ATO Interpretative Decision

ATO ID 2003/647 (Withdrawn)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This ATO ID is withdrawn as it is a straight application of the law and does not contain an interpretative decision.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Does CGT event J4, section 104-195 of the Income Tax Assessment Act 1997 (ITAA 1997), happen when a trust that has obtained rollover under Subdivision 124-N of the ITAA 1997 ceases to exist within six months after the start of the trust restructuring period or as soon as practicable after the end of that six month period?

Decision

No. CGT event J4 under section 104-195 of the ITAA 1997 does not happen if the trust ceases to exist within six months after the start of the trust restructuring period or as soon as practicable after the end of that six month period.

Facts

A fixed trust and a company both chose to obtain rollover under Subdivision 124-N of the ITAA 1997 for a trust restructure. The trust disposed of all of its assets to the company and ceased to exist within six months of the start of the trust restructuring period.

Reasons for Decision

CGT event J4 happens where:

there is a rollover under Subdivision 124-N of the ITAA 1997 for a trust disposing of a CGT asset to a company under a trust restructure (paragraph 104-195(1)(a) of the ITAA 1997);

the trust fails to cease to exist within six months after the first asset is disposed of to the company or as soon as practicable after the end of that six month period (paragraph of the 104-195(1)(b) of the ITAA 1997); and

the company owns the asset when the failure happens (paragraph 104-195(1)(c) of the ITAA 1997).

In these circumstances, the CGT event does not happen because a necessary precondition for the triggering of CGT event J4 has not been satisfied. The trust ceased to exist within the six month period referred to in paragraph 104-195(1)(b) of the ITAA 1997.

[Note: In these circumstances, as CGT event J4 does not happen to the company it also does not happen to a shareholder in the company.]

Date of decision: 9 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)(a)
   paragraph 104-195(1)(b)
   paragraph 104-195(1)(c)

Related ATO Interpretative Decisions
ATO ID 2003/644
ATO ID 2003/645
ATO ID 2003/646

Keywords
Capital gains
Capital gains tax
CGT assets
CGT choice
CGT events
Shares
Trust assets
Unit trusts

Business Line: Losses and CGT Centre of Expertise

Date of publication: 25 July 2003

ISSN: 1445-2782

history

	Date:	Version:
	9 July 2003	Original statement
You are here	21 September 2007	Archived

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