If your school is like mine, this is not unusual and should not be met with undue concern.  That he is the youngest in the class makes it even less of a concern.  Being in a multi-age class (as most of my children were at that age) in fact makes this easier as he will be with many of the same kids next year that he was with this year.  I faced this same thing a few years ago, with second grade in a multi-age class, and today, a few years later, my child is doing very well in her class.
 
So. from a social and developmental standpoint, I would not see this as a concern.
 
Academically, keeping a close eye on his progress next year is a good idea, making sure he is tracking the first-grade full-classroom work.  My sense (based on not much information!) is that the kind of academics that a tutor could help with might not be an issue, as the teacher says he is handling the subjects, albeit one-on-one.  But it does seem important that he be able to keep on top of what is going on at the class level, or he could run the risk of (later) falling behind academically.
 
Just one parent's opinion!

Children whose behavior and development are young can benefit from moving to a class where they might be among the oldest in the class.  In my teaching years, I have seen it time and again, especially with boys, who tend to mature more slowly than girls.  Boys who are older in the class get many chances to be leaders, helpers, good examples, and grow self-esteem.  While being older offers other challenges in adolescence, the benefits are huge.  My own son turned 7 in December of first grade, was 18 as a high school senior, and really bloomed in his college, and now adult, years.  I recommend it.

Dear Maine68,
 
You're asking a very difficult question because we won't really be able to know the "right" answer until years from now.
 
I'm really concerned that your son's teacher has said he knows his subjects already.  If you have your son repeat grade one, he may start to get bored because he already knows what's being taught.  Children learn so much in grade one.  Is your son already reading at a grade one level?  Does he know his math facts and concepts for grade one?  If he does, I would be really hesitant to have him repeat all of those things.
 
Having a young child in a multi-age/multi-grade classroom presents many challenges for concentration.  Much of the day, the child is having to ignore the instruction to the other groups.
 
As well, having 28 children in a classroom is another challenge.  That's a lot of little bodies and minds in one place all day.
 
Instead of having him repeat all of grade one, you could consider some other options.
 
Does he need to stay in a multi-age/multi-grade classroom?  In any typical one- grade classroom, there's a tremendous range of abilities and skills.  If your son goes to a straight grade two classroom, he might be the youngest, but he won't be the lowest academically from what you suggest.
 
Can your son be placed in a classroom with fewer students?
 
Can your son work in a quiet space in the school library, for instance, when he has to really concentrate and finish some work?
 
Can your son have a work/study space in his classroom?  This would be like having his own office to work in.  When he finishes his work, then he can return to his desk or table.
 
Have you tried a reinforcement system where your son, you, and his teacher work out a point and reward system for work completed.
 
Could you talk to your school principal about the grade two teachers in your son's school?  Some teachers are better at working with active youngsters.
 
If your son has an inquiring mind, then I would be really concerned about what he'll think if he's asked to stay another year in grade one.
 
Could you and his tutor teach him how to work with other noises around him?  I know that this suggestion might sound odd.  However, when I was young, my mother always made certain that it was completely quiet in the house when I was studying or doing my homework.  It has taken me years to learn how to work in an environment with any noise.  In the real world, there are very few totally quiet places!!!  When my own girls were doing their schoolwork, I always made sure that there were background noises, or other activitives, going on at the same time.  This is more like a real classroom setting.
 
The best to you in your decision.
 
Sylvia HS
Reading Specialist, Author