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Edited version of private advice
Authorisation Number: 1051585089742
Date of advice: 24 September 2019
Ruling
Subject: Small business restructure rollover
Question
Will the Company be entitled apply the small business restructure rollover relief in Subdivision 328-G of the Income Tax Assessment Act 1997 (ITAA 1997) in respect of the proposed transaction?
Answer
Yes.
The Commissioner is satisfied that the proposed transfer of the active assets to the new discretionary trust qualifies for relief under subdivision 328-G of the ITAA 1997 as it is considered that it is a genuine restructure of an ongoing business, ultimate economic ownership of the assets will not change, all entities involved are Australian residents for tax purposes, are considered small businesses and the assets being transferred are active. Information about the small business restructure rollover can be found by searching for "QC 48586" on ato.gov.au
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The Company is a private company 100% owned by an individual Australian resident shareholder.
The Company is an Australian resident for tax purposes.
The individual shareholder is the Shareholder, who is also the sole director.
The Company currently has an aggregated turnover of less than $XXX.
The Shareholder wants to grow the business.
The Shareholder has expressed concern over the asset protection of the current structure as their personal assets could be exposed if the Company were ever sued.
The active assets used to carry on the business will be transferred to a new discretionary trust (the Trust).
The Trust will have a newly established corporate trustee.
Both the Trust the new Trustee will be Australian residents for taxation purposes.
The Trust will take over the activities currently conducted by the Company.
The Trust will have an aggregated turnover of less than $XX.
The Shareholder will be the primary beneficiary of the Trust, as well as the primary individual specified in the family trust election.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subdivision 328-G
Income Tax Assessment Act 1997 Section 328-110
Income Tax Assessment Act 1997 Section 328-425
Income Tax Assessment Act 1997 Section 328-430
Income Tax Assessment Act 1997 Section 328-440
Income Tax Assessment Act 1997 Section 328-445
Income Tax Assessment Act 1997 Section 152-40