Issue
Does CGT event J4, section 104-195 of the Income Tax Assessment Act 1997 (ITAA 1997), happen when a trust that has obtained rollover under Subdivision 124-N of the ITAA 1997 ceases to exist within six months after the start of the trust restructuring period or as soon as practicable after the end of that six month period?
Decision
No. CGT event J4 under section 104-195 of the ITAA 1997 does not happen if the trust ceases to exist within six months after the start of the trust restructuring period or as soon as practicable after the end of that six month period.
Facts
A fixed trust and a company both chose to obtain rollover under Subdivision 124-N of the ITAA 1997 for a trust restructure. The trust disposed of all of its assets to the company and ceased to exist within six months of the start of the trust restructuring period.
Reasons for Decision
CGT event J4 happens where: there is a rollover under Subdivision 124-N of the ITAA 1997 for a trust disposing of a CGT asset to a company under a trust restructure (paragraph 104-195(1)(a) of the ITAA 1997); the trust fails to cease to exist within six months after the first asset is disposed of to the company or as soon as practicable after the end of that six month period (paragraph of the 104-195(1)(b) of the ITAA 1997); and the company owns the asset when the failure happens (paragraph 104-195(1)(c) of the ITAA 1997).
In these circumstances, the CGT event does not happen because a necessary precondition for the triggering of CGT event J4 has not been satisfied. The trust ceased to exist within the six month period referred to in paragraph 104-195(1)(b) of the ITAA 1997.
[Note: In these circumstances, as CGT event J4 does not happen to the company it also does not happen to a shareholder in the company.]