# Worked Example — Bounty #08

**Companion file to:** `01-brief.md`

## The scenario

**Taxpayer:** Wilson Family Trust (discretionary trust; trustee is Wilson Nominees Pty Ltd)
**Beneficiaries:** Bob Wilson (68), his wife Maree Wilson (65), their adult children (× 2)
**Trust asset:** 100% shareholding in Wilson Trading Pty Ltd, which operates a family cabinetmaking business.
**Trust acquired the shareholding:** July 2008 (16.5 years continuous ownership)
**Bob's role:** Managing director of Wilson Trading; drawing a salary and franked distributions from the trust for 16 years.
**Disposal event:** Sale of the entire shareholding to a third-party acquirer on 15 September 2024.
**Sale proceeds:** $4.2M
**Trust's cost base in the shares:** $50,000 (initial capitalisation)
**Capital gain:** approximately $4.15M
**Bob's stated intention:** He will fully retire from active business involvement on completion; he is 68.

## The engine spec's target evaluations

**Basic conditions (s 152-10):**
- CGT event A1 on the shares? YES
- Would produce a capital gain? YES
- SBE (aggregated turnover < $2M) OR MNAV ($6M net assets)? The trust's MNAV needs testing — likely PASS given the small operation.
- Active-asset test — s 152-40(3): shares in a company can qualify if the underlying company is a "small business active asset" holder for the majority of ownership. Need to test.

**15-year exemption specific conditions (s 152-110):**
- 15+ years continuous ownership? YES (16.5 years).
- "Significant individual" test throughout? The reviewer must confirm Bob has been a significant individual (as defined in s 152-55) at all times.
- Significant individual at disposal age 55+ retiring or incapacitated? Bob is 68, retiring — YES.

## The spec's predicted verdict

Subject to the active-asset test and significant-individual test passing on the facts, the trust is eligible for the full 15-year exemption. Consequence: **the $4.15M capital gain is fully disregarded** under s 152-110.

## What the reviewer is being asked

1. Have I correctly identified all the basic conditions?
2. Is the "significant individual" test correctly framed?
3. Are there any lurking conditions in Subdivision 152-B that the calculator must additionally test?
4. Post-exemption, what does the trust do with the proceeds — any downstream CGT event on distribution to Bob?
5. Any authority (case law, ATO ruling) I've missed that changes the analysis?