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Edited version of private advice
Authorisation Number: 1051553646126
Date of advice: 24 July 2019
Ruling
Subject: Income tax - capital gains tax - small business restructure rollover
Question
Will the proposed transfer of assets from the Trust to the Company satisfy Subdivision 328-G of the Income Tax Assessment Act 1997?
Answer
Yes.
Having considered your circumstances and the relevant factors the Commissioner considers that the requirements for the restructure rollover have been satisfied. Further information can be found by searching 'QC 48586' on ato.gov.au
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The Trust was settled on 20XX with Entity A and Entity B as the Trustees.
The Trustees were replaced by deed with the Company on 20XX. Entity A and Entity B are the directors of the Company.
The Company share structure is currently two ordinary shares, one each held by Entity A and Entity B. Entity A and Entity B will continue to hold all of the shares in the Company in the same proportions for at least three years after the transfer of assets takes place.
The Trust commenced carrying on the business on 20XX.
The Trust lodged a family trust election naming Entity A as the specified individual.
The Trust also holds a piece of real property that is not used in the business and is leased to an unrelated third party.
The assets owned by the Trust that will be transferred to the Company are:
· goodwill;
· ownership of a website used in the business;
· the client list;
· service contracts; and
· various minor plant and equipment.
The Company was incorporated for the purpose of being the corporate trustee of the Trust. The Company does not carry on any other activities in its own right and holds no other assets.
The aggregated turnover of the Trust in each of the 20XX and 20XX financial years was less than $2 million.
After the transfer of assets takes effect, the Company will be running the business activity.
The Trust will continue to hold the real property in its own name, separate from the assets of the Company.
Entity A, Entity B, the Company and the Trust are all Australian residents for taxation purposes in the 20XX-XX financial year.
The Trust and the Company will elect to utilise the rollovers.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 328-430
Income Tax Assessment Act 1997 section 328-435
Income Tax Assessment Act 1997 section 328-440
Income Tax Assessment Act 1997 section 328-445