Private ruling: Business restructure
Date of advice: 20 December 2019
Published: March 2020
Ruling period: Year ended 30 June 2020
Date scheme commenced: 1 July 2019

Ruling: Q1: Will entity A meet the requirements to apply the Small Business Restructure Rollover under Subdivision 328-G of the Income Tax Assessment Act 1997 (ITAA 1997) for the proposed restructure from a company to a discretionary family trust? | A1: Yes. Entity A is a small business entity, the ultimate economic ownership of the asset will be maintained and the asset is an active asset of the business. Both entity A and entity B are residents for Australian tax purposes and will choose to apply the roll-over. The restructure is authentic and maintains the continuity of use of assets and of key personnel. Accordingly, this is a genuine restructure of an ongoing business (Law Companion Ruling LCR 2016/3 provides further information).




Relevant facts: Entity A has been operating since xxxx. | Entity A is a small business entity, with a turnover under $10 million. | Entity A has a business asset that is an active asset. | Entity A has been trading profitably with entity C owning 51% and entity D owning 49% of the shares. | Due to the risks involved, entity C and D would like to change the structure of their business. The new structure will have entity E to manage entity B. | Entity B is a discretionary trust. A family trust election has been made. The specified individuals and test individuals are entity C and D. | Entity B will have an ABN and will operate the business. Entity B will have three beneficiaries, entity C, D and A. | Entity A is currently running the business, however will not run the business after restructuring. Entity A also owns cars which are used in the business. | The shareholding of entity A will not change. | Both entity A and entity B will choose the rollover. | Entity A and entity B are Australian residents.