Can the in-specie transfer of the farmland from Company Pty Ltd to the related Family Trust, which triggers the CGT event eligible for the 15-year exemption, and subsequent vesting of the land from the Family Trust to the related significant individual, be treated as a payment of the CGT exempt amount to the CGT concession stakeholder under section 152-125 of the Income Tax Assessment Act 1997 (ITAA 1997)?
No. This ruling applies for the following period : Year ending 30 June 20XX The scheme commences on: 1 July 20XX
Company Pty Ltd owns land. 100% of the shares in Company Pty Ltd are currently held by the related Family Trust. Related individual X is under 55 years old and is permanently incapacitated. They are indirectly a significant individual of Company Pty Ltd, and directly a significant individual of the Family Trust for the 20XX financial year. The company will transfer the land will be transferred in-specie to the Family Trust which will trigger a CGT event. The land will then be vested from the Family Trust to individual X.
Income Tax Assessment Act 1997 section 152-125 Under section 152-125 of the ITAA 1997 if a capital gain made by a company or trust is disregarded under the small business 15-year exemption any distributions made by the company or trust of the exempt amount to the CGT concessions stakeholders are: • not included in the assessable income of the CGT concession stakeholders, and • not deductible to the company or trust if certain conditions are satisfied. The provision requires the company or trust to make a payment to an individual (whether directly or indirectly through one or more interposed entities) within 2 years of the relevant CGT event. The payment must be made to an individual who was a CGT concession stakeholder of the company just before the CGT event. Further, as p