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Edited version of private advice
Authorisation Number: 1051567767972
Date of advice: 16 August 2019
Ruling
Subject: Capital gains tax - small business restructure roll-over
Question
Will the small business restructure rollover relief under subdivision 328-G of the Income Tax Assessment Act 1997 (ITAA 1997) apply upon the transfer of the goodwill from the family trust to the new company?
Answer
Yes.
The Commissioner considers that the proposed arrangement is a genuine restructure of an ongoing business and that the ultimate economic ownership is maintained. Information about the small business restructure rollover can be found by searching for "QC48586" on ato.gov.au
This ruling applies for the following periods:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The Trust is a family trust.
A family trust election has been made.
A business is operated through the Trust.
It is proposed that a new Company will be formed and the Trust will transfer all assets necessary to carry on the current business, including staff and goodwill.
The Trust holds property which will not be transferred to the new company during the restructure.
The directors of the new company are to be the same directors of the trustee company.
The Trust will hold all of the shares in the new company.
The restructure will reduce the cashflow impediments of insurances and other compliance issues.
Previous distributions from the Trust, relating to the business, have been within the family group and remained consistent throughout its existence.
All future distributions from the Trust will be made to same family group.
The trust will not dispose of the shares within the next three years.
The Business will continue to operate for at least the next three years.
The Trusts aggregated turnover is less than $10 million.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 108-5(1)
Income Tax Assessment Act 1997 section 152-10
Income Tax Assessment Act 1997 section 152-40
Income Tax Assessment Act 1997 subdivision 328-G
Income Tax Assessment Act 1997 section 328-125
Income Tax Assessment Act 1997 section 328-430
Income Tax Assessment Act 1997 section 328-440
Income Tax Assessment Act 1997 section 328-455