Private ruling: CGT - restructure which involved the original entity transferring assets to an entity
Date of advice: 1 October 2024
Published: 11 November 2024

Ruling: Q1: Will CGT event A1 (section 104-10) happen at the time the original entity enters into the Agreement as a result of the operation of clause xx? | A1: Yes. | Q2: Will the capital proceeds, pursuant to section 116-20, for the disposal of the assets resulting from entry into the Agreement be $xx? | A2: Yes. | Q3: Is the asset a depreciating asset for the purposes of Division 40? | A3: Yes. | Q4: Will a balancing adjustment event occur under subsection 40-295(1) on completion of the Agreement? | A4: Yes. | Q5: Will the termination value, pursuant to section 40-300, for the disposal of the rights to exploit the asset be $xx? | A5: Yes. | Q6: Will the original entity be required to apportion its adjustable value of the asset on a reasonable basis pursuant to section 40-205 and subsection 40-115(3)? | A6: Yes. | Q7: Will section 118-24 apply to disregard a capital gain the original entity made in relation to the disposal of the asset to the extent that the gain is dealt with under a Division 40 balancing adjustment? | A7: Yes. | Q8: Will the entities be eligible for roll-over relief under Division 615 on any gain realised on the transfer of their shares in original entity to the new entity? | A8: Yes.

Relevant facts and circumstances: The Commissioner has ruled in relation to a restructure which involved the original entity transferring assets to an entity and a new entity being interposed between the original entity and its shareholders.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 116-20 | Income Tax Assessment Act 1997 section 118-24 | Income Tax Assessment Act 1997 Division 40 | Income Tax Assessment Act 1997 subsection 40-115(3) | Income Tax Assessment Act 1997 section 40-205 | Income Tax Assessment Act 1997 subsection 40-295(1) | Income Tax Assessment Act 1997 section 40-300 | Income Tax Assessment Act 1997 Division 615