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Edited version of private advice
Authorisation Number: 1051557522107
Date of advice: 31 July 2019
Ruling
Subject: Income tax - Small business concessions
Question
Is Company A an affiliate of Company B for the purposes of the small business concessions?
Answer
No.
Having regard to your circumstances and the relevant factors we consider that Company A is not an affiliate of Company B as Company A does not act, or could reasonably be expected to act, in accordance with Company B's directions or wishes, or in concert with Company B in relation to the affairs of their business. Further information on affiliates can be found by searching 'QC 50236' on ato.gov.au
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You own X% of Company B.
You wish to transfer the ownership of your shares to the trustee of a family trust that will be established for the benefit of your family.
The market value of the shares is greater than the cost base so you will realise a capital gain on the disposal of the shares.
The trustee of Person A's family trust owns X% of Company B and X% of Company A.
Person A has limited involvement in the day-to-day affairs of the business of Company B.
You are the managing director of Company B and manage the business without influence.
Company B is operated independently of Company A and has a separate board of directors from Company A.
Company A and Company B does not have the same board of directors. The directors of Company B are required to act, and do act, in the best interests of Company B.
The business of Company B is managed by different persons to the business of Company A.
Company A does not consult with you or Company B as to the conduct of Company A's business.
Company A and Company B has different employees. No person employed by Company A is employed by Company B and vice versa.
Company A and Company B has different business premises.
Company A and Company B has separate bank accounts.
Company A and Company B does not consult on business matters and certainly not in respect of the business affairs of Company A.
Company A and Company B conduct their business affairs independently except to the extent to which Company B, in providing services to Company A franchisees, must have regard to the wishes and directions of Company A.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 328-130
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