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:
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.
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.
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.
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.
Mutual Tax Choices: Both trusts must make the same tax choices affecting their net income or taxable income.
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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