Private ruling: Trust restructure
Date of advice: 15 April 2026
Published: 1 June 2026
Ruling period: 1 July XXXX to 30 June XXXX

Ruling: Q2: Will the transfer of all assets in Trust 1, Trust 2 and Trust 3 to Company A meet the requirements for CGT roll-over relief under Subdivision 124-N of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes | Q3: Will the trustees for Trust 1, Trust 2 and Trust 3 be able to disregard any capital gains or capital losses from CGT event A1 happening on disposal of their CGT assets (other than trading stock) to Company A under the Proposed Restructure pursuant to subsection 124-875(1) of the ITAA 1997? | A2: Yes | Q4: Can the unit holders, Unitholder 1, Unitholder 2 and Unitholder 3 choose a roll-over under section 124-870 of the ITAA 1997 for each of their respective unitholding interests in Trust 1, Trust 2 and Trust 3? | A3: Yes | Q5: Will roll-over relief under section 40-345 of the ITAA 1997 be available under table item 2A of subsection 40-340(1) of the ITAA 1997 in relation to the depreciating assets transferred by Trust 1, Trust 2 and Trust 3? | A4: Yes | Q6: Will section 70-90 of the ITAA 1997 apply to the transfer of the trading stock from Trust 1 to Company A? | A5: No - section 70-100 of the ITAA 1997 will apply to the transfer of trading stock from Trust 1 to Company A. | Q7: Will Trust 1 include the book value of its trading stock in its assessable income under section 6-5 of the ITAA 1997 on the transfer of the trading stock to Company A? | A6: Yes - if an election is made to treat trading stock as disposed of at closing value under subsection 70-100(4) of the ITAA 1997. | Q8: Will Company A include as the cost of its trading stock for the purposes of Division 70 of the ITAA 1997 the book value of its stock acquired from Trust 1? | A7: Yes - if an election is made to treat trading stock as disposed of at closing value under subsection 70-100(4) of the ITAA 1997, section 70-100 will operate to automatically to deem Company A to have acquired the trading stock for the same amount.

Relevant facts and circumstances: There are three separate unit trusts relevant to the Proposed Restructure set out below: • Trust 1. • Trust 2 • Trust 3 (collectively, the Trusts - the reference to Trusts will be taken to be a reference to the trustees of the Trusts where relevant). The Trusts are each owned in the same proportions by three separate discretionary trusts being Unitholder 1, Unitholder 2 and Unitholder 3 (collectively, the Founder Trusts or the Unitholders of the Trusts) holding X%, X% and X% respectively (Respective Proportions). The Trusts are each owned in the same proportions by three separate discretionary trusts being the Trust 4, Trust 4 and Trust 5 (collectively, the Founder Trusts or the Unitholders of the Trusts) holding X%, X% and X% respectively (Respective Proportions). The corporate trustee for Trust 1 is Company A which is owned non beneficially by each of Company B as trustee for Unitholder 2 and Unitholder 3 (X%) and Company C as trustee for Unitholder 1 (X%) based on the Respective Proportions. The corporate trustee for Trust 2 is Company D, which is owned by the Founder Trusts based on the Respective Proportions. The corporate trustee for Trust 3 is Company E, which is owned by the Founder Trusts based on the Respective Proportions. Each of the corporate trustees of the Trusts (collectively, the Trustees) is incorporated in, and is a tax resident in Australia. A business is currently operated through the Trusts The unitholding of each Trust is arranged as follows: a) Trust 1 has X Ordinary Units on issue, being the only class of units on issue. b) Trust 2 has X Ordinary Units on issue, being the only class of units on issue. c) Trust 3 has X Ordinary Units on issue, being the only class of units on issue. There have been no changes to the original unit allocations between the Founder Trusts from the time of settlement of Trust 2 and Trust 3 to the date of this application. There were some minor changes to the original unit allocations of Trust 1 in the initial years following the trust settlement, but the unitholding as currently reflected on the register (which is the same as Trust 2 and Trust 3) has been established for several years. The deed of Trust 1 states that "if the Trustee receives the written consent of all unit holders it may classify and re-classify units already issued or to be issued in such manner and on such terms as it may think fit provided the Trustee enters the terms of any special rights, restrictions and conditions attaching to such classified units in the register of unit holders". The deeds of Trust 2 and Trust 3 do not have similar clauses relating to the reclassification of units already issued. Under each deed of trust for the Trusts (Trust Deeds), each Ordinary Unit carries entitlements to income and capital of the trust in proportion to the number of units held, and the respective corporate trustee does not have discretion to determine that any payment of trust capital and/or income may be made to some unitholders and not to others. As at XXX Trust 1's balance sheet included: XXXX As at XXXX, Trust 1's balance sheet included the following liabilities: XXXX None of the assets of Trust 2 are held as items of trading stock. As at XXXX, Trust 2's balance sheet included the following liabilities: XXXX None of the assets of Trust 3 are held as items of trading stock. As at XXXX, Trust 3's balance sheet included the following liabilities: XXXX Company A is an Australian resident company limited by shares and incorporated around the same time as Trust 1 was settled. It has never traded/operated any other business in its own right, and has only ever acted as a corporate trustee for Trust 1. The entity is not registered for GST as it is not carrying on as a business Company A has no assets or liabilities in its own right (i.e. all assets/liabilities are in its capacity as trustee for Trust 1) and has only ever lodged Nil income tax returns/non-lodgement advice. Company D is an Australian resident company limited by shares. It has never traded/operated a business in its own right and has only ever acted as a corporate trustee for Trust 2. The entity is not registered for GST as it is not carrying on a business. This entity has no assets or liabilities in its own right (i.e. all assets/liabilities are in its capacity as trustee for Trust 2) and has only ever lodged Nil income tax returns/non-lodgement advice. Company E is an Australian resident company limited by shares. It has never traded/operated a business in its own right and has only ever acted as a corporate trustee for Trust 3. The entity is not registered for GST as it is not carrying on a business. This entity has no assets or liabilities in its own right (i.e. all assets/liabilities are in its capacity as trustee for Trust 3) and has only ever lodged Nil income tax returns/non-lodgement advice. The relevant corporate trustees are not exempt entities as defined in subsection 995-1(1) of the ITAA 1997. Proposed restructure The commercial purposes of the Proposed Restructure are: • to simplify the operating and reporting structure of The Group by consolidating all of the Trusts' operations into a single Australian operating company, being Company A (the current trustee of Trust 1). • to arrive at a structure that allows for future investment by a potential third-party investor. As at the date of this Application, there is no contemplated transaction, nor have any transaction related advisors been appointed to run such a process. It is intended for the Proposed Restructure to be implemented as follows: Step 1: Trust 2 and Trust 3 will change its corporate trustee to Company A. Step 2: Immediately prior to the Restructure, the Trusts will make an interim distribution to unitholders for the income of the Trusts up to and including the date of the Proposed Restructure. This amount may be partially cash settled. To the extent any element is not cash settled, it will be non-cash settled and left as an unpaid present entitlement (UPE) and will be settled by the issuance of a loan note from the Trusts to each of its unitholders. Step 3: Company A will undertake a legal share consolidation to consolidate the X ordinary shares currently on issue into X ordinary shares using the ratio X:X. The shareholding of Company A will continue to be split X/X between the existing shareholders. Step 4: The Trusts will each enter into an Asset Sale Agreement (ASA) with Company A to transfer 100% of the trade and assets (including the assumption of liabilities which will include loan notes relating to the previous UPEs) - other than cash that may be retained by the Trusts to pay expected beneficiary entitlements - to Company A in consideration for the issue of new shares to the Founder Trusts in equal proportions to the Founder Trusts' unit holdings in the Trusts (i.e. the Respective Proportions). The completion of each of the ASAs will happen simultaneously and will be interdependent and conditional on each separate ASA completing (i.e. one ASA cannot complete without the others). The Trusts will dispose of all their CGT assets to Company A (except for cash retained to pay expected debts of the Trusts) within a 6-month period. All transaction will be on an arm's length basis (for market value). There will be no changes in the market value of the assets and liabilities of the Trusts during the period just before the trade and assets are transferred to Company A to just after the time the shares in Company A are issued. To the extent any excess cash is retained to settle any beneficiary entitlements, and the cash is not fully utilised, it will be transferred to Company A within the trust restructuring period. The original shares and new shares in Company A will be within the same class and carry the same rights. The Founder Trusts will have the same rights, to the extent legally possible, under their ordinary shares in Company A that they had under their units in the respective Trusts (and the units in the Trusts carried the same rights and obligations). Step 5: Each of the Trusts will be legally vested within 6 months of entering into the ASAs. Both the Trusts and Company A will choose to obtain the roll-over in accordance with section 124-865 of the ITAA 1997. The Founder Trusts will choose to obtain the roll-over in accordance with section 124-870 of the ITAA 1997, including choosing the roll-over for all their units in the Trusts. The Founder Trusts will not engage in transactions that cause them to make a capital loss from a CGT event that happens to their units in the Trusts. With the exception of inventory, Company A will not hold the trade and assets transferred from the Trusts under to the Proposed Restructure as items of trading stock. Trust 1 currently holds its trading stock at cost in its books. Shares issued by Company A to the Founder Trusts under the Proposed Restructure will not be held as items of trading stock. There is no proposal to change the shareholders in Company A or for any shareholders in Company A post reorganisation to sell their shares to any other party.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 Division 40 | Income Tax Assessment Act 1997 Subdivision 40-B | Income Tax Assessment Act 1997 Subdivision 40-D | Income Tax Assessment Act 1997 section 40-40 | Income Tax Assessment Act 199 7 section 40-285 | Income Tax Assessment Act 1997 section 40-295 | Income Tax Assessment Act 1997 section 40-340 | Income Tax Assessment Act 1997 section 40-345 | Income Tax Assessment Act 1997 section 40-385 | Income Tax Assessment Act 1997 section 70-90 | Income Tax Assessment Act 1997 section 70-100 | Income Tax Assessment Act 1997 section 104-70 | Income Tax Assessment Act 1997 Subdivision 124-N | Income Tax Assessment Act 1997 section 124-855 | Income Tax Assessment Act 1997 section 124-860 | Income Tax Assessment Act 1997 section 124-870 | Income Tax Assessment Act 1997 section 124-875

Reasons for decision: Detailed Reasoning - Questions 1, 2, and 3: Broadly, Subdivision 124-N of the ITAA 1997 provides CGT roll-over relief to the trust and its beneficiaries for the restructuring of the trust, where the trust disposes of all its assets to a company and the beneficiaries' interests in the trust are exchanged for shares in the company. The Proposed Restructure will satisfy the requirements of Subdivision 124-N of the ITAA 1997. The Trusts will transfer all of the assets of the Trusts (other than the retention of cash to meet beneficiary entitlements). Any capital gain or capital loss from CGT event A1 happening to the transferor (i.e., the Trusts) under the trust restructure will be disregarded. The first element of the cost base and reduced cost base of each CGT asset that the transferee (i.e., Company A) acquires under the Proposed Restructure will be the same as the cost base and reduced cost base of that asset for the transferor (i.e., the Trusts) just before the acquisition. The Founder Trusts will receive replacement interests being new ordinary shares in Company A. Those replacement interests will be held in the same proportions as their units in the Trusts. The market value of the replacement interests (new ordinary shares in Company A) will be substantially the same as their original units (in the Trust). A capital gain or a capital loss the Founder Trusts make from the ending of their ownership of their units in the Trusts in respect of the exchange of their units in the Trusts for new ordinary shares in Company A is disregarded. The first element of the cost base and reduced cost base of the new ordinary shares in Company A will be equal to cost base and reduced cost base of the units in the Trusts just before they were redeemed. | Detailed Reasoning - Question 4: A balancing adjustment is required if a balancing adjustment event occurs for a depreciating asset whose decline is worked out under Subdivision 40-B of the ITAA 1997 (section 40-285 of the ITAA 1997). Relevantly, the automatic roll over relief under section 40-340 of the ITAA 1997 applies where the conditions in Subdivision 124-N of the ITAA 1997 are satisfied, which means that section 40-285 of the ITAA 1997 will not apply to the balancing adjustment event. The conditions for automatic depreciation roll-over relief under table item 2A in subsection 40-340(1) of the ITAA 1997 will be satisfied. Roll-over relief under section 40-345 of the ITAA 1997 will be available, which means there will be no balancing adjustments for the Trusts under section 40-285 and Company A will inherit the same method and effective life of the depreciating assets used by the Trusts. | Detailed Reasoning - Questions 5, 6 and 7: Section 70-100 of the ITAA 1997 will apply because the trading stock will cease to be trading stock on hand of Trust 1 and becomes trading stock on hand of Company A. While subsection 70-100(2) of the ITAA 1997 establishes market value as the default consequence, Division 70 expressly accommodates non-market-value outcomes in continuity-of-enterprise cases. On the specific facts of this genuine restructure, the Commissioner accepts a book-value outcome consistent with the policy and structure of section 70-100 - which also operates automatically to deem Company A to have acquired the trading stock for the same amount.

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