Private ruling: Majority underlying ownership of a CGT asset
Date of advice: 30 July 2025
Published: 29 September 2025
Ruling period: Year ended 30 June 2025
Date scheme commenced: 1 July 2024

Ruling: Q1: With reference to section 149-30(2) of the Income Tax Assessment Act 1997 (ITAA 1997), is the Commissioner satisfied, or thinks it is reasonable to assume, that at all times on and after 20 September 1985 to the date the property was sold, that the majority underlying interests in the CGT asset (property) were held by ultimate owners who had majority underlying interest in the asset immediately before 20 September 1985? | A1: Yes, the Commissioner is satisfied, or thinks it reasonable to assume that the majority underlying interest in the CGT asset were held by ultimate owners who had majority underlying interest in the asset immediately before 20 September 1985 as: • The variations to the trust deed of Family Trust A did not cause a change in the majority underlying interests of the trust in accordance with Taxation Ruling IT 2340 Income tax: capital gains: deemed acquisition of assets by a taxpayer after 19 September 1985 where a change occurs in the underlying ownership of assets acquired by the taxpayer on or before that date; and • The changes in unit holders did not result in a change of the majority underlying ownership of the unit trust in accordance with subsection 149-30(3) of the ITAA 1997 and Taxation Ruling IT 2530 Income tax: capital gains: change in the underlying ownership of assets in a publicly traded unit trust: issue of new units in unit trusts and new shares in companies: interposed entities: calculation of change in majority underlying interests .

Relevant facts and circumstances: The Unit Trust The Unit Trust (UT) settled before 19 September 1985. The UT deed has been amended over the years: • A variation added the definition of "Part- Unit" and included "and/or part-unit" to each clause that referenced "unit." • A new company was appointed the Trustee. • To extend the Trust Period to 30 June 2040. Person A is the sole director of the Trustee of UT. Person A and Person B were married when the UT settled, they separated and divorced during the 1980's. Person A married Person C at a later date. Person D was Person A's sibling. Person F, Person G, and Person H are the children of Person E. Based on the deed, all units rank equally for all purposes. Each unit shall entitle the holder of the Unit to the beneficial interest in a fraction of the fund equal to 1/No. of units issued The class of the unit holders of the UT have not been altered. No additional units or classes of units have been issued in UT in accordance with deed. At settlement 30 units of the same class issued to the following unit holders in equal proportion: Unit Holder Ownership Ownership fraction Family Trust A 10 Units 1/3 Family Trust B 10 Units 1/3 Person E 10 Units 1/3 Before 19 September 1985 the UT purchased a CGT asset, the property. Just before 20 September 1985, the unit holders were as follows: Unit Holder Ownership Ownership fraction Family Trust A 10 Units 1/3 Family Trust B 10 Units 1/3 Person E 10 Units 1/3 After 20 September 1985 following the passing of Person E, the transfer of her units was executed in accordance with her Will. Each of her children, Person F, Person G and Person H were to receive 3.33 units. The unitholders were as follows: Unit Holder Ownership Ownership fraction Family Trust A 10 Units 1/3 Family Trust B 10 Units 1/3 Person F 3.33 Units 1/9 Person G 3.33 Units 1/9 Person H 3.33 Units 1/9 A few months later, Family Trust A purchased 10 units from Family Trust B. The unitholders were as follows: Unit Holder Ownership Ownership fraction Family Trust A 20 Units 2/3 Person F 3.33 Units 1/9 Person G 3.33 Units 1/9 Person H 3.33 Units 1/9 In the year ended 30 June 1999, a deed of variation was prepared. This variation was to acknowledge the transfer of Person H's units to the following parties: Unit Holder Units purchased Family Trust A 2.5 Units Person F 0.42 Units Person G 0.42 Units The unitholding after the transfer until now is as follows: Unit Holder Ownership Ownership fraction Family Trust A 22.5 Units 3/4 Person F 3.75 Units 1/8 Person G 3.75 Units 1/8 The UT sold the property in the 2024-25 financial year. Family Trust A Family Trust A settled prior to 19 September 1985. Person A is the appointor of Family Trust A. At settlement Person A and Person D were to act as joint Trustees. The beneficiaries of Family Trust A at settlement were: Class Details A Class Beneficiaries Person A and Person B B Class Beneficiaries The children, grandchildren, and remoter issue of Person A and Person B C Class Beneficiaries The parents of Person A. The siblings of Person A; The spouses for the time being of the all B Class Beneficiaries and the Beneficiaries specified in subparagraph (ii) of this clause; Any Company in which any B Class Beneficiary hold shares; Any trust, vested, contingent or discretionary, which in the opinion of the Trustee, is a trust for the benefit (inter alia) of any B Class Beneficiary. D Class Beneficiaries Any school or tertiary education institution which any B Class Beneficiary attends or may attend as a student. E Class Beneficiaries Any charity or charities as may at any time be nominated by the Trustee by Deed, revocable or irrevocable, executed by the Trustee, and if more than one, in such shares or proportions as may be nominated, or if not nominated, then equally. The Family Trust A deed has been amended as follows: • a deed of variation granted the Trustee more flexible powers with respect to the treatment and distribution of income, particularly asset capital gains. • a deed of declaration of non-appointment was prepared. This deed noted the passing of Person B and resolved not to appoint a replacement for the deceased joint Trustee and that Person A as the Continuing Trustee would act as the sole Trustee of Family Trust A. • a deed of variation was made by adding 'the spouse of Person A' to the 'A Class beneficiaries'. Person C was included in the eligible class of beneficiaries of Family Trust A as a result. • a deed of variation was made to extend the Trust Period to 30 June 2040.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 149-15 | Income Tax Assessment Act 1997 section 149-30 | Income Tax Assessment Act 1936 schedule 2F section 272-95