

(a) you are a *CGT concession stakeholder in the object company or trust; or

(b) CGT concession stakeholders in the object company or trust together have a *small business participation percentage in you of at least 90%.

Example: A discretionary trust sells shares in an operating company (the object company). Anna receives 90% of the distributions from the trust, and the trust has a 50% interest in the object company.

The trust cannot be a CGT concession stakeholder in the object company because it is not an individual and therefore cannot satisfy paragraph (2)(a).

However, the trust can satisfy paragraph (2)(b) because Anna is a CGT concession stakeholder in the object company (because her small business participation percentage in the object company is 45%, which is greater than 20%) and her small business participation percentage in the trust is 90%.