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Edited version of private advice
Authorisation Number: 1051557558367
Date of advice: 31 July 2019
Ruling
Subject: Capital gains tax: underlying economic interests
Question
Would the Commissioner be satisfied or find it reasonable to assume that for the purposes of Division 149 of the Income Tax Assessment Act 1997 (ITAA 1997) that the majority underlying interests held in your pre-capital gains tax (pre-CGT) assets have been maintained?
Answer
Yes. In accordance with subsection 149-30(2) of the ITAA 1997, the Commissioner is satisfied or finds it reasonable to assume that the majority underlying interests held in your pre-CGT assets have been maintained. Accordingly, any sale of the assets will remain outside the scope of the capital gains and losses provisions of the ITAA 1997.
This ruling applies for the following periods:
Year ended 30 June 20xx
The scheme commences on:
1 July 20xx
Relevant facts and circumstances
You were incorporated prior to 20 September 1985.
Company shareholding before 20 September 1985
The shareholders of the company existing before 20 September 1985 were as follows:
|
Shareholder |
Number of Shares |
Type of Shares |
|
Individual A |
X |
Ordinary |
|
Individual B |
X |
Ordinary |
|
Individual C |
X |
Ordinary |
|
Family Trust |
XX,XXX |
Ordinary |
|
Individual B |
X,XXX |
X% Preference |
|
Individual C |
X,XXX |
X% Preference |
The Family Trust
Individual B and Individual C hold the shares in the company on trust for the Family Trust (the Trust). The Trust was established by Individual Z (as settlor) on 1 July 19xx. The beneficiaries of the Trust are
· Individual B and Individual C (the primary beneficiaries)
· Family members of the primary beneficiaries
· Such charitable organisations funds and purposes gifts or contributions to which are the subject of exemption, deduction or allowance relating to the assessment of Gift Duty or Death Duty of any State or Territory of the Commonwealth of Australia (the charity beneficiaries).
During the life of the trust, the appointer and trustees have changed several times due to death and retirement. The most recent Deed of Agreement dated 1 Month 20xx appointed Individual M as appointer and Company A as trustee.
The beneficiaries of the Trust have not changed.
The Trust has not distributed to the charity beneficiaries.
The Trust will not distribute to the charity beneficiaries.
Company shareholding after 19 September 1985
The number and type of shares held by the shareholders of the company changed several times during your corporate life due to death and transfer. However, the actual shareholders did not change.
The shareholders of the company after 19 September 1985 were as follows:
|
Shareholder |
Number of Shares |
Type of Shares |
|
Family Trust |
XX,XXX |
Ordinary |
|
Family Trust |
XX,XXX |
X% Preference |
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 149