Issue
Does the roll-over in Subdivision 126-C of the Income Tax Assessment Act 1997 (ITAA 1997) apply if CGT event E2 happens because the assets of a superannuation fund are transferred to another superannuation fund pursuant to an agreement between the two funds?
Decision
No. CGT event E2 did not happen as a result of the amendment or replacement of the trust deed of the transferor fund. Accordingly, the roll-over in Subdivision 126-C of the ITAA 1997 does not apply.
Facts
A complying superannuation fund was established in the 1994-95 income year (the original fund).
Another complying superannuation fund was established in the 2000-01 income year (the replacement fund). This fund is a self managed superannuation fund.
The assets of the original fund were transferred to the replacement fund in the 2001-02 income year.
The members and assets of both funds are the same.
The trust deed of the original fund was not amended or replaced. However, the fund was closed following the transfer of its assets to the replacement fund.
Reasons for Decision
There is a mandatory roll-over under section 126-130 of the ITAA 1997 if CGT event E1 or E2 happens in relation to a CGT asset because the trust deed of a complying approved deposit fund or complying superannuation fund is amended or replaced for the purpose of: • complying with the Superannuation Industry (Supervision) Act 1993 , or • enabling a complying approved deposit fund to become a complying superannuation fund.
It is also a requirement that the assets and members of the fund do not change as a consequence of the amendment or replacement (paragraph 126-130(c) of the ITAA 1997).
In this case, CGT event E2 happened because of the transfer of assets from the original fund to the replacement fund, rather than as a result of amending or replacing the trust deed of the original fund.
Accordingly, the roll-over in Subdivision 126-C of the ITAA 1997 does not apply to disregard any capital gain or capital loss made as a result of the transfer of assets.