Edited version of private advice

Authorisation Number: 1052247565971

Date of advice: 15 May 2024

Ruling

Subject: CGT - rollover relief for business restructure

Question

Will the restructure qualify for roll-over relief under Subdivision 328-G of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes. Based on the information provided all the requirements in paragraph 328-430(1) of the ITAA 1997 will be satisfied. Therefore, the restructure will qualify for the rollover relief under Subdivision 328-G of the ITAA 1997.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are a partnership that operates a business.

You are a small business entity with a turnover of less than $10 million.

You are an Australian resident for income tax purposes.

The partners and holdings in your partnership is as follows:

•         Partner A - 50%,

•         Partner B - 25%, and

•         Partner C - 25%.

The partnership has maintained the same ownership since 20XX.

Proposed restructure

You intend to move the business from the partnership into a newly incorporated privately operated company.

You have created a new company which was incorporated in Australia.

The new company will carry on the same business activity as the partnership.

You are restructuring the business to into a company for better asset protection to separate the business risk from the partners personal assets.

You have assets consisting of the business trademark and associated computer equipment which you will transfer to new company.

You have liabilities consisting of ongoing expenses (BAS payments, leases, subscriptions, contract, etc). You do not have any business loans.

The new company will have shareholdings as follows:

•         Partner A - 50%,

•         Partner B - 25%, and

•         Partner C - 25%.

You intend for the transfer to occur on a specified date to allow the same business to be carried on under the new company from a specified date.

Once the transfer is complete you intend to dissolve the partnership.

You currently have no plans to sell the business. You hope to gain future partners from within the business and have older partners retire in the natural course.

The aggregated turnover for the new company is expected to be under $10 million in the relevant financial year.

All partners of the partnership and the new company will elect to apply the rollover in subdivision 328-G.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 122-15

Income Tax Assessment Act 1997 section 152-105

Income Tax Assessment Act 1997 section 328-430

Income Tax Assessment Act 1997 paragraph 328-430(1)(a)

Income Tax Assessment Act 1997 paragraph 328-430(1)(b)

Income Tax Assessment Act 1997 paragraph 328-430(1)(c)

Income Tax Assessment Act 1997 paragraph 328-430(1)(d)

Income Tax Assessment Act 1997 paragraph 328-430(1)(e)

Income Tax Assessment Act 1997 paragraph 328-430(1)(f)

Income Tax Assessment Act 1997 Subdivision 328-G