Question:

Facts

Sally and John are husband and wife and Nick is their adult son. Sally runs a business of providing home care to people with disability and has business turnover of $1.1m for 2020/21. John runs a bus repair business with turnover of $1.6 million for 2020/21. Nick runs a business of providing tutoring services to primary students, and his turnover for 2020/21 is $100,000.

Sally recently arranged an independent business valuation and she has been advised that her business is worth $3.5m. She co-jointly (50/50) owns a house with John which is their principal place of residence and this has been valued at $2.75m.

Sally, John and Nick each run their business as independent entities with separate business bank accounts and employees. Sally and Nick each run their business from an office in the family home, and John runs his business from a separate location.

Question

Assess both the turnover and net asset tests and explain whether Sally is eligible to claim small business CGT concessions for 2020/21 if she decides to sell her business. You do not need to discuss the actual concessions, only Sally's eligibility.