Edited version of private advice

Authorisation Number: 1051893310725

Date of advice: 1 September 2021

Ruling

Subject: CGT - small business restructure rollover

Question 1

Does the proposed transfer of land from you to new discretionary trusts qualify for relief under subdivision 328-G of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes. The proposed transfer of land from the individual taxpayer to the new discretionary trust(s) qualifies for relief under subdivision 328-G of the ITAA 1997. It is considered that the transaction is a genuine restructure of the business.

Questions 2

Does the land retain its pre-CGT status post transfer under section 328-460 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes. The land subject to the proposed transfer and acquired before 20 September 1985 will retain its pre-CGT status upon transfer to the discretionary trust(s) pursuant to section 328-460 of the ITAA 1997.

This ruling applies for the following periods:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You do not carry on business individually.

You are a partner in a partnership, the partnership does carry on a business in XXXXXX growing

You own the land located in Australia under multiple titles (Collectively referred to as the land).

All of the land was purchased prior to 20 September 1985.

The land has been used in a primary production business since date of purchase.

Since 19XX till to date the primary production business has operated through a partnership (the partnership), with the partners being you (50%) and your spouse (50%).

The business carried on by the partnership is solely for the benefit of the two partners.

The partnership is financially dependent on the land and the partners are financially dependent on the partnership business and act in concert to ensure that the partnership is run in such a way as to meet their financial requirements.

The aggregated turnover for the partnership is expected to be well under $XXX for the current and foreseeable future financial years.

You proposed to transfer the land to a new discretionary trust(s) with a corporate trustee in XX financial year.

Each new discretionary trust established to hold the land will have a family trust election in place with you as the specified individual.

You and your spouse will be beneficiaries of the new discretionary trusts.

The appointors of each of the new discretionary trusts will be you and your spouse.

The transferor and each transferee are Australian Residents for tax purposes.

The land will continue to be used by the partnership in the carrying on of its business activities.

The purpose of applying the restructure rollover is to:

•         Provide further asset protection by separating the ownership of assets from you who are integral to the partnership;

•         Enable's additional options with financiers to be negotiated to assist in growth of the operations; and

•         The ownership of the land will reflect current land holding structures utilised by the family.

Both the transferor and each transferee will choose to apply the roll-over in relation to the assets transferred under the transactions.

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 Section 328-125

Income Tax Assessment Act 1997 Subdivision 328-G

Income Tax Assessment Act 1997 Section 328-430

Income Tax Assessment Act 1997 Section 328-440

Income Tax Assessment Act 1997 Section 328-460