CTA3 2024 - CS5 : Trusts and Small Business CGT Concessions

1. Grace’s Potential Property Sale:
   • Grace is considering selling her property used in the William Family Trust’s farming activities and wants to know about using Division 152 concessions to reduce her capital gain.
2. Arthur Jones’s Nursery Land:
   • Arthur seeks advice on the tax implications of selling his nursery land used for growing flowers with an estimated value of $1 million and cost base of $250,000. He has not claimed deductions for this property.
3. Mr. Obedient’s Influence:
   • Mr. Obedient, though the appointor of the William Family Trust, follows Arthur’s directions, which may affect the Trust's transactions and decisions.
4. Trust Income Distribution for 2024:
   • The trust might not have income due to substantial asset write-offs, raising questions about the impact on Division 152 concessions.

1. GST-Free Going Concern: Can Battery acquire the assets of SStore, Asset, and Secret as a GST-free going concern?
2. GST Treatment if Not GST-Free: What is the GST treatment if the acquisition cannot be treated as a GST-free going concern?
3. ITC and RITC Claims: How will the change in transaction structure affect the eligibility to claim ITCs and RITCs on incurred costs, including Accumin’s, Clover’s, and CarneRock’s expenses?

1. Compliance with Tax Agent Services Act 2009 (Cth): What specific issues does this scenario present for the adviser under the Tax Agent Services Act 2009?
2. Consequences of Non-Compliance: What are the potential consequences for the adviser failing to observe the provisions of the Act, and which are likely to apply in this case?

1. For Grace:
   • Eligibility for Division 152 Concessions: Advise on meeting basic conditions and active asset test. Recommend considering the timing of the sale to potentially improve eligibility.
2. For Arthur Jones:
   • PPR Exemption: Confirm if the property qualifies for the Principal Place of Residence (PPR) exemption.
   • Business Status: Determine if Arthur’s flower growing qualifies as a business and if the nursery land is an active asset.
   • Alternative Strategies: Explore options like selling for less, reclassifying the business, or transferring shares to a super fund.
3. For Mr. Obedient:
   • Influence on Trust: Review the impact of Mr. Obedient’s influence on CGT concessions and Trust decisions and assess any implications for the Trust’s tax matters.
4. For the Trust:
   • No Income Distribution: Clarify the impact of no income distribution on accessing Division 152 concessions and confirm that prior year distributions can still support eligibility for CGT concessions.

Guide for Arthur Jones

William Family Trust

Grace

Mr. Obedient

Guide to Implementation Steps