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Legal database

ATO Interpretative Decision

ATO ID 2003/859 (Withdrawn)

Income Tax

Capital gains tax : trust to company rollover - trust ceasing to exist
FOI status: may be released
  • This ATO ID is withdrawn as it is a straight application of the law and does not contain an interpretative decision.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.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Can CGT event J4 happen to a CGT asset disposed of to a company under Subdivision 124-N of the Income Tax Assessment Act 1997 (ITAA 1997) if the asset is sold by the company during the trust restructuring period?

Decision

No. CGT event J4 cannot happen to a CGT asset disposed of to a company under Subdivision 124-N of the ITAA 1997, that is sold by the company during the trust restructuring period.

Facts

The trustee disposed of all of the CGT assets of a unit trust to a company under trust restructure rollover in Subdivision 124-N of the ITAA 1997.

The last CGT asset was disposed of by the trustee to the company more than 6 months after the transfer of the first CGT asset.

There were no circumstances beyond the control of the trustee which caused the disposal of the last asset to be more than 6 months after the disposal of the first asset. During the trust restructuring period, the company sold a CGT asset it had acquired from the trustee.

Reasons for Decision

Where the transferor (the trustee) and the transferee (the company) have chosen rollover under Subdivision 124-N of the ITAA 1997, and the trust does not end within six months, or, if that is not possible because of circumstances outside the control of the trustee - as soon as practicable after the end of that 6 month period, CGT event J4 (section 104-195 of the ITAA 1997) applies to effectively reverse the effect of the rollover in respect of the CGT assets transferred between these entities.

CGT event J4 does not happen to a CGT asset if the company does not own that asset when the failure to cease to exist occurs (paragraph 104-195(1)(c) of the ITAA 1997). CGT event J4 will happen to other CGT assets disposed of by the trustee to the company under the trust restructuring that are owned by the company at the time of the event.

Date of decision:  17 July 2003

Year of income:  Year ended 30 June 2003

Legislative References:
Income Tax Assessment Act 1997
   Subdivision 124-N
   section 104-195
   paragraph 104-195(1)(c)

Keywords
Capital gains tax
CGT events
CGT roll-over relief
Shares
Trusts

Business Line:  Losses and CGT Centre of Expertise

Date of publication:  26 September 2003

ISSN: 1445-2782

history
  Date: Version:
  17 July 2003 Original statement
You are here 19 March 2010 Archived

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