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Edited version of private advice
Authorisation Number: 1052304173142
Date of advice: 1 October 2024
Ruling
Subject: CGT - restructure which involved the original entity transferring assets to an entity
Question 1
Will CGT event A1 (section 104-10) happen at the time the original entity enters into the Agreement as a result of the operation of clause xx?
Answer
Yes.
Question 2
Will the capital proceeds, pursuant to section 116-20, for the disposal of the assets resulting from entry into the Agreement be $xx?
Answer
Yes.
Question 3
Is the asset a depreciating asset for the purposes of Division 40?
Answer
Yes.
Question 4
Will a balancing adjustment event occur under subsection 40-295(1) on completion of the Agreement?
Answer
Yes.
Question 5
Will the termination value, pursuant to section 40-300, for the disposal of the rights to exploit the asset be $xx?
Answer
Yes.
Question 6
Will the original entity be required to apportion its adjustable value of the asset on a reasonable basis pursuant to section 40-205 and subsection 40-115(3)?
Answer
Yes.
Question 7
Will section 118-24 apply to disregard a capital gain the original entity made in relation to the disposal of the asset to the extent that the gain is dealt with under a Division 40 balancing adjustment?
Answer
Yes.
Question 8
Will the entities be eligible for roll-over relief under Division 615 on any gain realised on the transfer of their shares in original entity to the new entity?
Answer
Yes.
Relevant facts and circumstances
The Commissioner has ruled in relation to a restructure which involved the original entity transferring assets to an entity and a new entity being interposed between the original entity and its shareholders.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-10
Income Tax Assessment Act 1997 section 116-20
Income Tax Assessment Act 1997 section 118-24
Income Tax Assessment Act 1997 Division 40
Income Tax Assessment Act 1997 subsection 40-115(3)
Income Tax Assessment Act 1997 section 40-205
Income Tax Assessment Act 1997 subsection 40-295(1)
Income Tax Assessment Act 1997 section 40-300
Income Tax Assessment Act 1997 Division 615