ATO ID 2004/889: Financial Sector (Business Transfer and Group Restructure) Act 1999: transfer of debts
Date of decision: 26 February 2004
Year of income: Year ended 30 June 2002
Business line: Public Groups and International

Issue
Where a credit union business is voluntarily transferred to another eligible credit union business, pursuant to the provisions of the Financial Sector (Business Transfer and Group Restructure) Act 1999 (FSBTGR Act) is the receiving body taken to have bought debts from the transferring body equal to the amount of the debts as at the effective date of the transfer?

Decision
Yes.

Facts
Entity A, the transferring body, has transferred its business to Entity B, the receiving body, in accordance with the FSBTGR Act. Both entities are authorised deposit-taking institutions for the purposes of the Banking Act 1959. The parties satisfied all of the relevant procedural and substantive provisions determined by the Australian Prudential Regulation Authority (APRA), including preparation of a statement under section 20 of the FSBTGR Act (section 20 statement). The section 20 statement provided that the consequences for parties of the transfer of assets and liabilities under the FSBTGR Act are taken to be the same as if the transfer involved a sale of the assets of the transferring body to the receiving body. APRA approved the transfer of business and issued a certificate of transfer pursuant to section 18 of the FSBTGR Act.

Reasons for decision

Legislative references: Income Tax Assessment Act 1997 section 25-35
Subject references: Acquisition of business Bad debts