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Is the trust to company roll-over under Subdivision 124-N of the Income Tax Assessment Act 1997 (ITAA 1997) available if the transferor, a unit trust, disposed of a CGT asset, owned by the unit trust at the start of the trust restructuring period, to a third party that was not the transferee company?

No. The trust to company roll-over under Subdivision 124-N is not available unless all the CGT assets owned by the transferor, the unit trust, are disposed of to the transferee, the company, during the trust restructuring period.

The trustee of a unit trust sought to restructure using the trust to company roll-over under Subsection 124-N of the ITAA 1997. During the trust restructuring period, one of the CGT assets was not disposed of to the transferee company. It was disposed of to a third party.

Section 124-860 of the ITAA 1997 sets out the requirements to be satisfied by the transferor, the unit trust, so that roll-over is available for the disposal of the unit trust's CGT assets to the transferee, the company.

All of the CGT assets owned by the transferor, other than those assets that come to an end during the trust restructuring period, must be disposed of to the transferee during this period (subsection 124-860(1) of the ITAA 1997). The disposal of the CGT asset to the third party does not satisfy this requirement.

As the transferor did not dispose of this CGT asset to the transferee, the transferor and the transferee are not entitled to the roll-over relief under Subdivision 124-N of the ITAA 1997 for the CGT assets that were disposed of by the transferor to the transferee.

[Note: The unit holders in the transferor are not entitled to the roll-over relief under Subdivision 124-N of the ITAA 1997 in respect of the disposal of their units in exchange for the shares in the transferee.]