Court Decisions
CGT small business reliefs: connected entities
18.08.2009
The Federal Court (Sundberg J) has held that a partnership cannot be a connected entity under the former CGT small business relief connected entity rules (White v FCT [2009] FCA 880).
This meant that partnerships in which the taxpayer was a partner could not be connected with the taxpayer and that the net values of the CGT assets of the partnerships were not brought into account in determining whether the taxpayer satisfied the maximum net asset value test.
The present connected entity rules that apply for the purposes of the CGT small business reliefs were enacted by the Tax Laws Amendment (Small Business) Act 2007 and apply in relation to CGT events that happen in the 2007-08 or a later income year. These rules make it clear that a partnership may be a connected entity. There is in fact a specific control rule which refers to the control of a partnership (see sec 328-125(2)(a)(ii) ITAA 1997).
