Private ruling: CGT - small business restructure rollover
Date of advice: 17 March 2022
Published: May 2022
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is a roll-over available under section 328-430 of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to the transfer of shares from the individual to the Family Trust? | A1: Yes, having considered the information provided the Commissioner accepts the proposed transaction is a genuine restructure of an ongoing business. Each party to the transfer is a small business entity or connected with an entity that is a small business entity and the transaction does not have the effect of materially changing the ultimate economic ownership of the asset. As the shares are active assets and the residency requirements have been satisfied the small business restructure roll-over can be applied in the circumstances.

Relevant facts and circumstances: The company was incorporated in 20XX. The individual is the sole director and shareholder of the company. Over the past X years, the business has steadily grown and its annual turnover was less than $X million for the year ended 30 June 20XX. The individual is concerned that the current structure can no longer accommodate this growth. The individual is also concerned that is they are exposed to risk outside the company that their shares will also be at risk. The shares satisfy the active asset test. The individual proposed to transfer their shares to the Family Trust. A family trust election will nominate the individual as the specified individual of the trust. The trustee of the Family Trust is company B. The individual and their spouse each hold a 50% interest company B. All entities involved in the transaction pass the residency test.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 328-G | Income Tax Assessment Act 1997 section 328-430