: Will the Commissioner allow the Trust a Capital Gains Tax (CGT) rollover for the purchase of an investment portfolio pursuant to subsection 124-75(4) of the Income Tax Assessment Act 1997 (ITAA 97)?
: No This private ruling applies for the following period: DD MM YYYY to DD MM YYYY The scheme commenced on: DD MM YYYY
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect, and you cannot rely on it. Background information The Trust owns a residential rental property and derives rental income from it. The state government will possibly be acquiring the residential rental property, resulting in the Trust having to make an involuntary disposal of the property. If the state government purchases the rental property they will pay the Trust, in cash, the equivalent of the rental property's market value. Assuming that the state government does purchase the rental property, paying the Trust the market value in cash, the Trust intends to purchase a passive investment portfolio from Entity X with the money they received from the state government. This passive investment portfolio will be purchased within one year after the end of the tax year by which the rental property would be acquired. The investment portfolio would be a long-term investment to derive passive income.
The investment portfolio is also not being held by the Trust as trading stock, but rather as a capital investment in the same way that the rental property was held. Information provided You have provided a number of documents containing detailed information in relation to the Trust, including the Private Binding Ruling (PBR) Application, dated DD MM YYYY. We have referred to the relevant information within these documents in applying the relevant tests to your circumstances.
Income Tax Assessment Act 1997 Subdivision 124-B Income Tax Assessment Act 1997 paragraph 124-70(1)(c) Income Tax Assessment Act 1997 subsection 124-70(1A) Income Tax Assessment Act 1997 paragraph 124-75(3)(b) Income Tax Assessment Act 1997 subsection 124-75(4) Income Tax Assessment Act 1997 subsection 995-1(1) Reasons for the decision All legislative references are to the Income Tax Assessment Act 1997 unless otherwise stated. Summary The Commissioner will not allow the Trust a Capital Gains Tax rollover for the intended purchase of an investment portfolio pursuant to subsection 124-75(4) of the ITAA 1997. The purchase of an investment portfolio as replacements assets will not be used for the same purpose as, or for a similar purpose to, the purpose for which the Trust used the residentia