ATO Interpretative Decision
ATO ID 2003/910 (Withdrawn)
Income Tax
CGT: Rollover of depreciating assets from a partnership (STS taxpayer) to a wholly-owned companyFOI status: may be released
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This ATO ID is withdrawn as it is a straight application of the law and does not contain an interpretative decision.This document incorporates revisions made since original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.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 CGT rollover relief under section 122-170 of the Income Tax Assessment Act 1997 (ITAA 1997) available for the transfer of partnership assets to a company wholly-owned by the partners where the partnership is an STS taxpayer under Division 328 of the ITAA 1997?
Decision
Yes. CGT rollover relief under section 122-170 of the ITAA 1997 is available for the transfer of partnership assets to a company wholly-owned by the partners where the partnership is an STS taxpayer under Division 328 of the ITAA 1997.
Facts
The partnership commenced business prior to the introduction of capital gains tax. The partnership is an STS taxpayer under Division 328 of the ITAA 1997 and consists of three partners, each holding a one-third interest. The third partner acquired his interest in the partnership after 19 September 1985.
The partnership owns and uses a wide range of equipment and the partners believe that it would be appropriate to transfer the business into a company structure in order to protect their personal assets.
The partners intend to transfer all of the assets of the business, consisting of a multitude of both low and high cost items of equipment, to a company they wholly-own.
Reasons for Decision
Section 122-170 is contained in Subdivision 122-B of the ITAA 1997. The subdivision outlines the circumstances in which the partners in a partnership can choose capital gains tax (CGT) rollover if an asset, or all the assets of the partnership, are transferred to a company which is wholly-owned by the partners. The subdivision also covers the situation where an asset is created by the partners in a wholly-owned company.
The arrangement proposed by the partners will meet the requirements of Subdivision 122-B of the ITAA 1997, so CGT rollover relief is available under section 122-170.
The effect of the rollover relief is that any capital gain or capital loss made by the partners on the transfer of the assets of the business, is disregarded (section 122-170 of the ITAA 1997). However, the rollover relief under section 122-170 does not extend to any deductions or amounts included in income under Division 328 of the ITAA 1997 in relation to depreciating assets.
Date of decision: 20 June 2003Year of income: Year ended 30 June 2003
Legislative References:
Income Tax Assessment Act 1997
section 122-170
ATO ID 2003/911
Keywords
Capital gains tax
CGT roll-over relief
Simplified tax system
CGT replacement asset roll-over
STS taxpayers
ISSN: 1445-2782
| Date: | Version: | |
| 20 June 2003 | Original statement | |
| You are here | 19 March 2010 | Archived |
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