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Edited version of private advice
Authorisation Number: 1052017035240
Date of advice: 5 August 2022
Ruling
Subject: Affiliate relationship
Question
Was Company A an 'affiliate' of Trust A (as defined under section 328-130 of the Income Tax Assessment Act 1997 (ITAA 1997)) from the establishment of the Trust in the 20XX financial year to the exchange of contracts for the business and land sales?
Answer
Yes.
Company A is an affiliate of Trust A under section 328-10 of the ITAA 1997 as the directors of the company and corporate trustee are considered to have acted or could reasonably be expected to act in accordance with the Trustee's directions or wishes, or in concert with you, in relation to their business affairs. Further information on affiliates can be found by searching 'QC 52285' on ato.gov.au.
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
The scheme commences on:
20 May 20XX
Relevant facts and circumstances
The Trustee for Trust A ('the Trustee') is Company B ('the corporate trustee').
The Trustee owns the business and business premises located in the state of XXXXX. The premises were acquired in a specified year.
Company A operates a business.
The Trustee leases the business premises and business equipment to the Company A to conduct their business.
The lease agreement in respect to the business premises lapsed in a specified year. Rent paid by Company A to the Trustee was less than market value and therefore not at arm's length. Company A paid rent on an inconsistent basis based on their cash flow.
Company A and the Trustee entered into a contract at a specified date for the sale of the business for a specified amount and the sale of the land for a specified amount.
The directors and shareholders of both the Company A and Company B are the same.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 328-130