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Edited version of private advice
Authorisation Number: 1051560404221
Date of advice: 5 August 2019
Ruling
Subject: Transfer of shares - correction of ownership details
Question
Will capital gains tax apply on the transfer of legal ownership of the shares from the individual trustees to the corporate trustee?
Answer
No. Based on the evidence you have provided, we accept that an error was made and there has been no change in beneficial ownership for the shares. The proposed transfer of legal ownership back to the corporate trustee does not result in acquisition or disposal for CGT purposes. There will be no capital gains tax liability in the relevant transfer of shares.
This ruling applies for the following period:
Financial year ending 30 June 20xx
The scheme commences on:
1 July 20xx
Relevant facts and circumstances
A Trust (the trust) was established with a corporate trustee.
The trust owned investments in shares listed on the Australian Stock Exchange (ASX).
A number of years later, a Deed of Variation was executed to change the trusteeship from corporate to individual trustees.
The individual trustees updated their ASX shareholding information to effect the change in trusteeship. The ownership of shares was incorrectly recorded against the individual trustees' personal names. There was no change in payment destination. However, the individual trustees used their personal names for the bank account holder details.
With the updates in the shareholding registry, the individuals failed to note that they were holding the shares as trustees of the trust.
Over the following years, all ASX shares and income from dividends have been accounted for as assets and income of the trust. All trust distributions over this period have been appropriately allocated to the beneficiaries and have been declared accordingly by the individuals in their tax returns.
Advice was recently sought in relation to estate and succession planning. The Trustee wishes to correct the error, appoint a new corporate trustee, and update the holding details.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 102-20
Income Tax Assessment Act 1997 section 104-10
Income Tax Assessment Act 1997 section 109-5
Income Tax Assessment Act 1997 section 116-20