Understanding TA 2019/2 Arrangements
TA 2019/2 examines specific setups where a Transferring Trust sells an asset to a buyer, typically following these steps:
-
Setting Up the Receiving Trust: The Receiving Trust is established with minimal funds and units issued. Both the Receiving Trust and the Transferring Trust share the same beneficiaries with identical entitlements, without significant discretionary powers.
-
Asset Transfer: The Transferring Trust transfers the asset to the Receiving Trust for the agreed purchase price, resulting in a capital gain for the Transferring Trust.
-
Subdivision 126-G Roll-Over: Both trusts opt for the Subdivision 126-G roll-over. This means the Transferring Trust disregards the capital gain from transferring the asset to the Receiving Trust.
-
Debt between Trusts: After the transfer, the Receiving Trust owes the Transferring Trust the purchase price, often in the form of a promissory note.
-
Subscription and Repayment: The buyer subscribes to a significant number of new units in the Receiving Trust, equal to the purchase price. The Receiving Trust uses these funds to repay the debt to the Transferring Trust.
-
Unit Exchange: Finally, the buyer typically acquires the original units in the Receiving Trust for a nominal amount and replaces the existing trustee with their chosen entity.
These steps may happen in quick succession or be structured over stages as part of a larger scheme.
Got questions? Reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment on our live calendar.
- Topics on CGT roll-over tax scheme (1)
- Topics on CGT roll-over tax scheme (2)
- Topics on CGT roll-over tax scheme (3)
- Topics on CGT roll-over tax scheme (4)
- Topics on CGT roll-over tax scheme (5)
- Topics on CGT roll-over tax scheme (7)
