Private ruling: Division 328 small business restructure rollover
Date of advice: 10 September 2025
Published: 17 November 2025
Ruling period: 30 June 20XX

Ruling: Q1: Will Trust 1 qualify for roll-over relief when it sells the operational assets to Company 2 at cost in the 20XX income year (Restructure 1) pursuant to Subdivision 328-G? | A1: Yes | Q2: Will Trust 1 qualify for roll-over relief when it transfers its primary production land to Trust 3 at cost in the 20XX income year (Restructure 2) pursuant to Subdivision 328-G? | A2: Yes

Relevant facts and circumstances: Trust 1 carries on a primary production business. Trust 1 had an aggregated turnover of less than $10 million and will be a small business entity under section 328-110 in the year ended 30 June 20XX and for the 20XX income year respectively. Trust 1 owns the land that the business is carried on at X. Company 1 is the trustee of Trust 1. The directors and shareholders of Company 1 are Person A and Person B. Person B is the spouse of Person A. Person C is the child of Person A and B. Person C with her partner provides services and assistance to the operation of Trust 1's business. It is proposed that Trust 1 does the following restructures: • Restructure 1 - disposes of its operational assets to a new company (Company 2). • Restructure 2 - transfers its primary production land to a yet to be established Discretionary Family Trust (Trust 2). Restructure 1 It is proposed that Trust 1 sells the operational assets to Company 2 at cost in the income year ending 30 June 2026. Person A and Person B are directors of Company 2. Trust 2 is the shareholder of Company 2. Person A and Person B are the trustees and appointors of Trust 2. A Family Trust Election nominating Person A as the Specified Individual of Trust 2 will be made with a commencement date prior to the proposed sale of operational assets. All parties are residents of Australia for tax purposes and all parties will choose to apply the rollover in writing. The commercial rationale behind the proposed restructure are as follows: • Overtime the business has grown and has now reached a stage where it has outgrown a trust structure for conducting its operational activities. • Person A and Person B would like the trading entity to have the ability to retain profits within the business structure and not be required to distribute to beneficiaries who are then required to provide financial accommodation to the business. • Provide more certainty with respect to cashflow due to nature of farming production yields and commodity pricing as the income tax would be paid at a set rate (25%) and not marginal tax rates of beneficiaries. • Reduces reliance on Farm Management Deposits (FMDs) in high income years which will improve business cash flow and liquidity. • Separation of operational assets, primary production land and the residential property providing an increased level of asset protection. Restructure 2 It is proposed that Trust 1 transfers its land to Trust 3 at cost in the financial year ending 2026. Person A and Person B will be the Appointors of Trust 3. Person A and Person B will be the Trustees of Trust 3. Trust 3 would be connected to Company 2 as both would be controlled by Person A. All parties are residents for tax purposes and all parties will choose to apply the rollover in writing. The commercial rationale behind the proposed restructure are as follows: • Asset protection purposes, the segregation of a primary production land and a residential property. • If appropriate advice was sought at the time of purchase, the primary production land and the residential property would have not been acquired by the same entity. • The administration burden on the business would be decreased as it would not be required to report non-business income in a business entity • The administration burden would be further reduced on the business as the residential property is actively managed by the Trustees. • There is no commercial rationale behind the blending of business and non-business assets within the same entity.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 40-340 | Income Tax Assessment Act 1997 Division 328G


Does Part IVA apply to this private ruling?: Part IVA of the Income Tax Assessment Act 1936 contains anti-avoidance rules that can apply in certain circumstances where you or another taxpayer obtains a tax benefit, imputation benefit or diverted profits tax benefit in connection with an arrangement. | If Part IVA applies, the tax benefit or imputation benefit can be cancelled (for example, by disallowing a deduction that was otherwise allowable) or you or another taxpayer could be liable to the diverted profits tax. | We have not fully considered the application of Part IVA to the arrangement you asked us to rule on, or to an associated or wider arrangement of which that arrangement is part. | If you want us to rule on whether Part IVA applies, we will need to obtain and consider all the facts about the arrangement which are relevant to determining whether Part IVA may apply. | For more information on Part IVA, go to our website ato.gov.au/gaar .