Income tax: capital gains: small business concessions: does a person who has the power to remove the trustee of a discretionary trust and appoint a new trustee control the trust for the purposes of subparagraph 152-30(2)(c)(ii) of the Income Tax Assessment Act 1997?

TD 2006/67 states that a person who has the power to remove the trustee of a discretionary trust and appoint a new trustee controls the trust for the purposes of subparagraph 152-30(2)(c)(ii) of the Income Tax Assessment Act 1997 (ITAA 1997). This is provided that subsection 152-30(4) of the ITAA 1997 does not apply. Where the trust deed specifies that the appointor of a trust has the power to remove the trustee and appoint a new trustee, it is considered the appointor controls the trust. The appointor and the trust will therefore be connected with each other under paragraph 152-30(1)(a) of the ITAA 1997.

As part of the legislative changes associated with the Small Business Alignment measure, Tax Laws Amendment (Small Business) Act 2007 repealed section 152-30 of the ITAA 1997, for CGT events happening in the 2007-08 or later income years. As part of these changes, the connected entity rules previously contained in section 152-30 of the ITAA 1997 were relocated to section 328-125 of the ITAA 1997. However, former paragraph 152-30(2)(c) of the ITAA 1997 was not identically reproduced in section 328-125 of the ITAA 1997.

As the legislative provision on which the views outlined in TD 2006/67 is based has been repealed for CGT events that happen in the 2007-08 or later income years, TD 2006/67 is therefore withdrawn.