ARTICLE · 12 FEBRUARY 2016

Sladen Snippet - Statute-barred loans and the Maximum Net Asset Value (MNAV) test

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This loan was included in the calculation of assets for the MNAV test of eligibility for small business CGT concessions.

AustraliaTax

The Full Court of the Federal Court has dismissed the taxpayer's appeal in Breakwell v Commissioner of Taxation [2015] FCA 1471 and confirmed the earlier Administrative Appeals Tribunal decision to include an allegedly statute-barred loan of $1.1m in the calculation of the taxpayer's net assets for the maximum net asset value (MNAV) test when determining the taxpayer's eligibility for small business CGT concessions.

The taxpayer was the beneficiary and trustee of a family trust (ABFT), which was in turn the beneficiary of a unit trust (ETUT). In July 2007 the ETUT sold its finance broking business for $500,000. In its 2008 income tax return, the ETUT excluded the capital gain from the sale of the business by applying the small business CGT concessions.

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