Private ruling: CGT - small business restructure rollover
Date of advice: 17 December 2024
Published: 28 January 2025
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20YY

Ruling: Q1: Will the Applicant, a company, be 'the transferor' for the purposes of section 328-430 of the Income Tax Assessment Act 1997 (ITAA 1997) under the Proposed Restructure due to the operation of section 701-1 of the ITAA 1997? | A1: Yes. | Q2: Will the Proposed Restructure satisfy the safe harbour requirements in section 328-435 of the ITAA 1997 with the result that the Proposed Restructure is, or is part of, a genuine restructure of an ongoing business for the purposes of paragraph 328-430(1)(a) of the ITAA 1997? | A2: Decline to rule. See Reasons for Decision below. | Q3: Will both the Applicant and the transferee (Company T) each satisfy the small business entity requirement in subparagraph 328-430(1)(b)(i) of the ITAA 1997? | A3: Yes. | Q4: Will the Proposed Restructure satisfy the ultimate economic ownership requirements in paragraph 328-430(1)(c) of the ITAA 1997? | A4: No. | Q5: Will the transfer of goodwill under the Proposed Restructure satisfy the active asset requirements in paragraph 328-430(1)(d) of the ITAA 1997? | A5: Yes. | Q6: Will the Applicant and Company T each meet the residency requirement in paragraph 328-430(1)(e) and the roll-over choice requirement in paragraph 328-430(1)(f) of the ITAA 1997 for the purposes of the Proposed Restructure? | A6: Yes. | Q7: Is the Applicant eligible to apply a roll-over under section 328-430 of the ITAA 1997 in respect of the transfer of goodwill under the Proposed Restructure? | A7: No. | Q8: Is the Applicant eligible to apply a roll-over under section 40-340 of the ITAA 1997 in respect of the transfer of the software and associated intellectual property under the Proposed Restructure? | A8: No.

Relevant facts and circumstances: 1. The Applicant is the head company of a consolidated group that includes its subsidiaries Company A and Company B. 2. The assets of Company A are comprised of goodwill, software (and any intellectual property associated with the development of the software), cash, plant and equipment (Business Assets). 3. The Applicant was incorporated in Australia and is a tax resident of Australia. 4. The combined turnover of the consolidated group for the income year ended 30 June 20XX was below $10 million. 5. The different classes of shares in the Applicant are all held by the trustees of various discretionary trusts. 6. All dividends payable in respect of the profits of the Applicant have been paid to the holders of the ordinary shares. 7. The directors of the Applicant essentially control the trusts mentioned in paragraph 5. Proposed Restructure 8. The Applicant is proposing to undertake the Proposed Restructure in the manner described immediately below. 9. A new company will be incorporated in Australia (Company T). Company T will be an ordinary company limited by shares and will not be an exempt entity or a complying superannuation entity for the purposes of the ITAA 1997. 10. The directors and shareholders of Company T will be identical to the directors and shareholders of the Applicant. Accordingly, the shareholding trusts will hold all the shares in Company T in the same proportions as their ownership of the shares in the Applicant. 11. The rights attaching to each class of share in Company T will be identical to the rights attaching to that class of share in the Applicant. 12. Company T will not join the consolidated group. 13. Company A will transfer the Business Assets to Company T. 14. At the time of transfer, the Applicant, Company A and Company T will be Australian residents for Australian income tax purposes. 15. In the income year of the transfer, the Applicant and Company T will each have carried on business and will each have an aggregated turnover below $10m for Australian income tax purposes either or both the income year of the transfer and/or the income year immediately preceding the transfer. 16. Both the Applicant and Company T will choose to apply a roll-over under subdivision 328-G of the ITAA 1997. 17. At the time of the transfer, the directors of Company T, and the trustees of the shareholding trusts as necessary, will resolve that in the three-year period subsequent to the transfer: • there will be no change in the shareholding of Company T or the rights attaching to any of shares held by the shareholding trusts in Company T; • there will be no disposal of the goodwill of Company T or any assets to which the goodwill is attached; • none of the trustees of any of the shareholding trusts will amend the trust deed of any of the respective trusts to alter the general beneficiaries entitled to benefit upon the exercise by the trustee of its discretion to distribute the income or capital of the respective trusts or the respective entitlements of those beneficiaries under the respective trust deeds; • none of the trustees of any of the shareholding trusts will nominate any additional beneficiaries as either general beneficiaries or default beneficiaries under the respective trust deeds; • none of the trustees of any of the shareholding trusts will amend the trust deed of any of the respective trusts to alter the default beneficiaries who will benefit in default of the trustee utilising its discretion or the respective entitlement of those beneficiaries under the respective trust deeds, be it contingent or otherwise, to the income and capital of the respective trusts; • there will be no change in the trustees of any of the shareholding trusts; • Company T will continue to carry on Company A's business in reliance upon the goodwill; and • there will not be any significant or material use of the Business Assets for private purpose.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 328-430(1) | 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 subsection 328-430(2) | Income Tax Assessment Act 1997 section 328-440 | Income Tax Assessment Act 1997 subparagraph 328-440(a)(ii)

Reasons for decision: Detailed Reasoning - Question 1:: Will the Applicant be the transferor for the purposes of section 328-430 under the Proposed Restructure due to the operation of section 701-1 of the ITAA 1997? | Detailed Reasoning - Answer: Yes. | Detailed Reasoning - Restructures of small businesses:: 1. Subdivision 328-G allows flexibility for owners of small business entities to restructure their businesses and the way their business assets are held while disregarding tax gains and losses that would otherwise arise. 2. Section 328-430 explains the conditions that must be satisfied when, under a transaction, an entity (the 'transferor'), transfers an asset to one or more other entities (the 'transferees'), for a rollover to be available (the relevant conditions are explained in detail below). Therefore, the provision requires consideration of the entity that would be considered the transferor. | Detailed Reasoning - Single Entity Rule:: 3. Broadly, section 701-1 provides that the members of a consolidated group are treated as a single entity (being the head company) for calculating the head company's liability to income tax. 4. Taxation Ruling TR 2004/11 Income tax: consolidation: the meaning and application of the single entity rule in Part 3-90 of the Income Tax Assessment Act 1997 (' TR 2004/11 ') sets out the Commissioner's view on the application of the single entity rule (SAR). 5. Paragraph 31 of TR 2004/11 states: A consequence flowing from the SER is that while an entity is a subsidiary member of a consolidated group, actions and transactions of that member are treated as having been undertaken by the head company. In addition, the assets owned by subsidiary members of the group are taken to be owned by the head company (other than assets where the rights and obligations are between members of the group) [see the EM - paragraphs 2.12, 2.20 and 2.26]. Application to your circumstances : 6. The Proposed Restructure involves a number of steps, including the transfer of Company A's Business Assets to Company T. 7. The Applicant is the head company of the tax consolidated group with Company A being a subsidiary member. In accordance with section 701-1 and TR 2004/11, as the head entity of the tax consolidated group, The Applicant will be deemed to be the relevant transferor under the Proposed Restructure. | Detailed Reasoning - Question 2: Will the Proposed Restructure satisfy the safe harbour requirements in section 328-435 with the result that the Proposed Restructure is, or is part of, a genuine restructure of an ongoing business for the purposes of paragraph 328-430(1)(a)? | Detailed Reasoning - Answer: Not ruled upon. | Detailed Reasoning - REQUIREMENTS FOR ROLLOVER: 8. Subsection 328-430(1) provides that: A roll-over under this Subdivision is available in relation to an asset that, under a transaction, an entity (the transferor ) transfers to one or more other entities ( transferees ) if: (a) the transaction is, or is a part of, a genuine restructure of an ongoing *business; and (b) each party to the transfer is an entity to which any one or more of the following applies: (i) it is a *small business entity for the income year during which the transfer occurred; (ii) it has an *affiliate that is a small business entity for that income year; (iii) it is *connected with an entity that is a small business entity for that income year; (iv) it is a partner in a partnership that is a small business entity for that income year; and (c) the transaction does not have the effect of materially changing: (i) which individual has, or which individuals have, the ultimate economic ownership of the asset; and (ii) if there is more than one such individual - each such individual's share of that ultimate economic ownership; and (d) the asset is a *CGT asset (other than a *depreciating asset) that is, at the time the transfer takes effect: (i) if subparagraph (b)(i) applies - an *active asset; or (ii) if subparagraph (b)(ii) or (iii) applies - an active asset in relation to which subsection 152-10(1A) is satisfied in that income year, or would be satisfied in that income year if paragraph 152-10(1AA)(b) were disregarded; or (iii) if subparagraph (b)(iv) applies - an active asset and an interest in an asset of the partnership referred to in that subparagraph; and (e) the transferor and each transferee meet the residency requirement in section 328-445 for an entity; and (f) the transferor and each transferee choose to apply a roll-over under this Subdivision in relation to the assets transferred under the transaction. 9. In addition, subsection 328-430(2) provides that roll-over is not available under Subdivision 328-G if the transferor or any transferee is either an exempt entity or a complying superannuation entity. As all the parties to the Proposed Restructure are not either of these types of entities, subsection 328-430(2) does not apply. | Detailed Reasoning - Paragraph 328-430(1)(a) - genuine restructure of an ongoing business: 10. Paragraph 328-430(1)(a) requires that the transaction is, or is part of, a genuine restructure of an ongoing business. 11. Whether a transaction is or is part of a 'genuine restructure of an ongoing business' is a question of fact that is determined having regard to all of the circumstances surrounding the restructure. 12. Law Companion Ruling LCR 2016/3 Small Business Restructure Roll-over: genuine restructure of an ongoing business and related matters provides guidance of the Commissioner's view on whether a transaction will be part of a 'genuine restructure of an ongoing business'. 13. The Commissioner's view in LCR 2016/3 is that a genuine restructure of an ongoing business is one that could be reasonably expected to deliver benefits to small business owners in respect of their efficient conduct of the business. It can encompass a restructure of the way in which business assets are held where that structure is likely to have been adopted had the business owners obtained appropriate professional advice when setting up the business. 14. Paragraph 7 of LCR 2016/3 outlines the following features that the Commissioner accepts will indicate that a transaction is, or is part of, a genuine restructure of an ongoing business: • it is a bona fide commercial arrangement undertaken to facilitate growth, innovation and diversification, to adapt to changed conditions, or to reduce administrative burdens and compliance costs • it is authentically restructuring the way the business is conducted, as opposed to a divestment or a preliminary step to facilitate the economic realisation of assets • the economic ownership of the business and its restructured assets is maintained • the small business owners continue to operate the business through a different legal structure, and • it results in a structure likely to have been adopted had the small business owners obtained appropriate professional advice when setting up the business. 15. However, the Commissioner's view is that the restructure of an ongoing business by a business owner is not genuine if it is done in the course of winding down to transfer wealth between generations or realising their ownership interests. In the Commissioner's view, a restructure is likely to not be a genuine restructure of an ongoing business if: • it is a preliminary step to facilitate the economic realisation of assets, or takes place in the course of winding down to transfer wealth between generations • it effects an extraction of wealth from the assets of the business for personal investment or consumption • it creates artificial losses or brings forward their recognition • it effects a permanent non-recognition of gain or creates artificial timing advantages, and/or • there are other tax outcomes that do not reflect economic reality. | Detailed Reasoning - Section 328-435 - genuine restructure - safe harbour rule:: 16. Section 328-435 provides a safe harbour rule which is an alternative way to satisfy the 'genuine restructure of an ongoing business' condition. A transaction will be taken to be a genuine restructure of an ongoing business for the purposes of paragraph 328-430(1)(a) where the conditions in section 328-435 have been satisfied. 17. Paragraph 78 of LCR 2016/3 states that: Where the safe harbour rule is satisfied, it is not necessary to consider whether the arrangement would otherwise be a 'genuine restructure of an ongoing business' under paragraph 328-430(1)(a). 18. Section 328-435 provides that, for the purposes of paragraph 328-430(1)(a), a transaction is, or is part of, a genuine restructure of an ongoing business if, for a period of three years after the transaction occurs: (a) there is no change in the ultimate economic ownership of any of the significant assets of the business (other than trading stock) that were transferred under the transaction; and (b) those significant assets continue to be active assets; and (c) there is no significant or material use of those significant assets for private purposes. Application to your circumstances : 19. We have not considered your question regarding the satisfaction of the safe harbour rule to determine if the Proposed Restructure is part of a genuine restructure under section 328-435. Responding to this request would necessitate making assumptions about future events. Regardless, subject to these limitations, if the conditions of the section were satisfied for the three years subsequent to the Proposed Restructure, then the safe harbour rule under section 328-435 could have application such that the Proposed Restructure is a 'genuine restructure of an on-going businesses. | Detailed Reasoning - Question 3: Will both the Applicant and Company T each satisfy the small business entity requirement in subparagraph 328-430(1)(b)(i)? | Detailed Reasoning - Answer: Yes. | Detailed Reasoning - Paragraph 328-430(1)(b) - small business or related entity:: 20. Paragraph 328-430(1)(b) requires both the transferor and the transferee to be one or more of the following entities in the income year the transaction occurs: (i) a small business entity (ii) an affiliate of a small business entity (iii) connected with a small business entity, and (iv) a partner in a partnership that is a small business entity. | Detailed Reasoning - Small business entity: 21. Subsection 328-110(1) provides that you are a small business entity for an income year if: (a) you carry on a *business in the current year; and (b) one or both of the following applies: (i) you carried on a business in the income year (the previous year ) before the current year and your *aggregated turnover for the previous year was less than $10 million; (ii) your aggregated turnover for the current year is likely to be less than $10 million. 22. The term 'business' is defined in subsection 995-1(1) to include any profession, trade, employment, vocation or calling, but does not include occupation as an employee. 23. The question of whether a business is being carried on is a question of fact and degree. The courts have developed a series of indicators to determine the matter, these indicators are summarised in Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production . Application to your circumstances : 24. In the income year of the transfer, the Applicant and Company T will each have carried on business and will each have an aggregated turnover below $10m for Australian income tax purposes either or both the income year of the transfer and/or the income year immediately preceding the transfer. 25. Therefore, the Applicant will satisfy the requirement of subparagraph 328-430(1)(b). | Detailed Reasoning - Question 4: Will the Proposed Restructure satisfy the ultimate economic ownership requirements in paragraph 328-430(1)(c)? | Detailed Reasoning - Answer: No. | Detailed Reasoning - Paragraph 328-430(1)(c) - Ultimate economic ownership: 26. Paragraph 328-430(1)(c) requires the transaction to not have the effect of materially changing which individual has, or which individuals have, the ultimate economic ownership of the assets. Additionally, where more than one individual holds the ultimate economic ownership of the asset, each individual's share of that ownership must not materially change. 27. The phrase 'ultimate economic ownership' is not defined in the ITAA 1997. Guidance on the meaning of the term can be found in the Explanatory Memorandum to the Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016 (the EM), which introduced the provisions. The EM states: 1.29 ...The ultimate economic owners of an asset are the individuals who, directly or indirectly, beneficially own an asset. 1.30 Ultimate economic ownership of an asset can only be held by natural persons. Therefore, where a company, partnership or trust owns an asset it will be the natural person owners of the interests in these interposed entities that will ultimately benefit economically from that asset. 28. The EM further provides that for the purposes of subparagraph 328-430(1)(c)(ii), an individual's share of the ultimate economic ownership of an asset being 'materially unchanged' means that they have the same proportion of ultimate economic ownership before and after the transaction. In other words, that an individual's share of ultimate economic ownership of an asset is ascertainable. Paragraph 1.31 states: 1.31 If there is more than one individual who is an ultimate economic owner of an asset, there is an additional requirement that each of those individuals' shares of that ultimate economic ownership be materially unchanged, maintaining the same proportionate ownership in the asset. [Schedule 1, item 1, subparagraph 328-430(1)(c)(ii)] 29. The presence of a discretionary trust in an ownership structure generally means that the ultimate economic ownership test in paragraph 328-430(1)(c) cannot be satisfied. This is because the economic interests that the objects of a discretionary trust have in a trust asset are not fixed in proportion and depend on the trustee exercising their discretion. This means an individual's share of ultimate economic ownership cannot be ascertained. | Detailed Reasoning - Ultimate economic ownership - discretionary trusts: 30. Section 328-440 contains an alternative ultimate economic ownership test for discretionary trusts. 31. Section 328-440 states that for the purposes of paragraph 328-430(1)(c), a transaction does not have the effect of changing the ultimate economic ownership of an asset, or any individual's share of that ultimate economic ownership, if the requirements in that section are satisfied. 32. Section 328-440 provides that: | Detailed Reasoning - 328-440 Ultimate economic ownership - discretionary trusts: For the purposes of paragraph 328-430(1)(c), a transaction does not have the effect of changing the ultimate economic ownership of an asset, or any individual ' s share of that ultimate economic ownership, if: (a) either or both of the following applies: (i) just before the transaction took effect, the asset was included in the property of a *non-fixed trust that was a *family trust; (ii) just after the transaction takes effect, the asset is included in the property of a non-fixed trust that is a family trust; and (b) every individual who, just before the transfer took effect, had the ultimate economic ownership of the asset was a member of the family group (within the meaning of Schedule 2F to the Income Tax Assessment Act 1936 ) relating to the trust or trusts referred to in paragraph (a); and (c) every individual who, just after the transfer takes effect, has the ultimate economic ownership of the asset is a member of that family group. | Detailed Reasoning - Application of facts to the law: Ultimate economic ownership 33. Under the Proposed Restructure, the Business Assets will be transferred to Company T. The directors and shareholders of Company T will be identical to the directors and shareholders of the Applicant. That is, the shareholders of Company T will be the same discretionary trusts as those owning the shares in the Applicant. 34. As the Business Assets are not directly owned by individuals, the ownership interests in the interposed entities must be considered to determine which individuals have ultimate economic ownership in the Business Assets and the share of ultimate economic ownership that each individual has. This requires consideration of the shareholding trusts as they own the ownership interests in the Applicant. 35. As explained above the economic interests that the objects of a discretionary trust have in a trust asset are not fixed in proportion. Therefore, it is not possible to ascertain an individual's share of ultimate economic ownership in the Business Assets (via the ownership interests in the Applicant held by the XX trusts). An assessment of whether there has been a material change in an individual's share of ultimate economic ownership cannot be undertaken when there is no ascertainable share to begin with. 36. For the reasons outlined above, the Applicant cannot satisfy the requirement of subparagraph 328-430(c)(ii), and as a result it is not eligible for a roll-over under section 328-430. 37. Although paragraph 328-430(1)(c) has not been satisfied, it is necessary to consider whether the Applicant meets the alternative test for non-fixed trusts in section 328-440. 38. Under the Proposed Restructure, the Business Assets to be transferred are not included in the property of those discretionary trusts either just before or just after the proposed transaction and paragraph 328-440(a) cannot be satisfied. As such, section 328-440 has no application to the Proposed Restructure. The Proposed Restructure will not satisfy all the conditions in section 328-430 and the Applicant will not be eligible to choose roll-over. 39. Furthermore, paragraph 328-430(1)(c) does not have reference to family trusts or family groups so it is therefore important to note that a family trust election or status as a family trust does not assist the Applicant. Asserting that the family group, or the members as a collective, hold the ultimate economic ownership, also does not assist in meeting subparagraph 328-430(1)(c)(ii) as it does not deal with the shares of ultimate economic ownership that the individuals have. | Detailed Reasoning - Conclusion: 40. As such, the Applicant will not satisfy the requirements under paragraph 328-430(c). | Detailed Reasoning - Question 5: Will the transfer of goodwill under the Proposed Restructure satisfy the active asset requirements in paragraph 328-430(1)(d)? | Detailed Reasoning - Answer: Yes. | Detailed Reasoning - Detailed reasoning: 41. Paragraph 328-430(1)(d) states: (d) The asset is a CGT asset (other than a depreciating asset() that is, at the time the transfer takes effect: (i) if subparagraph (b)(i) applies - an active asset; or (ii) if subparagraph b(ii) or (iii) applies - an active asset in relation to which (iii) subsection 152-10(1A) is satisfied in that income year; or would be satisfied in that income year if paragraph 152-10(1AA)(b) were disregarded or (iv) if subparagraph (b)(iv) applies - an active asset and an interest in an asset of the partnership referred to in that paragraph; and 42. Referring to question 3 above, if subparagraph 328-430(b)(i) applies in respect of the transfer of the goodwill from the Applicant to Company T, the relevant test is whether the goodwill is an active asset at the time the transfer takes effect. | Detailed Reasoning - Active Asset: 43. Subsection 152-40(1) states: (1) A *CGT asset is an active asset at a time if, at that time: (a) You own the asset (whether the asset is tangible or intangible) and it is used, or held ready for use, in the course of carrying on a *business that is carried on (whether alone or in partnership) by; (i) you; or (ii) your *affiliate; or (iii) another entity that is *connected with you; or (b) if the asset is an intangible asset - you own it and it is inherently connected with a business that is carried on (either alone or in partnership) by you, your affiliate, or another entity that is connected with you. | Detailed Reasoning - CGT Assets: 44. CGT assets are defined in subsection 108-5(1) as: (a) any kind of property; or (b) a legal or equitable right that is not property. 101. Paragraph 108-5(2)(b) outlines that goodwill, or an interest in it, is a CGT asset. Application to your circumstances : 45. Goodwill is a CGT asset in accordance with paragraph 108-5(2)(b). At the time of the Proposed Restructure, the goodwill is owned by Company A (i.e. the Applicant) and used by it in the course of carrying on its business. 102. Immediately following the Proposed Restructure the goodwill will be owned and used by Company T in the course of carrying on its business. 103. Therefore, at the time the Proposed Restructure takes effect, the goodwill will be an active asset in accordance with subsection 152-40(1), and also satisfy subparagraph 328-430(1)(d)(i). | Detailed Reasoning - Question 6: Will the Applicant and Company T each meet the residency requirement in paragraph 328-430(1)(e) and the roll-over choice requirement in paragraph 328-430(1)(f) for the purposes of the Proposed Restructure? | Detailed Reasoning - Answer: Yes. | Detailed Reasoning - Paragraph 328-430(1)(e) Australian residents: 46. Paragraph 328-430(1)(e) requires both the transferor and the transferee to meet the residency requirements outlined in section 328-445. 47. The Applicant is the transferor and Company T the transferee for the purpose of paragraph 328-430(1)(e). 48. A company meets the residency requirement in s 328-445 if the company is an Australian resident. 49. A company is a resident of Australia if it is incorporated in Australia, or it carries on business in Australia and has either its central management in Australia, or its voting power is controlled by shareholders who are residents of Australia. 50. The Applicant was incorporated in Australia, Company T will be incorporated in Australia. Both the Applicant and Company T will therefore be an Australian resident and therefore meet the residency requirement in section 328-445. 51. Accordingly, paragraph 328-430(1)(e) will be satisfied. | Detailed Reasoning - Paragraph 328-430(1)(f) - roll-over choice: 52. Paragraph 328-430(1)(f) requires both the transferor and the transferee to choose to apply the roll-over under Subdivision 328-G in relation to the assets transferred under the transaction. 53. Both the Applicant and Company T will choose to apply the roll-over in relation to the transfer of the goodwill. Therefore, the requirement in paragraph 328-430(1)(f) will be satisfied. | Detailed Reasoning - Question 7: Is the Applicant eligible to apply a roll-over under section 328-430 in respect of the transfer of the goodwill under the proposed restructure? | Detailed Reasoning - Answer: No. | Detailed Reasoning - Detailed reasoning: 54. In order for the Applicant to be eligible to choose roll-over in relation to the transfer of the goodwill to Company T, all the conditions in section 328-430 must be satisfied. Consequently, if the arrangement fails one of the conditions, the Applicant will not be able to satisfy section 328-430. 55. Under the Proposed Restructure, the Applicant will not satisfy all the conditions in section 328-430 and therefore, the Applicant will not be eligible to apply a roll-over. | Detailed Reasoning - Question 8: Is the Applicant eligible to apply a roll-over under section 40-340 in respect of the transfer of the software and associated intellectual property under the proposed restructure? | Detailed Reasoning - Answer: No. | Detailed Reasoning - Automatic roll-over relief: 56. The note to subsection 328-430(1) states that the roll-over of a depreciating asset transferred in the restructuring of a small business is addressed in item 8 of the table in subsection 40-340(1). Section 40-340 outlines the circumstances in which roll-over relief is available where specified balancing adjustment events have occurred for a depreciating asset. 57. Pursuant to subsection 40-340(1) the conditions required to obtain roll-over relief are: a. there is a balancing adjustment event because an entity (the transferor) disposes of a depreciating asset in an income year to another entity (the transferee); and b. the disposal involves a CGT event; and c. the conditions in an item in this table are satisfied. 58. Item 8 of the table in subsection 40-340(1) outlines the consequences where there is a transfer of a depreciating asset under a small business restructure roll-over. In this situation, roll-over relief is available under section 40-340 if a roll-over under Subdivision 328-G would be available in relation to the asset if the asset were not a depreciating asset. | Detailed Reasoning - Application to your circumstances:: 59. As discussed in Question 7, the Applicant will not be eligible to apply a roll-over under section 328-430 as it cannot satisfy the requirement of paragraph 328-430(1)(c). 60. As such, the Applicant is not eligible to the roll-over relief under 40-430 in respect of the transfer of the software and associated intellectual property.