ACCA Advanced Taxation (ATX) Practice Exam

What is the minimum ownership period for an Asset Purchase Relief (APR) to apply if farmed by the owner?

1. Two years

2. Three years

3. Five years

4. Seven years

The correct answer is: Two years

The correct response regarding the minimum ownership period for an Asset Purchase Relief (APR) to apply if farmed by the owner is two years. This reflects the tax provisions that are in place, where an individual or business must hold the qualifying asset for at least this duration to benefit from the relief on capital gains tax upon disposal, facilitating the transfer of assets in a more tax-efficient manner. Understanding the minimum ownership period is crucial because it allows owners to plan the timing of their asset disposal strategically. Those who hold the asset for the requisite period can secure significant tax advantages, which is especially relevant in agricultural contexts where asset values can fluctuate significantly. In contrast, longer ownership periods, such as three, five, or seven years, do not apply to this particular relief, as the tax legislation specifically states two years as the minimum threshold. This distinction emphasizes the importance of staying informed about current tax regulations to maximize benefits.