Private ruling: Capital gains tax - rollover
Date of advice: 19 May 2026
Published: 10 August 2026
Ruling period: Year ending 30 June 2026

Ruling: Q1: Is the Commissioner satisfied that the shares in the company are beneficial assets of the Partnership? | A1: Yes | Q2: Can the Partners choose to obtain the roll-over under section 122-125 of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to the Restructure? | A2: Yes

Relevant facts and circumstances: Incorporation and Structure 1. Two individuals each hold 50% of the shares in Company A. These shares are beneficially held on behalf of the partners of a partnership (the Partnership). 2. The individuals also hold the shares in an associated company, Company B. They each hold a 50% interest in Company B. These shares are beneficially held on behalf of the partners of the Partnership, in accordance with legally binding documentation. 3. The Company A acts as an agent and management company of the Partnership. 4. Business is conducted by the Partnership. The Partnership holds all the relevant business assets. Outline of arrangements 5. The Company A acts as the agent on behalf of the Partners of the Partnership, and it is authorised to manage and conduct activities for the benefit of the Partners. 6. The Company A is the 'manager' and 'agent' of the Partnership, giving it responsibility for overseeing the Partnership's operations and acting on its behalf in dealings with third parties. 7. The Partnership owns IP and assets related to its business. 8. Company B is the trading entity licensed under the Licence Agreement by the Partnership to operate a business of selling products to consumers. Company B pays the Partnership royalties as the licensee. Financial records 9. In all relevant financial statements, records, accounts and income tax returns, the shares in the Company A and Company B, and the units in Trust A and Trust B have been accounted for as Partnership assets. 10. There are no liabilities in respect of the CGT assets to be transferred (discussed below). Restructure - transfer of assets of the Partnership to a new company (New Co) 11. CGT assets of the Partnership will be transferred to New Co as part of a restructure. The assets include: a) cash and cash equivalents b) intangibles c) units in trusts d) shares in Company B e) trade debtors f) loan receivables. 12. No liabilities will be transferred to New Co under the arrangement. New Co will not undertake to discharge any liabilities in respect of the interests in the assets. 13. Shares in the Company A are not part of the transfer of assets. The Company A will be liquidated once the restructure is complete. 14. None of the entities participating in the restructure hold any real property. 15. All trusts and companies involved in the restructure were established after 20 September 1985. All CGT assets were acquired, or created, after 20 September 1985. 16. All entities are Australian residents. 17. Relevantly: a) the Partners will dispose of their interests in business assets from the Partnership to New Co b) shares in New Co will be the only consideration c) shares in New Co will not be redeemable shares d) immediately after the transfer, the assets and liabilities of New Co will comprise completely the former assets and liabilities of the Partnership and each partner will hold the same proportional interest in New Co that they currently hold in the Partnership e) the Partners will own all the shares in New Co just after the disposal of the assets f) each partner will own the shares in New Co in the same capacity that they owned their interest in the CGT assets that New Co will own g) New Co will not be an entity that is exempt from income tax, and h) both the Partners and New Co will be Australian residents at the time of the transfer.


Reasons for decision: Summary: 18. The Commissioner is satisfied that the shares in Company B are beneficial assets of the Partnership. | Detailed Reasoning - Detailed reasoning: 19. The Commissioner is satisfied that the shares in Company B are beneficial assets of the Partnership as: a) the shares in Company B are held on behalf of the Partnership (as shown by legal documentation), and b) the shares have been treated as such by all relevant parties. | Summary: 20. The Partners can choose to obtain the roll-over under section 122-125 in relation to the Restructure. | Detailed Reasoning - Detailed reasoning: 21. Section 122-125 allows all the partners in a partnership to choose a roll-over where: a) CGT event A1 in section 104-10 occurs when the partners dispose of their interests in assets of a business carried on by the partnership to a company, and b) the conditions in sections 122-130 to 122-140 are satisfied. 22. Where the roll-over is chosen under section 122-125, any capital gain or loss made by the partners from the disposal is disregarded under section 122-150. 23. The relevant conditions in sections 122-130 to 122-140 are: a) The consideration the partners receive must be only shares in the company or shares in the company together with the company undertaking to discharge one or more liabilities in respect of their interests (subsection 122-130(1)). b) The shares cannot be redeemable shares (subsection 122-130(2)). c) The market value of the shares each partner receives must be substantially the same as the market value of interests in the assets the partner disposed of, less any liabilities the company undertakes to discharge in respect of the interests in the asset (paragraph 122-130(3)(a)). d) The partners must own all the shares in the company just after the time of the trigger event (subsection 122-135(1)). e) Each partner must own the shares the partner received in the same capacity that the partner owned the partner's interests in the assets that the company now owns (subsection 122-135(2)). f) The asset transferred or created must not be a personal use asset, a decoration, a precluded asset, or an asset that will be become trading stock of the company (subsection 122-135(3)). g) If the asset in question is a right, option, or convertible note, the asset acquired by the company on the exercise or conversion of the right, must not become trading stock of the company just after acquisition (subsection 122-135(4)). h) The company cannot be an exempt entity (subsection 122-135(5)). i) The trustee partners and the company must be a Australian residents at the time of the trigger event. (paragraph 122-135(7a)). 24. The Commissioner considers all of the Partners can choose to obtain the roll-over under section 122-125 in relation to the Restructure as: a) the Partners will dispose of their interests in all business assets from the Partnership to New Co, triggering CGT event A1 in section 104-10 b) Shares in New Co will be the only consideration, thus satisfying paragraph 122-130(1)(a) c) Shares in New Co will not be redeemable shares, thus satisfying subsection 122-130(2) d) the market value of the shares received by each partner will be substantially the same as the net market value of the assets the partner disposed of, less any liabilities New Co undertakes to discharge in respect of the interests in the assets, thus satisfying paragraph 122-130(3)(a). This is because the assets and liabilities of New Co will comprise completely the former assets and liabilities of the Partnership and each partner will hold the same proportional interest in New Co that they currently hold in the Partnership. e) the Partners will own all the shares in New Co just after the disposal of the assets, thus satisfying subsection 122-135(1) f) each partner will own the shares in New Co in the same capacity that they owned their interest in the assets that New Co will own, thus satisfying paragraph 122-135(2)(a) g) New Co will not be an entity that is exempt from income tax, thus satisfying subsection 122-135(5), and h) both the Partners and New Co will be Australian residents at the time of the transfer, thus satisfying paragraph 122-135(7)(a).

Reasons for decision: Legislative references are to the Income Tax Assessment Act 1997 ( ITAA 1997) unless otherwise stated.