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Edited version of private advice
Authorisation Number: 1052122858891
Date of advice: 29 May 2023
Ruling
Subject: Affiliate relationship
Question
Is Company your affiliate as defined by section 328-130 of the Income Tax Assessment Act 1997 (ITAA 1997) for the purpose of the proposed sale of land?
Answer
Yes. The Company is considered to be an affiliate of yours under section 328-130 of the ITAA 1997. On the basis of your close family relationship with its directors and shareholders, its dependency on the use of your land and labour at below market value, and your involvement in its business decisions, it is reasonably expected that XXXXXXXX Pty Ltd would act in accordance your directions or wishes, or in concert with you in relation to the affairs of its business.
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You and your spouse were previously the directors and shareholders of the Company. You relinquished your directorship to and sold your shares in the Company to your child and their spouse, approximately XX years ago.
Since this time, you have provided the land used in the business conducted by the Company at well below market value. You have also provided your own services as employees at a significant discount to market value.
You have also been involved in significant decisions of the Company in relation to its affairs.
You propose selling land that has been used by the Company.
The only other connected entity or affiliate in the group is your child and their spouse.
The Company is the only entity in the group carrying on a business and its aggregated turnover for the year ended 30 June 20XX was under $X million.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 328-130
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