Private ruling: Income tax - capital gains tax - small business concessions - small business restructure roll-over
Date of advice: 15 June 2019
Published: August 2019
Ruling period: Year ending 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Will the sale of assets to the Trust satisfy the requirements of the small business restructure rollover in accordance with Subdivision 328-G of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. The Commissioner considers that the proposed arrangement is a genuine restructure of an ongoing business. Information about the small business restructure rollover can be found by searching for "QC48586" on ato.gov.au | Q2: Will the transfer of depreciating assets to the Trust satisfy the requirements to apply the rollover in section 40-340 of the ITAA 1997? | A2: Yes. The Commissioner considers that the small business restructure rollover is available for the depreciating assets and that there will be no direct income tax consequences as a result of the transfer. Further information can be found in LCR 2016/2: Small Business Restructure Roll-over: consequences of a roll-over.

Relevant facts and circumstances: You operate the Practice with the Trust. You have a sole director and shareholder (Individual A). Individual A holds all of your shares both legally and beneficially. You, the Trust and Individual A are all Australian residents for tax purposes. Your aggregated turnover is less than $10 million. The Trust is a discretionary trust with a family trust election naming Individual A as the test individual. You carry out the work and engage professionals. You have accrued goodwill through operation of the Practice. The Trust employs assistants and administrative personnel. It also holds the majority of the assets, including plant and equipment, used in the Practice. The Trust charges you a fee for use of the assets. You hold a small amount of depreciating assets used in the Practice. The goodwill and depreciating assets that you hold will be transferred to the Trust in the 20XX-XX financial year. There are no plans to sell the Practice and it will continue to operate. Individual A is not retiring. The restructure is undertaken for the purpose of simplifying the structure of the business.

Relevant legislative provisions: Income Tax Assessment Act section 328-430 | Income Tax Assessment Act section 328-440 | Income Tax Assessment Act section 328-445 | Income Tax Assessment Act section 328-450 | Income Tax Assessment Act section 40-340