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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your written advice

Authorisation Number: 1051465886067

Date of advice: 14 December 2018

Ruling

Subject: Income tax - Capital gains tax - Exemptions - Pre-CGT assets - Income tax - Capital gains tax - CGT events - CGT events K1 to K12 - other CGT events

Question 1

Will the capital gain on the disposal of shares in ABC Pty Ltd by the A & B Partnership that arises under CGT event A1 be disregarded under paragraph 104-10(5)(a) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

Question 2

Is the goodwill of XYZ Pty Ltd property that was acquired before 20 September 1985 (i.e. pre-CGT) for the purpose of subsection 104-230(2) of ITAA 1997?

Answer

Yes.

Question 3

Will CGT event K6 under section 104-230 of the ITAA 1997 apply to the disposal of shares in ABC Pty Ltd by the A & B Partnership?

Answer

No.

This ruling applies for the following period

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

Proposed restructure

Pre-CGT

Goodwill of XYZ Pty Ltd

Assumption

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 160ZZN

Income Tax Assessment Act 1936 Section 160ZZNA

Income Tax Assessment Act 1936 Section 160ZZO

Income Tax Assessment Act 1997 Paragraph 104-10(5)(a)

Income Tax Assessment Act 1997 Section 104-230

Income Tax Assessment Act 1997 Subsection 104-230(1)

Income Tax Assessment Act 1997 Subsection 104-230(2)

Income Tax Assessment Act 1997 Paragraph 104-230(2)(a)

Income Tax Assessment Act 1997 Paragraph 104-230(2)(b)

Income Tax Assessment Act 1997 Section 125-80

Income Tax Assessment Act 1997 Subsection 125-80(5)

Reasons for Decision

These reasons for decision accompany the Notice of private ruling for A & B Partnership.

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

All legislative references are to the ITAA 1997 unless otherwise specified.

Question 1

Will the capital gain on the disposal of shares in ABC Pty Ltd by the A & B Partnership that arises under CGT event A1 be disregarded under paragraph 104-10(5)(a) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Summary

Detailed reasoning

Conclusion

Question 2

Is the goodwill of XYZ Pty Ltd property that was acquired before 20 September 1985 (i.e. pre-CGT) for the purpose of subsection 104-230(2) of ITAA 1997?

Summary

Detailed reasoning

CGT event K6

Goodwill is property

Goodwill of LA

Meaning of Goodwill

Goodwill remains a single CGT asset if the same business continues

Changes to the business

Whether new goodwill is acquired on the acquisition of a new business

Application of the facts

Conclusion

Question 3

Will CGT event K6 under section 104-230 of the ITAA 1997 apply to the disposal of shares in ABC Pty Ltd by the A & B Partnership?

Summary

Detailed reasoning

When CGT event A1 happens

75% Test 1: paragraph 104-230(2)(a)

75% Test 2: paragraph 104-230(2)(b)


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