Edited version of private advice

Authorisation Number: 1052371478421

Date of advice: 28 March 2025

Ruling

Subject: CGT - small business concessions

Question 1

Is Company A an affiliate of the Trustee Company as defined by section 328-130 of the Income Tax Assessment Act 1997 (ITAA 1997) for the purpose of the proposed transfer/sale of property?

Answer 1

No.

Question 2

Is Company B an affiliate of the Trustee Company as defined by section 328-130 of the Income Tax Assessment Act 1997 (ITAA 1997) for the purpose of the proposed transfer/sale of property?

Answer 2

No.

Question 3

Is Company C an affiliate of the Trustee Company as defined by section 328-130 of the Income Tax Assessment Act 1997 (ITAA 1997) for the purpose of the proposed transfer/sale of property?

Answer 3

No.

Question 4

Is Company D an affiliate of the Trustee Company as defined by section 328-130 of the Income Tax Assessment Act 1997 (ITAA 1997) for the purpose of the proposed transfer/sale of property?

Answer 4

No.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

Background and Business Structure

The Trustee Company acts as a trustee for the Unit Trust (the Trust). The ownership structure of the Trust and the Trustee Company is presented below.

Table 1:Utimate individual controller of Unitholder

The above presented individuals are also equal shareholders and directors of the Trustee Company and have close personal relationships.

Individual 1, Individual 2 and Individual 3 are equal shareholders of companies within the Group.

The Group consists of the following business companies:

•                     Company A

•                     Company B

•                     Company C

•                     Company D

The Applicant contends that the Trust's administration, tax compliance and similar tasks are managed by the Group's internal management team.

The Constitutions of all companies within the Group were submitted.

Individual 4 is a sole shareholder of another company that runs a business (Company E).

Properties

The Trustee company owns X commercial units (the Properties).

The Properties were acquired at different times over several years. The Properties are utilised in the businesses of the Group and Company E.

The Trust leased approximately XX% of space to the Group and approximately XX% of space to Company E for the carrying on of the separate business operations.

The acquisitions of units X and X were primarily for the growth of the Group's business and, therefore, its overall percentage use of the Properties increased.

There are no formal lease agreements in place.

The rent charged is equal to the loan repayments required for the properties and is not charged is at market value.

The rent is allocated approximately between the use of the Group and the other business company.

The acquisition of the Properties and the financing arrangements have been managed and negotiated by Individual 1 and Individual 2. Moreover, the financing negotiations with the bank for the acquisition of units X and X were based solely on the serviceability by the Group.

Currently, an extension of the Properties is occurring.

The extension will be used to store the stock for Company B.

The extension is funded by the Group. The Trust will have a loan owing to the Group for the extensions. Once the SMSFs acquire the properties, including the extensions, the loan will be fully repaid.

Companies' Business Activities

The Trustee Company manages commercial units, being X commercial units (the Properties).

The companies within the Group operate independently and do not have common bank accounts, customers or employees.

The Trustee Company does not purchase the same goods or services, or provide a similar kind of business, to the companies within the Group.

Trust Deed

A copy of the Trust Deed of the Unit Trust dated XX was provided.

The Deed was signed by the representatives of beneficiaries of the Unit Trust, being:

•                     Individual 1

•                     Individual 2

•                     Individual 3

•                     Individual 4

Every beneficiary of the Unit Trust has acquired XX units in the Unit Trust, valued at $X each.

Constitutions

Trustee Company

The relevant clauses from the Constitution of the Trustee Company for the purposes of this ruling are presented below.

Convening Meetings

•                     Any director may call a meeting of members

•                     The Directors will call a meeting of members if requested by the members as provided by the Act.

Resolutions without Meetings

Written Resolutions

•                     Information relating to how the Company may pass a resolution without a general meeting has been provided.

Sole Member Resolutions

Information provided relating to this matter has been provided.

XX. Sole Director Resolutions

If the Company has only one director, that director may:

•                     Information provided relating to this matter has been provided.

Company A

The relevant clauses from the Constitution of a Company A for the purposes of this ruling are presented below.

Directors' Powers

Multiply points of information provided relating to this matter have been provided.

Convening Meetings

Multiply points of information provided relating to this matter has been provided.

Board Resolutions without Meetings - Single Director

Multiply points of information provided relating to this matter has been provided.

Board Resolutions without Meetings - Multiple Directors

Multiply points of information provided relating to this matter has been provided.

Minutes

Multiply points of information provided relating to this matter has been provided.

Company B

The relevant clauses from the Constitution of a Company B for the purposes of this ruling are presented below.

Issue of Shares

Information provided relating to this matter has been provided.

Directors May Exercise Power of Company to Borrow

Information provided relating to this matter has been provided.

Meetings

Information provided relating to this matter has been provided.

Convening Meeting

Information provided relating to this matter has been provided.

Resolution in Writing without Meeting

Information provided relating to this matter has been provided.

Resolution of a Single Director

Where the Company has only one director:

Multiply points of information provided relating to this matter have been provided.

Management Vested in Directors

Information provided relating to this matter has been provided.

Minutes

The directors shall cause minutes to be made of:

Multiply points of information provided relating to this matter have been provided.

Mode of Payment

The directors may determine that a dividend is payable and fix:

Multiply points of information provided relating to this matter have been provided.

Company C

The relevant clauses from the Constitution of a Company C for the purposes of this ruling are presented below.

Issue of Shares

Information provided relating to this matter has been provided.

Directors May Exercise Power of Company to Borrow

Information provided relating to this matter has been provided.

Meetings

Information provided relating to this matter has been provided.

Convening Meeting

Information provided relating to this matter has been provided.

Resolution in Writing without Meeting

Information provided relating to this matter has been provided.

Resolution of a Single Director

Where the Company has only one director:

Multiply points of information provided relating to this matter have been provided.

Management Vested in Directors

Information provided relating to this matter has been provided.

Minutes

The directors shall cause minutes to be made of:

Multiply points of information provided relating to this matter have been provided.

Mode of Payment

The directors may determine that a dividend is payable and fix:

Multiply points of information provided relating to this matter have been provided.

Company D

The relevant clauses from the Constitution of a Company D for the purposes of this ruling are presented below.

Issue

Information provided relating to this matter has been provided.

Directors

Information provided relating to this matter has been provided.

Directors' Meetings

Multiply points of information provided relating to this matter have been provided.

Written and Circular Resolutions of Directors

Multiply points of information provided relating to this matter have been provided.

Minutes and Registers

Multiply points of information provided relating to this matter have been provided..

Managing or Executive Director

Information provided relating to this matter has been provided.

Other information provided:

Outlook calendar

Screenshots of outlook calendar provided in relation to Individual 1 and Individual 2 for the month of Month 20XX.

Screenshot of outlook calendar of Individual 3 for the month of Month 20XX.

Review of the outlook calendar screenshots undertaken to identify common and corresponding calendar meetings. Only one was identified being the meeting on XX at XX between Individual 1 and Individual 2, being in both calendars.

Other Attachments

Photo of business cards of Individual 1 representing Company A and Company B, Individual 2 representing Company A and Company B and Individual 3 representing Company C.

Excel spreadsheet with day-to-day tasks of:

•                     Individual 1 on behalf of Company A, Company B and Company D,

•                     Individual 2 on behalf of Company A, Company B and Company C; and

•                     Individual 3 on behalf of Company A, Company B and Company C.

The spreadsheet tabs are named per Company however does not include the Trustee Company nor the Trust in relation to any common business initiatives or priorities.

Dividend Minutes - Company C

Information provided relating to this matter has been provided.

Trust Minutes

Information provided relating to this matter has been provided.

Meeting/Board minutes

The Group of companies do not have any meeting minutes.

Contentions

Information provided relating to this matter has been provided.

The contentions contain brief descriptions of every individual's key responsibility within every company in the Group.

According to the contentions these individuals are all directors of each company within the Group, except of Individual 3 who is not a director of Company B.

Proposed Transaction

The Trust is considering a restructure, whereby the Properties will be transferred to the Self- Managed Superannuation Funds (SMSFs) associated with the current unitholders.

The interests in the properties will be sold to the SMSFs for market value.

The market valuations will be obtained prior to the transfer.

The Companies will continue to conduct the businesses on the properties and will pay the SMSFs market value rent for the lease of the properties.

The transfer of the properties to the SMSFs is also in line with the investment plan of the SMSFs.

There are no plans to the sell the Companies or the businesses within the short to medium term.

The Applicants have applied for a Private Binding Ruling (PBR) on whether they are affiliates under subsection 328-130 of the ITAA 1997, as they do not satisfy the definition of 'connected entities' under section 328-125 of ITAA 1997. The Applicants would need to satisfy the required eligibility requirements and provisions in order to apply Small Business CGT Concessions on the transfer of the Properties, under Division 152 of the ITAA 1997.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 328-130

Income Tax Assessment Act 1997 subsection 995-1(1)

Reasons for decision

Question 1

Is Company A an affiliate of the Trustee Company as defined by section 328-130 of the Income Tax Assessment Act 1997 (ITAA 1997) for the purpose of the proposed transfer/sale of property?

Summary

Company A is not an affiliate of the Trustee Company, as the provided documentation does not support the view that Company A acts or could reasonably be expected to act in accordance with the Trustee Company's directions or wishes, or in concert with the Trustee Company as defined by section 328-130 of the ITAA 1997.

Detailed reasoning

Subsection 995-1(1) of the ITAA 1997 provides that 'affiliate' has the meaning given by section 328-130 of the ITAA 1997.

Section 328-130 of the ITAA 1997 provides the meaning of affiliate.

Meaning of affiliate

An individual or a company is an affiliate of yours if the individual or company acts, or could reasonably be expected to act, in accordance with your directions or wishes, or in concert with you, in relation to the affairs of the business of the individual or company.

However, an individual or a company is not your affiliate merely because of the nature of the business relationship you and the individual or company share.

Meaning of 'could reasonably be expected'

To determine if the Trustee Company and companies within the Group are affiliates, consideration is required as to whether they could reasonably be expected to act in concert in respect to the affairs of the Trustee Company.

The Full High Court, in Commissioner of Taxation (Cth) v Peabody [1994] HCA 43, held that the phrase 'might reasonably be expected' requires more than a possibility.

An entity, the first entity, 'could reasonably be expected' to act in accordance with another entity's, the second entity's, wishes where the second entity has a relationship of control or influence over the first entity. Such a relationship can be evidenced by the entities' behaviours and the presence of any influential relationships, such as:

(a)          family or other close personal relationships;

(b)          financial relationships and dependencies; and

(c)           relationships created through links such as common directors, partners or shareholders.

Conversely, the entities' behaviours, obligations to each other and external parties, and their own interests may evidence the lack of such a relationship.

For a company, this relationship depends on whether the majority shareholders and/or directors of the company can reasonably be expected to act in accordance with another entity's directions.

Meaning of 'in concert'

To determine if the Trustee Company and Company A are affiliates consideration is required on whether they could reasonably be expected to act in concert.

'In concert' is not defined in the ITAA 1997, therefore it needs to be interpreted according to its ordinary meaning and in accordance with Subdivision 328-C of the ITAA 1997.

The Macquarie dictionary (Macmillan Publishers Australia, The Macquarie Dictionary online, www.macquariedictionary.com.au) relevantly defines the phrase 'in concert' to mean:

6. in concert,

a. in a coordinated or organised way; together.

This ordinary meaning suggests that the term 'in concert' is used in the affiliate definition to describe entities that cannot be seen as independent of each other because of the degree to which their business activities are combined or organised together.

The term 'in concert' was considered in Re Excellar Pty Ltd and Federal Commission of Taxation2015 ATC 10-391 where Senior Member Lazanas stated, at ATC 6699:

75.          I agree with the authorities that a director or shareholder is not a small business CGT affiliate of the relevant company merely because of the office they hold or the formal relationship they have with the company and that the definition of "small business CGT affiliate" requires something more than, or different to, those relationships that are dictated by legal requirements, fiduciary duties and the like. ...

and, at ATC 6700:

76.          Excellar contended that the phrase "in concert with" was incorrectly treated as being synonymous with "control" in the tax cases referred to above and they should not be followed. I disagree. The meaning of the phrase "to act in concert with" has been held (in non-tax contexts) to mean "at least an understanding between the parties as to their common purpose or object.

Adsteam Building Industries Pty Ltd v The Queensland Cement and Lime Co Ltd (No 4)[1985] 1 Qd R 127.

Consistent with these views and the ordinary meaning of the phrase, an entity will be viewed as acting in concert with another entity where it and the other entity act together in pursuit of a common purpose or goal.

In the context of the definition of affiliate in section 328-130 of the ITAA 1997, that purpose or goal must be in relation to the affairs of the business of the individual or company.

In determining whether two entities are acting in concert for the purpose of the affiliate rules, paragraph 2.36 of the Explanatory Memorandum to the Tax Laws Amendment (Small Business) Bill2007, which introduced the definition of 'affiliate', states:

2.36 The following factors may have a bearing on whether an individual or company is an affiliate of an entity to the extent that they show that two or more entities are acting in concert:

•                     family or close personal relationships;

•                     financial relationships or dependencies;

•                     relationships created through links such as common directors, partners, or shareholders;

•                     the degree to which the entities consult with each other on business matters; or

•                     whether one of the entities is under a formal or informal obligation to purchase goods or services or conduct aspects of their business with the other entity.

2.37 None of these factors are determinative in their own right.

Importantly, in accordance with subsection 328-130(2) of the ITAA 1997, the nature of business relationships is not relevant to these considerations.

In relation to application of subsection 328-130(2) of the ITAA 1997 to companies, the Explanatory Memorandum to Tax Laws Amendment (Small Business) Bill 2007 further clarifies that view by stating as follows:

2.39 Similarly, an individual or company is not automatically an affiliate merely because of a business relationship [Schedule 1, item 1, subsection 328-130(2) of the ITAA 1997]. For example, co-directors, co-trustees or partners are not necessarily affiliates. Also, directors are not automatically affiliates of the company of which they are a director, nor would the company automatically be an affiliate of the directors.

Relevantly, in the context of companies, the strategic decision-making process made in a company should be considered to confirm which entity controls the company, and as a result, has influence on the company's acts.

The involvement made by the directors/shareholders of the Trustee company in every business company within the structure should be active - the high-level decisions made in relation to the business companies should support the view that these companies act in accordance with directions or wishes or in concert with the Trustee company.

This is because having a passive structure involving real properties owned by the Trustee company and leased by business companies is not sufficient to confirm that business companies are affiliated with the Trustee company, even if all the companies are ultimately owned by the same individuals.

The link between every business company and the Trustee company, is simply paying rent to use the property. A relationship of this nature is insufficient to support the view that they are an affiliate, as it would imply that every entity leasing a property would be an affiliate of the property owner. The mere relationship of a lessee and lessor is not enough, more would be required to show the decision making of the lessee is influenced by or is in concert with the lessor.

It is the actual control over companies that is manifested by making strategic decisions regarding these companies that really matters and should be considered upon application of section 328-130 of the ITAA 1997.

By establishing which entity controls the company, the Commissioner can confirm that the high-level decisions made in relation to the company's activities could be made in accordance with directions or wishes or in concert with another entity - the controlling entity.

If the company's high-level decisions were actually made in accordance with directions or wishes or in concert with the controlling entity, section 328-130 of the ITAA 1997 can be applied to the structure.

The relevant factors of controlling a company are discussed below.

Relevant factors of control

The concept of 'control' is discussed in Taxation Determination 2023/5 Income tax: aggregated turnover and connected entities - Commissioner's discretion that an entity does not 'control' another entity (TD 2023/5), which provides guidance on particular issues that have emerged from the administration of the discretion in subsection 328-125(6) of the ITAA 1997 to determine that an entity does not 'control' another entity.

As per paragraphs 13 -15 of TD 2023/5:

13.          ... That is, entitlements to income and capital of the entity as well as participation in decision-making on key matters affecting the entity's constitution, funding, structure and management. The latter would ordinarily include matters such as:

•                     decision-making on the composition and oversight of the management team

•                     amending the entity's constituent documents

•                     deciding on capital and entity restructuring proposals, the issue of new ownership interests or winding up, and

•                     authorising significant changes in the direction of the entity's business operations.

14.          Other ways in which an entity may be said to be 'controlled', such as the control exercised by managers with responsibility for the day-to-day conduct of the business of the entity, do not of themselves constitute control of the entity in the sense contemplated by the aggregation rules. It is necessary to distinguish control of an entity from powers in respect of the conduct of an entity's business.

15.          Managers or directors with responsibility for the day-to-day conduct of a company's business may have considerable autonomy in making significant business decisions, but this of itself is not considered 'control' of the entity for the purposes of subsection 328-125(6).

The above-presented view is further confirmed by Practical Compliance Guideline PCG 2018/9 Central management and control test of residency: identifying where a company's central management and control is located (PCG 2018/9), which sets out the Commissioner's views on the meaning of central management and control of the company for tax residency purposes.

PCG 2018/9 in paragraphs 15-17 states as follows:

15.          What constitutes high-level decision-making of a company is a question of fact to be determined in light of the company's overall business activities. It is also necessary to consider whether a particular act is properly characterised as an exercise of central management and control, or an exercise of the day-to-day management of a company's business under the authority and supervision of a higher-level control (see paragraphs 50 to 72 of this Guideline).

16.          The more extensive a company's business activities, the more likely it is that high-level decisions that are an exercise of its central management and control will be distinct from day-to-day management decisions about business operations or transactions. This is particularly the case if the decisions in question are made by employees or agents of the company under the supervision of, and under authority granted to them by, the board of directors (whether directly or indirectly) (see paragraphs 50 to 72 of this Guideline).

17.          The smaller the scale of the company's business activities, particularly where there is no division between those who make the high-level decisions and those who execute them, the more likely it is that the high-level decisions will overlap with, or be the same as, the company's decisions to undertake a particular business operation or transaction.

The business structure consists of 4 different business companies, a Unit Trust and a Trustee Company. Therefore, given the complexity of this structure, the concepts of day-to-day management of a company's business and control of a company must be distinguished for the purposes of this ruling in relation to every company involved in this structure.

In other words, day-to-day management of a company's business activities is not relevant for the purposes of establishing which entity controls a company.

Moreover, day-to-day management of a company falls into exclusion under subsection 328-130(2) of the ITAA 1997 regarding the nature of business relationships between the director and the company.

This is further confirmed by an example provided in section 328-130 of ITAA 1997, which states as follows:

Example: A partner in a partnership would not be an affiliate of another partner merely because the first partner acts, or could reasonably be expected to act, in accordance with the directions or wishes of the second partner, or in concert with the second partner, in relation to the affairs of the partnership.

Directors of the same company, or the company and a director of that company, would be in a similar position.

Accordingly, any documentation confirming who is responsible for day-to-day management of the company's business (or, in other words, 'the affairs of the company') is not meaningful for the purposes of establishing whether the company is affiliated with another entity.

The shareholders/directors of the Trustee Company and business companies should be involved in controlling business companies within the structure, not only by day-to-day management of the businesses of these companies, but also by making high-level decisions regarding these companies.

For the purposes of confirming that section 328-130 of the ITAA 1997 can be applied to the business structure and the business companies are affiliated with the Trustee company, these high-level decisions in every business company within the structure should be made in accordance with directions or wishes or in concert with the Trustee company represented by its shareholders/directors.

Moreover, these decisions should be properly documented in accordance with companies' constitutions and obligations imposed on directors of these companies stemming from the Corporations Act 2001.

Except for Company D, all business companies within the structure operate for at least X income years, and Company A conducts its business activities from the income year ended 30 June 20XX. Therefore, the documentation regarding high-level decisions made in these companies should be substantial.

Similarly, the decisions made by the Trustee Company regarding its properties, and as a result, in relation to the business companies leasing these properties, should also be properly documented in accordance with the Trustee Company's constitution and obligations imposed on its directors.

As the Trustee Company operates from the income year ended 30 June 20XX, there should be a large volume of documented decisions taken by the directors of Trustee Company in the past. The first property was also purchased during the same income year.

The potential lack of proper documentation regarding strategic decisions made by the companies within the structure does not only confirm that the business companies may not be affiliated with the Trustee company. It also raises concerns regarding directors' duties and obligations under the Corporations Law, where proper records may not have been maintained.

Relevantly, as per paragraph 10 of PCG 2018/9, the important indicators of control of a company are board minutes, documents that identify who has the formal power to make high-level decisions, for example the company's constitution (or other founding documents) or other instruments delegating this power and evidence of the relevant provisions of those documents being followed in practice.

For completeness, paragraph 14 of PCG 2018/9 indicates that these documents may include papers circulated to board members in advance of meetings, contemporaneous emails and correspondence that show the board's deliberations and the role played by each director in the company's decision-making. The Commissioner will also consider oral evidence and statements by those involved in the company's decisions.

The application of the above indicators of control in relation to Company A is discussed below.

Application to your circumstances

Below we have analysed the documentation submitted with the application.

Company's A Constitution

In accordance with Clause XX of the Company's A Constitution, there must be at least X Director in the Company.

Directors' Powers

Multiply points of information provided relating to this matter have been provided.

Meetings and Documentation

The execution of the Directors' powers should be properly organised and documented in accordance with the Company's A Constitution as outlined by the following clauses.

Convening Meetings

A meeting of Directors shall be convened:

Information provided relating to this matter has been provided.

Board Resolutions without Meetings - Single Director

Information provided relating to this matter has been provided.

Board Resolutions without Meetings - Multiple Directors

Multiply points of information provided relating to this matter have been provided.

Minutes

The Directors must ensure that minutes are recorded and retained of all:

Multiply points of information provided relating to this matter have been provided.

Board Minutes

Information provided relating to this matter has been provided.

Conclusion

The Commissioner acknowledges your contentions regarding the directors of Company A and their role in this company. However, your contentions regarding the strategic role of the directors were not reflected by any documentation required for the purposes of this ruling, which was submitted with your application.

Multiply points of information provided relating to minutes have been provided.

Documentation to demonstrate 'control' in acting in concert with you would ordinarily include papers circulated to board members in advance of meetings, contemporaneous emails and correspondence that show the board's deliberations and the role played by each director in the company's strategic decision-making. Furthermore, it could also include minutes of decisions made in respect to amending the constitution or deciding on capital and entity restructuring or authorising significant changes in the direction of the entity's business operations. In this matter, there has been no examples of the above nor records to demonstrate as such.

In summary, the evidence provided does support your contentions that the parties are affiliates under section 328-130 of the ITAA 1997. The evidence provided does not demonstrate or show that the day-to-day business decisions nor any high-level decisions made by Company A is in accordance with the wishes of Trustee Company as no act has been shown to be acting in concert with them.

Therefore, Company A is not an affiliate of the Trustee Company under section 328-130 of the ITAA1997.

Question 2

Is Company B an affiliate of the Trustee Company as defined by section 328-130 of the Income Tax Assessment Act 1997 (ITAA 1997) for the purpose of the proposed transfer/sale of property?

Summary

Company B is not an affiliate of the Trustee Company, as the provided documentation does not support the view that Company B acts or could reasonably be expected to act in accordance with the Trustee Company's directions or wishes, or in concert with the Trustee Company as defined by section 328-130 of the ITAA 1997.

Detailed reasoning

As set out in the reasons for decision for Question 1 of this ruling, an entity is an 'affiliate' of another entity if an entity acts, or could reasonably be expected to act, in accordance with another entity's directions or wishes, or in concert with another entity.

As a result, the same factors as presented in the reasons for the decision for Question 1 should be examined.

Application to your circumstances

Below we have analysed the documentation submitted with the application.

Company's B Constitution

In accordance with Clause XX of the Company's B Constitution, there must be at least one Director in the Company and until otherwise determined by a general meeting the Company shall not have more than X directors.

Directors' Powers

As per Clause XX, the management of the Company's business is vested in the directors who shall exercise all the powers of the Company as are not required to be exercised by the Company in general meeting.

Multiply points of information provided relating to this matter have been provided.

Meetings and Documentation

The execution of the directors' powers should be properly organised and documented in accordance with the Company's B Constitution as outlined by the following clauses.

Meetings

Information provided relating to this matter has been provided.

Convening Meeting

Information provided relating to this matter has been provided.

Resolution in Writing without Meeting

Information provided relating to this matter has been provided.

Resolution of a Single Director

Where the Company has only one director:

Multiply points of information provided relating to this matter have been provided.

Management Vested in Directors

Information provided relating to this matter has been provided.

Minutes

The directors shall cause minutes to be made of:

Multiply points of information provided relating to this matter have been provided.

Board Minutes

Information provided relating to this matter has been provided.

Conclusion

The Commissioner acknowledges your contentions regarding the directors of Company B and their role in this company. However, your contentions regarding the strategic role of the directors were not reflected by any documentation required for the purposes of this ruling, which was submitted with your application.

Multiply points of information provided relating to minutes have been provided.

Documentation to demonstrate 'control' in acting in concert with you would ordinarily include papers circulated to board members in advance of meetings, contemporaneous emails and correspondence that show the board's deliberations and the role played by each director in the company's strategic decision-making. Furthermore, it could also include minutes of decisions made in respect to amending the constitution or deciding on capital and entity restructuring or authorising significant changes in the direction of the entity's business operations. In this matter, there has been no examples of the above nor records to demonstrate as such.

In summary, the evidence provided does support your contentions that the parties are affiliates under section 328-130 of the ITAA 1997. The evidence provided does not demonstrate or show that the day-to-day business decisions nor any high-level decisions made by Company B is in accordance with the wishes of Trustee Company as no act has been shown to be acting in concert with them.

Therefore, Company B is not an affiliate of the Trustee Company under section 328-130 of the ITAA1997.

Question 3

Is Company C an affiliate of the Trustee Company as defined by section 328-130 of the Income Tax Assessment Act 1997 (ITAA 1997) for the purpose of the proposed transfer/sale of property?

Summary

Company C is not an affiliate of the Trustee Company, as the provided documentation does not support the view that Company C acts or could reasonably be expected to act in accordance with the Trustee Company's directions or wishes, or in concert with the Trustee Company as defined by section 328-130 of the ITAA 1997

Detailed reasoning

As set out in the reasons for decision for Question 1 of this ruling, an entity is an 'affiliate' of another entity if an entity acts, or could reasonably be expected to act, in accordance with another entity's directions or wishes, or in concert with another entity.

As a result, the same factors as presented in the reasons for the decision for Question 1 should be examined.

Below we have analysed the documentation submitted with the application.

Company's C Constitution

Information provided relating to this matter has been provided.

Directors' Powers

Multiply points of information provided relating to this matter have been provided.

Meetings and Documentation

The execution of the directors' powers should be properly organised and documented in accordance with the Company's C Constitution as outlined by the following clauses.

Meetings

Information provided relating to this matter has been provided.

Convening Meeting

Information provided relating to this matter has been provided.

Resolution in Writing without Meeting

Information provided relating to this matter has been provided.

Resolution of a Single Director

Where the Company has only one director:

Multiply points of information provided relating to this matter have been provided.

Management Vested in Directors

Information provided relating to this matter has been provided.

Minutes

The directors shall cause minutes to be made of:

Multiply points of information provided relating to this matter have been provided.

Board Minutes

Information provided relating to this matter has been provided.

Conclusion

The Commissioner acknowledges your contentions regarding the directors of Company C and their role in this company. However, your contentions regarding the strategic role of the directors were not reflected by any documentation required for the purposes of this ruling, which was submitted with your application.

Multiply points of information provided relating to minutes have been provided.

Documentation to demonstrate 'control' in acting in concert with you would ordinarily include papers circulated to board members in advance of meetings, contemporaneous emails and correspondence that show the board's deliberations and the role played by each director in the company's strategic decision-making. Furthermore, it could also include minutes of decisions made in respect to amending the constitution or deciding on capital and entity restructuring or authorising significant changes in the direction of the entity's business operations. In this matter, there has been no examples of the above nor records to demonstrate as such.

In summary, the evidence provided does support your contentions that the parties are affiliates under section 328-130 of the ITAA 1997. The evidence provided does not demonstrate or show that the day-to-day business decisions nor any high-level decisions made by Company C is in accordance with the wishes of Trustee Company as no act has been shown to be acting in concert with them.

Therefore, Company C is not an affiliate of the Trustee Company under section 328-130 of the ITAA1997.

Question 4

Is Company D an affiliate of the Trustee Company as defined by section 328-130 of the Income Tax Assessment Act 1997 (ITAA 1997) for the purpose of the proposed transfer/sale of property?

Summary

Company D is not an affiliate of the Trustee Company, as the provided documentation does not support the view that Company D acts or could reasonably be expected to act in accordance with the Trustee Company's directions or wishes, or in concert with the Trustee Company as defined by section 328-130 of the ITAA 1997.

Detailed reasoning

As set out in the reasons for decision for Question 1 of this ruling, an entity is an 'affiliate' of another entity if an entity acts, or could reasonably be expected to act, in accordance with another entity's directions or wishes, or in concert with another entity.

As a result, the same factors as presented in the reasons for the decision for Question 1 should be examined.

Application to your circumstances

Below we have analysed the documentation submitted with the application.

Company's D Constitution

Information provided relating to this matter has been provided.

Directors' Powers

Multiply points of information provided relating to this matter have been provided.

Directors' Meetings

Multiply points of information provided relating to this matter have been provided..

Written and Circular Resolutions of Directors

Multiply points of information provided relating to this matter have been provided.

Minutes and Registers

Multiply points of information provided relating to this matter have been provided.

Board Minutes

Information provided relating to this matter has been provided.

Conclusion

The Commissioner acknowledges your contentions regarding the directors of Company D and their role in this company. However, your contentions regarding the strategic role of the directors were not reflected by any documentation required for the purposes of this ruling, which was submitted with your application.

Multiply points of information provided relating to minutes have been provided.

Documentation to demonstrate 'control' in acting in concert with you would ordinarily include papers circulated to board members in advance of meetings, contemporaneous emails and correspondence that show the board's deliberations, and the role played by each director in the company's strategic decision-making. Furthermore, it could also include minutes of decisions made in respect to amending the constitution or deciding on capital and entity restructuring or authorising significant changes in the direction of the entity's business operations. In this matter, there has been no examples of the above nor records to demonstrate as such.

In summary, the evidence provided does support your contentions that the parties are affiliates under section 328-130 of the ITAA 1997. The evidence provided does not demonstrate or show that the day-to-day business decisions nor any high-level decisions made by Company D is in accordance with the wishes of Trustee Company as no act has been shown to be acting in concert with them.

Therefore, Company D is not an affiliate of the Trustee Company under section 328-130 of the ITAA 1997.