ATO Interpretative Decision
ATO ID 2004/802 (Withdrawn)
Income tax
Capital gains tax: financial services reform regime - old licence rollover - new owner - members of the same consolidatable groupFOI status: may be released
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This ATO ID is a straight application of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 taxpayer, a company, eligible for rollover relief under section 124-915 of the Income Tax Assessment Act 1997 (ITAA 1997) when, during the financial services reform (FSR) transition period, its old licence is replaced with the Australian financial services licence (AFS licence) acquired by another company in the same consolidatable group?
Decision
Yes. The taxpayer is eligible for rollover relief under section 124-915 of the ITAA 1997 when its old licence is replaced with the AFS licence acquired by the other company of the same consolidatable group.
Facts
The taxpayer and the other company are wholly owned resident subsidiary members of the head company. Each company is taxable at the general company tax rate and is not a non-profit company.
The taxpayer owned an old licence that was issued under the relevant law in force before the commencement of the Financial Services Reform Act 2001. The other company applied to the Australian Securities & Investments Commission (ASIC) for the AFS licence during the FSR transition period. ASIC granted the AFS licence to the other company.
The taxpayer and the other company are members of the same consolidatable group at the time the other company acquired the AFS licence.
The taxpayer's old licence was cancelled when the AFS licence was granted to the other company. The AFS licence acquired by the other company covered all of the activities that were authorised by the old licence.
The requirements of subsection 124-900(1) of the ITAA 1997 have been satisfied.
Reasons for Decision
CGT event C2 happened when the taxpayer's old licence was cancelled at the time the AFS licence was granted to the other company (paragraph 104-25(1)(a) of the ITAA 1997).
Under subsection 124-900(2) of the ITAA 1997, rollover relief is available if the original owner of the old licence and the new owner of the AFS licence are members of the same consolidatable group at the time the new owner acquires the AFS licence. A consolidatable group is defined in section 703-10 of the ITAA 1997 and consists broadly of a head entity and its wholly-owned subsidiaries. A wholly-owned subsidiary includes a company or trust where all the membership interests are wholly-owned by other members of the consolidatable group. The condition in subsection 124-900(2) is in addition to those set out in subsection 124-900(1).
In this case, the condition in subsection 124-900(2) of the ITAA 1997 that requires the new owner and the old owner to be members of the same consolidatable group has been met.
The taxpayer is eligible for the new owner rollover relief provided by section 124-915 of the ITAA 1997. It can disregard any capital gain or loss that it makes from the cancellation of its old licence.
Date of decision: 28 September 2004Year of income: Year ended 30 June 2004
Legislative References:
Income Tax Assessment Act 1997
paragraph 104-25(1)(a)
subsection 124-900(1)
subsection 124-900(2)
subsection 124-915
section 703-10
The Act Related ATO Interpretative Decisions
ATO ID 2004/576
Keywords
Australian financial services licence
Capital gains tax
CGT companies in the same wholly owned group
Consolidatable group
Financial services reform regime
Financial services reform transitions
FSR regime
New owner roll-over
Old licence roll-over
Subsidiary member of a consolidatable group
Wholly owned subsidiary
ISSN: 1445-2782
| Date: | Version: | |
| 28 September 2004 | Original statement | |
| You are here | 26 August 2005 | Archived |