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Edited version of private advice
Authorisation Number: 1051961337890
Date of advice: 14 April 2022
Ruling
Subject: CGT small business concessions - connected to a trust
Question
Is the Trust connected with you for the purpose of subsection 328-125 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes
You and your siblings are affiliates as you make decisions together in regard to the trustee.
As you and your affiliates control the trustee, the trust is connected to you.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You and your siblings own a property on which you operate a business.
You own the property jointly with your siblings.
The property has been used in the business carried on by the Trust for the whole period of ownership.
You use a discretionary trading trust as the main business entity to conduct the business:
• the siblings are the only directors
• the siblings are equal shareholders
• the siblings are Guardians and Appointors of the trust.
The net income of the trust is generally shared equally by you and your three siblings, after distributions to two of the spouses.
You and your siblings have absolute influence over the trustee.
You and other siblings were the directors of the trustee that confirmed the resolutions of directors for the last four years for the trust.
In prior years, you and your siblings have personally owned assets that have been used on the property and in the business activities carried on by the Trust.
As you and your siblings are approaching retirement, you are undertaking some succession planning.
Part of the planning is for you to transfer your interest in the land to your siblings to continue the family enterprise with future generations.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 328-125
Income Tax Assessment Act 1997 section 328-125(3)
Income Tax Assessment Act 1997 section 328-130