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This edited version has been archived due to the length of time since original publication.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.

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Edited version of your written advice

Authorisation Number: 1013016873781

Date of advice: 24 May 2016

Ruling

Subject: Consequences of assets roll-over for receiving entity under Subdivision 310-E

Question 1

In the event that all of the members of Transferring Fund and the funds relating to those members, except for certain non-transferable members and their funds, transfer to Continuing Fund, will the consequences set out in subsections 310-55(2), 310-55(3), and 310-65(2) of the Income Tax Assessment Act 1997 (ITAA 1997) apply to Continuing Fund?

Answer

Yes. In the event that all of the members of Transferring Fund and the funds relating to those members, except for certain non-transferable members and their funds, transfer to Continuing Fund, the consequences set out in subsections 310-55(2), 310-55(3), and 310-65(2) of the Income Tax Assessment Act 1997 (ITAA 1997) will apply to Continuing Fund.

This ruling applies for the following period:

An income year.

The scheme commences:

During the 2016 income year.

Relevant facts and circumstances

All legislative references are to the Income Tax Assessment Act 1997 unless otherwise specified.

1. The Trustee acts as the trustee for two superannuation funds, being Transferring Fund and Continuing Fund.

2. The Trustee will transfer members of Transferring Fund to Continuing Fund and merge Transferring Fund's assets with Continuing Fund by way of a successor fund transfer (SFT).

3. The SFT is expected to occur during the 2016 income year.

4. The SFT relates to the transfer of all of Transferring Fund's members and the funds relating to those members, except for certain non-transferable members and their funds.

5. The Commissioner has ruled that in relation to the SFT described above, Transferring Fund will satisfy the eligibility conditions to choose assets roll-over under Subdivision 310-D of the Income Tax Assessment Act 1997 (ITAA 1997).

6. Transferring Fund, as the original fund under the SFT, will be the 'transferring entity' for the purposes of Subdivision 310-E of the ITAA 1997.

7. Continuing Fund, as the continuing fund under the SFT, will be the 'receiving entity' for the purposes of Subdivision 310-E of the ITAA 1997.

8. For the purposes of Subdivision 310-E of the ITAA 1997, Transferring Fund chooses the global approach for its original assets that are revenue assets and its original assets that are not revenue assets.

Relevant legislative provisions

Subsection 310-55(2) of the Income Tax Assessment Act 1997

Subsection 310-55(3) of the Income Tax Assessment Act 1997

Subsection 310-65(2) of the Income Tax Assessment Act 1997

Reasons for decision

Division 310 sets out special rules for the treatment of assets relating to a merger. Specifically, Subdivision 310-E, amongst other things, sets out the consequences for a receiving entity of a transferring entity choosing assets roll-over.

Subdivision 310-E - Consequences of choosing assets roll-over

A transferring entity choosing assets roll-over has consequences for a receiving entity as follows:

    For CGT assets

    • If a global asset approach is chosen:

      • the first element of the cost base of the asset in the hands of the receiving entity is taken to be an amount equal to the cost base of the corresponding original asset just before the relevant transfer event (per subsection 310-55(2)); and

      • the first element of the reduced cost base in the hands of the receiving entity is taken to be an amount equal to the reduced cost base of the corresponding original asset just before the relevant transfer event (per subsection 310-55(3)).

    For revenue assets

    • If a global asset approach is chosen, for each of the received assets, the receiving entity is taken to have paid an amount for that asset at the time of the transfer event that is equal to the deemed proceeds for the corresponding original asset (per subsection 310-65(2)).

Conclusion

The Commissioner has ruled that in relation to the transfer of all of the members of Transferring Fund and the funds relating to those members, except for certain non-transferable members and their funds, to Continuing Fund, Transferring Fund will satisfy the eligibility conditions to choose assets roll-over under Subdivision 310-D.

As Transferring Fund chooses the global asset approach for its original assets that are revenue assets and its original assets that are not revenue assets (i.e. CGT assets), the consequences as set out in subsections 310-55(2), 310-55(3) and 310-65(2) (explained above) will apply to Continuing Fund.


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