Private ruling: Part IVA of the ITAA 1936
Date of advice: 27 September 2018
Published: November 2018
Ruling period: Income tax year ended 30 June 20xx.

Ruling: Q1: Will the Commissioner seek to make a determination that Part IVA of the Income Tax Assessment Act 1936 applies to include an amount in the assessable income of Company A due to CGT event A1 not happening as a result of an agreement with Company B to rescind for no consideration Contract A and Contract B. | A1: No.

Relevant facts and circumstances: Company A is an Australian resident for tax purposes. Company A as vendor and Company B as purchaser entered into Contract A and Contract B. Contract A Contract A was a contract for the sale of various assets. Company A provided Contract A. Contract B Contract B was a contract for the sale of various assets. Company A provided Contract B. Assumption Company A and Company B will enter into an agreement to discharge, for no consideration, their obligations under Contract A and Contract B.

Relevant legislative provisions: Income Tax Assessment Act 1936 Part IVA | Income Tax Assessment Act 1936 section 177A | Income Tax Assessment Act 1936 section 177C | Income Tax Assessment Act 1936 section 177CB | Income Tax Assessment Act 1936 subsection 177D(2) | Income Tax Assessment Act 1936 subsection 177F(1)

Reasons for decision: Summary: Law Administration Practice Statement PS LA 2005/24 Application of General Anti-Avoidance Rules (PS LA 2005/24) deals with the application of the general anti-avoidance rules, including Part IVA of the ITAA 1936. Before the Commissioner can exercise his discretion to make a determination in respect of Part IVA under subsection 177F(1) of the ITAA 1936, three requirements must be met: 1. there must be a scheme within the meaning of section 177A of the ITAA 1936; 2. a tax benefit must arise based on whether a tax effect would have occurred, or might reasonably be expected to have occurred, if the scheme had not been entered into or carried out; and 3. having regard to the matters in subsection 177D(2) of the ITAA 1936, the scheme is one to which Part IVA of the ITAA 1936 applies (dominant purpose). The Commissioner has considered these three requirements and will not seek to make a determination that Part IVA of the ITAA 1936 applies to include in the assessable income of Company A the whole or a part of the amount of assessable income that would have been included in the assessable income of Company A had CGT event A1 happened if Contract A and Contract B had not been rescinded for no consideration.