Private ruling: Small business restructure roll-over
Date of advice: 1 September 2023
Published: 9 October 2023
Ruling period: Year ending 30 June XXXX
Date scheme commenced: 1 July XXXX

Ruling: Q1: Does the proposed transfer of land from the Company to the Land Trust qualify for roll-over relief under Subdivision 328-G of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. | Q2: Does section 328-450 of the ITAA 1997 apply to the transfer of the land to stop the application of section 109C of the Income Tax Assessment Act 1936 (ITAA 1936)? | A2: Yes.

Relevant facts and circumstances: 1. The Trust was settled in XXXX and is a resident trust for income tax purposes. 2. The Company is the sole trustee of the Trust and is a resident company for income tax purposes. 3. An individual (the Individual) is the sole director and sole shareholder of the Company. 4. The Company owns a property. 5. The Company leases the property on an informal basis to Trust 2. The Individual is the sole trustee of Trust 2. 6. Trust 2 conducts business operations on the property, as well as an adjacent property that is owned by the Trust and a property which is owned by Trust 2. Trust 2 generates revenue less than $10 million per annum carrying on these operations. The Proposed Transaction 7. The Company proposes to transfer the property to a newly created discretionary trust called the Land Trust. 8. The Trust will also transfer the property to the Land Trust. 9. A newly created discretionary trust, called the Trading Trust, will enter into a leasing arrangement with the Land Trust, Trust 2 and the Trust and take over the business operations. 10. The trustee and appointor of both the Land Trust and the Trading Trust will be the Individual. 11. The Primary Beneficiaries of the Trust are the children of the Individual. They will be the Primary Beneficiaries of the Land Trust and the Trading Trust. 12. In the year ended 30 June XXXX, the Trust made a family trust election nominating the Individual as the specified test individual. 13. Prior to the transfer of the property, each of the Land Trust and the Trading Trust will make a family trust election nominating the Individual as the specified test individual. 14. In the year of transfer, the Trust will make a nomination pursuant to section 152-78 of the ITAA 1997 in favour of the Individual. 15. In the year of transfer, the Land Trust and the Trading Trust will make a nomination pursuant to section 152-78 of the ITAA 1997 in favour of the Individual. 16. The aggregated turnover of the Trust, Trust 2, the Company and all connected entities and affiliates is less than $10 million for the year ended 30 June XXXX. 17. The aggregated turnover of the Trading Trust (including connected entities and affiliates) will not exceed $10 million in the year ended 30 June XXXX. 18. The Land Trust and the Trading Trust will not sell or dispose of any of the transferred assets for a minimum of 3 years following the transfer (aside from trading stock). 19. The proposed arrangement is being considered due to the following commercial impracticalities: • a single entity owning land and operating the trading business, exposing the land asset to risks of claim against the trading business and vice-versa, • land holdings being held by the same entity despite having reasonable degree of physical separation, • the same entity acting as trustee of an entity and also having land holdings in their own right, • 2 parcels of adjoining land that are held by separate entities, and • inability to offer reduced land security to financiers due to the interconnection of land ownership. 20. All parties to the proposed transaction will choose to apply a roll-over under Subdivision 328-G of the ITAA 1997.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 109C | Income Tax Assessment Act 1936 Section 272-70 of Schedule 2F | Income Tax Assessment Act 1936 Section 272-80 of Schedule 2F | Income Tax Assessment Act 1997 Paragraph 152-10(1A) | Income Tax Assessment Act 1997 Paragraph 152-10(1A)(a) | Income Tax Assessment Act 1997 Paragraph 152-10(1A)(b) | Income Tax Assessment Act 1997 Paragraph 152-10(1A)(c) | Income Tax Assessment Act 1997 Paragraph 152-10(1A)(d) | Income Tax Assessment Act 1997 subsection 152-10(1AA) | Income Tax Assessment Act 1997 Paragraph 152-40(1)(a) | Income Tax Assessment Act 1997 Subsection 328-110(1) | Income Tax Assessment Act 1997 Paragraph 328-110(1)(a) | Income Tax Assessment Act 1997 Paragraph 328-110(1)(b) | Income Tax Assessment Act 1997 Subsection 328-115(1) | Income Tax Assessment Act 1997 Subsection 328-115(2) | Income Tax Assessment Act 1997 Subsection 328-115(3) | Income Tax Assessment Act 1997 Section 328-115(1) | Income Tax Assessment Act 1997 Subsection 328-125(1) | Income Tax Assessment Act 1997 Paragraph 328-125(1)(b) | Income Tax Assessment Act 1997 Subsection 328-125(2) | Income Tax Assessment Act 1997 Paragraph 328-125(2)(b) | Income Tax Assessment Act 1997 Subsection 328-125(3) | Income Tax Assessment Act 1997 Subdivision 328-G | Income Tax Assessment Act 1997 Section 328-430 | 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 Subparagraph 328-430(1)(b)(iii) | 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 Subparagraph 328-430(1)(d)(ii) | 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 Paragraph 328-440(a) | Income Tax Assessment Act 1997 Subparagraph 328-440(a)(ii) | Income Tax Assessment Act 1997 Paragraph 328-440(b) | Income Tax Assessment Act 1997 Paragraph 328-440(c) | Income Tax Assessment Act 1997 Section 328-445 | Income Tax Assessment Act 1997 Section 328-450 | Income Tax Assessment Act 1997 Paragraph 328-450(1)(b) | Income Tax Assessment Act 1997 Subsection 995-1(1)

Reasons for decision: Summary: The disposal of the property by the Company to the Land Trust in accordance with the Proposed Transaction will satisfy the conditions for roll-over under section 328-430. | Detailed Reasoning - Detailed reasoning: 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 discusses when a roll-over is available. There are 6 basic conditions in subsection 328-430(1) that must be met and they are as follows: 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 (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. Note: 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). 3. The transferor is the Company who will be transferring the property to the Land Trust. 4. 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 Transaction are not either of these types of entities, subsection 328-430(2) does not prevent roll-over being available in this situation. 5. Each requirement in subsection 328-430(1) will now be considered in detail. | Detailed Reasoning - Paragraph 328-430(1)(a) - genuine restructure: 6. Paragraph 328-430(1)(a) requires that the transaction is, or is part of, a genuine restructure of an ongoing business. 7. 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. 8. Law Companion Ruling LCR 2016/3 Small Business Restructure Roll-over: genuine restructure of an ongoing business and related matters (LCR 2016/3) provides guidance on whether a transaction will be part of a 'genuine restructure of an ongoing business'. 9. Paragraph 6 of LCR 2016/3 states: 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. ... 10. Paragraph 7 of LCR 2016/3 outlines the following features that indicate 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. 11. However, 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. 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. 12. The business operations will all continue to be carried on after the Proposed Transaction has been implemented. You have stated that there are 3 main reasons for its implementation: • separation of the trading business from land holdings • allowing more flexibility in debt and financing options • aligning ownership structure of the assets according to geographic location. 13. As per paragraph 7 of LCR 2016/3 these are features that indicate a genuine restructure of an ongoing business is taking place. That is, it is a bona fide commercial arrangement in a structure likely to have been adopted had the owners obtained appropriate professional advice when setting up the business. Moreover it is an authentic restructuring of the way the business is conducted. There is no indication that the Proposed Transaction is occurring in the course of winding down to transfer wealth between generations or realising their ownership interests. 14. It is accepted that the Proposed Transaction is a genuine restructure for the purposes of paragraph 328-430(1)(a). | Detailed Reasoning - Paragraph 328-430(1)(b) - small business or related entity: 15. 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 Proposed Transaction occurs: (i) a small business entity (ii) an affiliate of a small business entity (iii) connected with a small business entity (iv) a partner in a partnership that is a small business entity. 16. As neither the Company as transferor, or the Land Trust as transferee, are small business entities or partners in a partnership, the requirement in subparagraph 328-430(1)(b)(iii) will need to be satisfied. Trust 2 and the Trading Trust must therefore be small business entities and connected with the transferor and transferee. | Detailed Reasoning - Small business entity: 17. 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. 18. 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. 19. Trust 2 is conducting, and the Trading Trust will be conducting, business and will therefore satisfy the requirement in paragraph 328-110(1)(a). 20. The next requirement is to determine if the aggregated turnover is less than $10 million in the relevant income year. 'Aggregated turnover' for an income year is defined in subsection 328-115(1) as the sum of the relevant annual turnovers excluding any amounts covered by subsection 328-115(3). 21. The 'relevant annual turnovers' are defined in subsection 328-115(2) as: (a) your *annual turnover for the income year; and (b) the annual turnover for the income year of any entity (a relevant entity ) that is *connected with you at any time during the income year; and (c) the annual turnover for the income year of any entity (a relevant entity ) that is an *affiliate of yours at any time during the income year. 22. The amounts excluded under subsection 328-115(3) are amounts derived from dealings between you and any entities that are connected with you or are your affiliates, or amounts derived from dealings between those entities. 23. You advised that the aggregated turnover for the year ended 30 June XXXX was less than $10 million and the aggregated turnover for the year ended 30 June XXXX is estimated to be less than $10 million. Since these amounts are less than the $10 million threshold, the requirement in paragraph 328-110(1)(b) will be satisfied. 24. Since paragraphs 328-110(1)(a) and (b) are both satisfied, Trust 2 and the Trading Trust are small business entities in accordance with subsection 328-110(1). | Detailed Reasoning - Connected with a small business entity: 25. The final requirement is for the Company and the Land Trust to demonstrate that they are connected with Trust 2 and the Trading Trust. [1] 26. Subsection 328-125(1) states an entity is connected with another entity if: (a) either entity controls the other entity in a way described in this section; or (b) both entities are controlled in a way described in this section by the same third entity. 27. In this case, the Company and the Land Trust need to establish they are controlled by the same entity that controls Trust 2 and the Trading Trust, to satisfy paragraph 328-125(1)(b). 28. There are control tests in section 328-125 that apply depending on what type of entity is being tested. For a company, the control test in paragraph 328-125(2)(b) states: (2) An entity (the first entity) controls another entity if the first entity, its affiliates, or the first entity together with its affiliates: ... (b) if the entity is a company - own, or have the right to acquire the ownership of, interests in the company that carry between them the right to exercise, or control the exercise of, a percentage (the control percentage ) that is at least 40% of the voting power in the company. 29. The Individual is the 'first entity' referred to in subsection 328-125(2). As sole director and shareholder of the Company, the Individual controls the company. Consequently, the requirement in subsection 328-125(3) is satisfied. 30. For a discretionary trust, the direct control test in subsection 328-125(3) states: An entity (the first entity) controls a discretionary trust for an income year if a trustee of the trust acts, or could reasonably be expected to act, in accordance with the directions or wishes of the first entity, its affiliates, or the first entity together with its affiliates. 31. The Individual is the 'first entity' referred to in subsection 328-125(3). As sole trustee of Trust 2, the Land Trust and the Trading Trust, the Individual controls all 3 discretionary trusts. Further, as sole director and shareholder of the Company, which is the sole trustee of the Trust, the Individual controls the Trust. Consequently, the requirement in subsection 328-125(3) is satisfied. | Detailed Reasoning - Conclusion: 32. Trust 2, the Trading Trust, the Land Trust and the Company are all controlled by the Individual in accordance with subsections 328-125(2) and (3). Consequently, the Company and the Land Trust are both connected with Trust 2 and the Trading Trust via the operation of paragraph 328-125(1)(b). 33. It has been established that Trust 2 and the Trading Trust are small business entities. Since they are connected with both the Company (the transferor) and the Land Trust (the transferee), the requirement in paragraph 328-430(1)(b)(iii) is satisfied, as the transferor and the transferee to the Proposed Transaction are connected with an entity that is a small business entity. | Detailed Reasoning - Paragraph 328-430(1)(c) - ultimate economic owner: 34. 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. 35. Where ownership passes to or from a discretionary trust, this requirement would generally not be able to be met. Under ordinary legal concepts, a beneficiary of a discretionary trust is not entitled to income or capital of the trust until the trustee exercises their discretion to distribute income or to make an appointment of capital: Commissioner of Stamp Duties (NSW) v. Buckle (1998) 192 CLR 226. A beneficiary of a discretionary trust only has a right to require the trustee to consider whether or not to exercise their discretion. Instead, a beneficiary of a discretionary trust generally has a 'mere expectancy' in the income or capital of a trust and does not have an interest in possession: Gartside v. Inland Revenue Commissioner [1968] AC 553. 36. However, section 328-440 contains an alternative ultimate economic ownership test for discretionary trusts. 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. 37. Section 328-440 is satisfied if the assets are included in the property of a family trust (as defined in Schedule 2F to the ITAA 1936) either just before or just after the transaction takes / took effect [2] . Additionally, every individual who had the ultimate economic ownership of the asset just before and just after the transfer must be members of the family group (within the meaning of Schedule 2F to the ITAA 1936) relating to the family trust. [3] 38. The phrase 'ultimate economic ownership' is not defined in the ITAA 1997. However, the Explanatory Memorandum to the Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016 (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. 39. The Land Trust is a non-fixed trust for the purposes of section 272-70 of Schedule 2F of the ITAA 1936 and will each make a family trust election nominating a specified individual, the Individual, under section 272-80 of Schedule 2F to the ITAA 1936. As the assets will be the property of the Land Trust immediately after the Proposed Transaction takes effect, this will satisfy the requirement in subparagraph 328-440(a)(ii). 40. Just before the transaction takes effect, the individual who has the ultimate economic ownership of the property is the Individual, since he is the sole shareholder of the Company. Since he is also a member of the family group relating to the Land Trust at this time, the requirement in paragraph 328-440(b) is satisfied. 41. Just after the Proposed Transaction takes effect ultimate economic ownership of the property will be the family group members of the Land Trust, with the Individual as the test individual, thereby satisfying the requirement in paragraph 328-440(c). 42. Consequently, as the alternative ultimate economic ownership test under section 328-440 will be satisfied, this will satisfy the requirement in paragraph 328-430(1)(c). | Detailed Reasoning - Paragraph 328-430(1)(d) - active assets: 43. Paragraph 328-430(1)(d) requires the CGT asset 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 (iii) 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 subparagraph. 44. In this case, subparagraph 328-430(1)(b)(iii) applies, therefore the condition in subparagraph 328-430(1)(d)(ii) must be satisfied. To satisfy this condition, the property must be an active asset in relation to which subsection 152-10(1A) is satisfied. | Detailed Reasoning - Active asset: 45. Paragraph 152-40(1)(a) provides that a tangible or intangible CGT asset is an active asset if you own the asset and it is used, or held ready for use, in a business carried on (whether alone or in partnership) by you, your affiliate or another entity that is connected with you. 46. The asset being transferred by the Company is the property that is used by a connected entity (Trust 2) in the course of a carrying on operations. The property is therefore an active asset. | Detailed Reasoning - Subsection 152-10(1A): 47. Subsection 152-10(1A) is satisfied in relation to the CGT asset in the income year if: (a) your *affiliate or an entity that is *connected with you, is a *CGT small business entity for the income year; and (b) you do not carry on a business in the income year (other than in partnership); and (c) if you carry on a business in partnership - the CGT asset is not an interest in an asset of the partnership; and (d) in any case - the CGT small business entity referred to in paragraph (a) is the entity that, at the time in the income year, carries on the business (as referred to in subparagraph (e) 152-40(1)(a)(ii) or (iii) or paragraph 152-40(1)(b)) in relation to the CGT asset. 48. In this case, the entity connected with the Company is Trust 2. As Trust 2 is a small business entity whose aggregated turnover in the previous income year was less than $10 million it will fall within the definition of a CGT small business entity in subsection 152-10(1AA). Therefore, the requirement in paragraph 152-10(1A)(a) will be satisfied. 49. As the Company does not carry on a business, the requirement in paragraph 152-10(1A)(b) will be satisfied. 50. As the Company does not carry on a business in partnership, the requirement in paragraph 152-10(1A)(c) will not be applicable. 51. Trust 2 is the entity referred to in paragraph 152-10(1A)(a) and will be carrying on the business operations using the property (the CGT asset) at the relevant time. Therefore, the requirement in paragraph 152-10(1A)(d) will be satisfied. 52. The property is an active asset in relation to which subsection 152-10(1A) will be satisfied in the year ending 30 June 2024. Therefore, the requirement in subparagraph 328-430(1)(d)(ii) will be satisfied. | Detailed Reasoning - Paragraph 328-430(1)(e) - residency: 53. Paragraph 328-430(1)(e) requires both the transferor and the transferee to meet the residency requirements outlined in section 328-445. As the Company and the Land Trust are Australian residents for income tax purposes, the requirement in paragraph 328-430(1)(e) will be satisfied. | Detailed Reasoning - Paragraph 328-430(1)(f) - roll-over choice: 54. 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. 55. The Company and the Land Trust will choose to apply the roll-over in relation to the transfer of the property. Therefore, the requirement in paragraph 328-430(1)(f) will be satisfied. | Detailed Reasoning - Conclusion: 56. As each of the requirements in subsection 328-430(1) have been met, the Company is eligible to choose roll-over relief under Subdivision 328-G in relation to the Proposed Transaction. | Detailed Reasoning - Question 2: Does section 328-450 apply to the transfer of the property to stop the application of section 109C of the ITAA 1936? | Summary: Since section 328-430 applies to this transaction, section 328-450 will operate to stop the application of section 109C of the ITAA 1936. | Detailed Reasoning - Detailed reasoning: 57. Section 328-450 provides that if the transfer of an asset occurs under a transaction to which section 328-430 applies, the transfer of the asset has no direct consequences under the income tax law. 58. Paragraph 328-450(1)(b) provides the following example: If the transfer were a transfer of the asset from a company to a shareholder, it would not be treated as a payment of a dividend under Division 7A of Part III of the Income Tax Assessment Act 1936 . 59. Further, the EM states: Transfers not to affect income tax position 1.45 As with other roll-overs, the small business restructure roll-over is intended to be tax-neutral, in the sense that no income tax consequences arise from the transfer of the asset(s). This will provide small businesses with the flexibility to change their legal structure without the cash flow problems that may arise from realising an income tax liability on the transfer of assets to a different entity. [Schedule 1, item 1, section 328-450] 1.46 The roll-over can be used for transfers from and to a range of different entity types, and such transfers may trigger various provisions under the existing income tax law. For example, a transfer of an asset by a company to a shareholder may be an assessable dividend under section 44 of the ITAA 1936 or Division 7A. 1.47 Section 328-450 ensures that there are tax neutral consequences for a transfer that qualifies for the roll-over, by 'switching off' the application of the existing income tax law. [Schedule 1, item 1, section 328-450] 60. The Company has proposed to transfer the property to the Land Trust. Since it has been established that section 328-430 applies to this transaction, section 328-450 will operate to 'switch off' any direct income tax law consequences of the transfer. 61. Therefore, as section 328-450 'switches off' the direct income tax law consequences of the transfer, the transfers are not considered payments under section 109C of the ITAA 1936. [1] Subparagraph 328-430(1)(b)(iii). [2] Paragraph 328-440(a). [3] Paragraphs 328-440(b) and (c).

Reasons for decision: All legislative references are to the ITAA 1997 unless otherwise stated.