Private ruling: Income tax - Small business concessions
Date of advice: 31 July 2019
Published: September 2019
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is Company A an affiliate of Company B for the purposes of the small business concessions? | A1: No. Having regard to your circumstances and the relevant factors we consider that Company A is not an affiliate of Company B as Company A does not act, or could reasonably be expected to act, in accordance with Company B's directions or wishes, or in concert with Company B in relation to the affairs of their business. Further information on affiliates can be found by searching 'QC 50236' on ato.gov.au

Relevant facts and circumstances: You own X% of Company B. You wish to transfer the ownership of your shares to the trustee of a family trust that will be established for the benefit of your family. The market value of the shares is greater than the cost base so you will realise a capital gain on the disposal of the shares. The trustee of Person A's family trust owns X% of Company B and X% of Company A. Person A has limited involvement in the day-to-day affairs of the business of Company B. You are the managing director of Company B and manage the business without influence. Company B is operated independently of Company A and has a separate board of directors from Company A. Company A and Company B does not have the same board of directors. The directors of Company B are required to act, and do act, in the best interests of Company B. The business of Company B is managed by different persons to the business of Company A. Company A does not consult with you or Company B as to the conduct of Company A's business. Company A and Company B has different employees. No person employed by Company A is employed by Company B and vice versa. Company A and Company B has different business premises. Company A and Company B has separate bank accounts. Company A and Company B does not consult on business matters and certainly not in respect of the business affairs of Company A. Company A and Company B conduct their business affairs independently except to the extent to which Company B, in providing services to Company A franchisees, must have regard to the wishes and directions of Company A.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 328-130