| Disclaimer 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: 1052181785568
Date of advice: 10 November 2023
Ruling
Subject: CGT - transfer of shares
Question 1
Is the trust known as DEF Pty Ltd ATF A and B considered a bare trust?
Answer
Yes. The trust known as DEF Pty Ltd ATF A and B is considered a bare trust.
Question 2
Will the transfer of shares held by the trustee of the trust to the beneficiary of the trust trigger a capital gains tax event?
Answer
No. The transfer of shares held by the trustee of the trust to the beneficiary of the trust will not trigger a capital gains tax event.
This ruling applies for the following period:
1 July 2022 to 30 June 2023
The scheme commenced on:
1 July 2022
Relevant facts and circumstances
The trust was established in 20XX with the transfer of 10 shares in the XYZ Co-op from A and B to C.
A copy of the deed establishing the trust is included was included with your application. After the trust was established, additional shares in XYZ Co-op were also transferred from A and B to C.
The trust arrangement was established in order to satisfy the supplier requirements for the XYZ Co-op. When the trust was established, the rules of the Co-op required that only suppliers could hold shares in the Co-op. A and B had been suppliers to the Co-op over many years and had acquired their shares as suppliers to the Co-op. In 20XX A and B ceased their operations which was transferred to their child C. The shares in the Co-op held by A and B were transferred to C to allow her to supply the Co-op however the beneficial ownership of the shares was retained by A and B by the establishment of the trust.
In 20XX the Co-op Society was converted to a public company and listed on the ASX. The requirement to be a supplier to hold shares was also removed.
Around the time of the listing of the public company, C ceased the operation.
In 20XX, a deed was executed in which C retired as trustee of the trust and DEF Pty Ltd was appointed as trustee.
A passed away in 20XX. B is the executor and sole beneficiary under A's will. The director and secretary of DEF Pty Ltd is now B (as A is deceased). The shareholders are B and A (Estate) equally.
You have stated in your application that in order to simplify estate planning, the beneficiary B, wishes to transfer the shares currently held by DEF Pty Ltd ATF 'A and B' to B.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 106-50