Private ruling: CGT event E2
Published: September 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 01 July 2011

Ruling: Q1: Did a CGT event E2 occur when the shares were transferred to the new superannuation fund? | A1: No. | Q2: Can you apply the CGT roll-over relief to carry forward any losses as a result of the CGT event E2? | A2: Not applicable, as no CGT event has occurred.

Relevant facts and circumstances: The individual established a private superannuation fund. The sole beneficiary of the fund is the individual. The individual had full control of all investment decisions in the fund. The fund consisted of cash and shares. Due to the high administrative costs associated with this fund, there was little growth. The shares were transferred into a new superannuation fund for the purpose of maximising the superannuation return. There were no material differences in the terms of the superannuation funds.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 subsection 104-60(1)

Reasons for decision: Summary: Note that all subsequent legislative references are to the Income Tax Assessment Act 1997 unless otherwise stated. A capital gain or capital loss is made when a CGT event happens to a CGT asset you own (section 102-20). A CGT event E2 happens if you transfer a CGT asset to an existing trust (subsection 104-60(1)). As a superannuation fund is a form of trust, a CGT event E2 happens when a CGT asset is transferred to the trustee of the fund. However, as per the note to subsection 104-60(1), a change in the trustee of a trust does not constitute a change in the entity that is the trustee of the trust. This means that a CGT event will not happen merely because of a change in the trustee. In this case, it is considered that the new superannuation fund is not materially different to the old one. The shares were merely transferred with the intention to maximise the superannuation return. Accordingly, as there has only essentially been a change in the trustee, a CGT event E2 has not occurred.

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