| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1051622391121
Date of advice: 20 December 2019
Ruling
Subject: Business restructure
Question
Will entity A meet the requirements to apply the Small Business Restructure Rollover under Subdivision 328-G of the Income Tax Assessment Act 1997 (ITAA 1997) for the proposed restructure from a company to a discretionary family trust?
Answer
Yes.
Entity A is a small business entity, the ultimate economic ownership of the asset will be maintained and the asset is an active asset of the business. Both entity A and entity B are residents for Australian tax purposes and will choose to apply the roll-over. The restructure is authentic and maintains the continuity of use of assets and of key personnel. Accordingly, this is a genuine restructure of an ongoing business (Law Companion Ruling LCR 2016/3 provides further information).
This ruling applies for the following period
Year ended 30 June 2020
The scheme commenced on
1 July 2019
Relevant facts
Entity A has been operating since xxxx.
Entity A is a small business entity, with a turnover under $10 million.
Entity A has a business asset that is an active asset.
Entity A has been trading profitably with entity C owning 51% and entity D owning 49% of the shares.
Due to the risks involved, entity C and D would like to change the structure of their business. The new structure will have entity E to manage entity B.
Entity B is a discretionary trust. A family trust election has been made. The specified individuals and test individuals are entity C and D.
Entity B will have an ABN and will operate the business. Entity B will have three beneficiaries, entity C, D and A.
Entity A is currently running the business, however will not run the business after restructuring. Entity A also owns cars which are used in the business.
The shareholding of entity A will not change.
Both entity A and entity B will choose the rollover.
Entity A and entity B are Australian residents.