ATO Interpretative Decision
ATO ID 2003/388
Income Tax
Capital Gains Tax: trust to company roll-over - disposal of a CGT asset to a third partyFOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the trust to company roll-over under Subdivision 124-N of the Income Tax Assessment Act 1997 (ITAA 1997) available if the transferor, a unit trust, disposed of a CGT asset, owned by the unit trust at the start of the trust restructuring period, to a third party that was not the transferee company?
Decision
No. The trust to company roll-over under Subdivision 124-N is not available unless all the CGT assets owned by the transferor, the unit trust, are disposed of to the transferee, the company, during the trust restructuring period.
Facts
The trustee of a unit trust sought to restructure using the trust to company roll-over under Subsection 124-N of the ITAA 1997. During the trust restructuring period, one of the CGT assets was not disposed of to the transferee company. It was disposed of to a third party.
Reasons for Decision
Section 124-860 of the ITAA 1997 sets out the requirements to be satisfied by the transferor, the unit trust, so that roll-over is available for the disposal of the unit trust's CGT assets to the transferee, the company.
All of the CGT assets owned by the transferor, other than those assets that come to an end during the trust restructuring period, must be disposed of to the transferee during this period (subsection 124-860(1) of the ITAA 1997). The disposal of the CGT asset to the third party does not satisfy this requirement.
As the transferor did not dispose of this CGT asset to the transferee, the transferor and the transferee are not entitled to the roll-over relief under Subdivision 124-N of the ITAA 1997 for the CGT assets that were disposed of by the transferor to the transferee.
[Note: The unit holders in the transferor are not entitled to the roll-over relief under Subdivision 124-N of the ITAA 1997 in respect of the disposal of their units in exchange for the shares in the transferee.]
Date of decision: 8 May 2003Year of income: Year ended 30 June 2003
Legislative References:
Income Tax Assessment Act 1997
Subdivision 124-N
section 124-860
subsection 124-860(1)
ATO ID 2002/955
Keywords
Capital gains tax
CGT replacement asset roll-over
CGT same asset roll-over
Unit trust restructuring
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 8 May 2003 | Original statement |
| 19 February 2010 | Archived |