Conditions for Subdivision 126-G Roll-Over
To qualify for the Subdivision 126-G roll-over when transferring a CGT asset between trusts, all the following requirements must be met:
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Eligible Trusts: Both the transferring and receiving trusts must be eligible for the roll-over. Essentially, this means they must be fixed trusts and have both opted for the roll-over.
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Fixed Trust Criteria: Each trust must meet the fixed trust criteria, meaning that CGT event E4 could apply to all membership interests in both trusts, and beneficiaries' entitlements are not discretionary.
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Consistency in Beneficiary Interests: The same beneficiaries must have the same interests in both trusts, with substantially the same market value. This ensures consistency in beneficiary membership interests.
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No Exceptions: Certain exceptions disqualify trusts from the roll-over, such as if the receiving trust is a foreign trust for CGT purposes and the asset isn't taxable Australian property.
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Mutual Tax Choices: Both trusts must make the same tax choices affecting their net income or taxable income.
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Mutual Agreement: Both trusts must agree to the roll-over, and the transferring trust must notify its beneficiaries in writing about the transfer.
These conditions ensure that the roll-over only applies when the asset transfer doesn't alter the underlying ownership of the CGT asset, and subsequent ownership changes are taxed appropriately.
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