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Bell v FCT: Uncertainties in the small business CGT concessions


The small business capital gains tax concessions in Div 152 of the Income Tax Assessment Act 1997 are widely utilised by taxpayers who are disposing of their businesses. Two recent cases in the Federal Court, FCT v Byrne Hotels Qld Pty Ltd and Bell v FCT, have, however, caused some uncertainty about the application of the concessions.

This article examines the implications of these cases. In the author’s view, the Byrne Hotels case has expanded the scope of the liabilities that can be included in the maximum net asset value (MNAV) test to some contingent liabilities, but leaves some uncertainty as to the precise types of contingent liabilities that can be included in the MNAV calculation. Bell’s case was unable to resolve this uncertainty due to the abandonment of the issue on appeal. Practitioners should be aware of the complexities with contingent liabilities when utilising the small business CGT concessions.

Author profile

Dr Philip Bender
Philip is a Barrister and member of the Institute of Chartered Accountants practising in State and Federal taxation, superannuation and commercial law. He is also a sessional member of the Victorian Civil and Administrative Tribunal (although he still appears as a barrister in the tax list of that Tribunal). Philip advises and appears for taxpayers and revenue authorities in State and Federal courts and tribunals and has appeared on a number of occasions in the High Court. He has also been briefed by other government agencies including ASIC, the Official Trustee in Bankruptcy and the Victorian Government Solicitor's Office. - Current at 01 October 2014
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