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Edited version of your written advice
Authorisation Number: 1012921536596
Date of advice: 3 December 2015
Ruling
Subject: Acquisition, transfer and sale of shares
In order to protect the privacy and commercial in-confidence components of this private binding ruling the following question and answers are provided.
Question 1:
In the event that a future disposal of shares in a company ('Shares') attracts the operation of the CGT provisions in Parts 3-1 and 3-3 of the ITAA 1997, do section 109-5 and section 109-10 of the ITAA 1997 apply such that you will be taken to have acquired the Shares in the year in which they were issued to you?
Answer:
Yes.
Question 2:
Does section 106-50 of the ITAA 1997 apply to you in respect of the Shares held by Entity A as your nominee such that:
• the cost base of the Shares will be determined as a cost base to you under Part 3-1 of the ITAA 1997; and
• the transfer of the Shares from Entity A to you will not constitute a CGT event under Division 104 of Part 3-1 of the ITAA 1997?
Answer:
Yes.
Question 3
Does section 126-5 of the ITAA 1997 apply to the transfer of some of the Shares from you to your former partner such that there is a rollover under Division 126 of Part 3-3 of the ITAA 1997?
Answer:
Yes.
Question 4
If you sell the Shares in the course of Schemes 1, 2 or 3, would any gain made by you on the disposal of those Shares be assessed solely as statutory income within Parts 3-1 and 3-3 of the ITAA 1997 and not as ordinary income?
Answer
Yes, subject to the following conditions:
• the Shares are not trading stock as you are not, and will not be, holding them as part of a business of buying and selling investments;
• the Shares are not 'revenue assets' (which are assets of which disposal is inherent in, or incidental to, the carrying on of a business, and which do not include trading stock) as you are not, and will not be, carrying on a business, where the sale of those Shares would be inherent in, or incidental to, that business;
• you do not sell the Shares as part of a business operation or commercial transaction; and
• the Shares have been, and will continue to be, held as a long-term investment.
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