Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES

PART 3-3 - CAPITAL GAINS AND LOSSES: SPECIAL TOPICS

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Division 126 - Same-asset roll-overs

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Subdivision 126-G - Transfer of assets between certain trusts

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History

Subdiv 126-G inserted by No 19 of 2010, s 3 and Sch 1 item 9, applicable to CGT events happening on or after 1 November 2008. No 19 of 2010, s 3 and Sch 1 items 12 and 13 also contains the following transitional provisions:

Transitional: time for making mirror choices
(1)
Subsection 126-235(3) of the Income Tax Assessment Act 1997 does not apply if the other trust makes a mirror choice under a provision of a taxation law by:

(a) 6 months after the day this Act receives the Royal Assent [ CCH Note: assent was gained 24 March 2010]; or

(b) a later day allowed by the Commissioner of Taxation.
Note:

For this item to have effect, the other trust must still be able, under that provision of the taxation law, to make the mirror choice.

(2)
This item has effect in addition to subsection 126-235(4) of the Income Tax Assessment Act 1997 .
Transitional: deadline for giving information to beneficiaries
(1)
This item applies in relation to a roll-over chosen under Subdivision 126-G of the Income Tax Assessment Act 1997 if the transfer year for the roll-over is the transferring trust's 2008-09 income year.

(2)
Subsection 126-260(1) of that Act has effect, in relation to the roll-over, as if the reference in that subsection to 3 months after the end of the transfer year were a reference to 6 months after the day this Act receives the Royal Assent [ CCH Note: assent was gained 24 March 2010].

Operative provisions

SECTION 126-225 When a roll-over may be chosen

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126-225(1)
A roll-over may be chosen for a *CGT asset (the roll-over asset ) if:

(a) the trustee of a trust (the transferring trust ):

(i) creates a trust (the receiving trust ), by declaration or settlement, over one or more CGT assets that include the roll-over asset; or

(ii) transfers the roll-over asset to an existing trust (the receiving trust );

at a particular time (the transfer time ); and

(b) if subparagraph (a)(ii) applies - the receiving trust has no CGT assets immediately before the transfer time, other than any or all of the following:

(i) small amounts of cash or debt;

(ii) its rights under an *arrangement, if (collectively) those rights only facilitate the transfer of assets to it from the transferring trust; and

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(c) just after the transfer time:

(i) each of the trusts has the same beneficiaries; and

(ii) the receiving trust has the same *classes of *membership interests that the transferring trust had just before, and has just after, the transfer time; and

(iii) the sum of the *market values of each beneficiary ' s membership interests of a particular class in both trusts is substantially the same as the sum of the market values, just before the transfer time, of the beneficiary ' s membership interests of that class in both trusts; and

(d) the requirement in section 126-230 is met; and

(e) the exceptions in section 126-235 do not apply.

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Exception if other roll-over assets already transferred

126-225(2)
However, paragraph (1)(b) does not apply if:

(a) the roll-over asset is transferred to the receiving trust under an *arrangement; and

(b) the roll-over asset was an asset of the transferring trust just before the arrangement was made; and

(c) at least one other asset of the receiving trust:

(i) is an asset for which a roll-over was obtained under this Subdivision for the trusts; and

(ii) is an asset over which the receiving trust was created, or was transferred by the transferring trust to the receiving trust under the arrangement; and

(d) the transfer time is in the income year for the transferring trust that includes the earliest transfer time (the start time ) for the assets covered by paragraph (c).

Obtaining the roll-over

126-225(3)
The roll-over only happens if both the trustee of the transferring trust and the trustee of the receiving trust choose to obtain it.

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