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Edited version of private advice
Authorisation Number: 1012676298763
Ruling
Subject: Scrip for scrip rollover
Question 1
Will rollover be available under Subdivision 124-M of the Income Tax Assessment Act 1997 (ITAA 1997) in respect of unitholder exchanging its units in Trust 1 for units in Trust 2?
Answer
Yes
Question 2
Will CGT event E1 in section 104-55 of the ITAA 1997 happen if the terms of Trust 1 are amended pursuant to a valid exercise of a power contained within the Trust Deed?
Answer
No
This ruling applies for the following periods:
income year ended 30 June 20xx
The scheme commences on:
income year ended 30 June 20xx
Relevant facts and circumstances
The sole unitholder of Trust 1 applied for a private ruling in connection with a corporate group restructure under which a new unit trust (Trust 2) will be interposed between the unitholder and Trust 1. Prior to the interposition, the Trust 1 deed will be amended in certain respects pursuant to a valid exercise of a power contained within the Trust Deed.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-55
Subdivision 124-M
Reasons for decision
Question 1
Scrip for scrip rollover under Subdivision 124-M will be available in respect of unitholder exchanging its Trust 1 for units in Trust 2 as the conditions under Subdivision 124-M will be met.
In particular, for the purposes of the Subdivision 124-M, both Trust 1 and the Trust 2 are considered to be 'fixed trusts' because if the beneficiary of both trusts does not have a vested and indefeasible interest to all the income and capital of the trust, it will be treated as having a vested and indefeasible interest to the income and capital of the trust pursuant to subsection 272-5(3) of Schedule 2F to the Income Tax Assessment Act 1936.
Question 2
The amendments proposed to be made to the Trust 1 Deed will not result in CGT event E1 happening under subsection 104-55(1) i.e. they will not result in a "resettlement" of the trust.