Concessions for Restructuring A Family

Q&A Tax

Question :

Mr C has a family group whom we are wanting to restructure.

The business has been operating in company XYZ with its shareholder being sole director A (husband)
for 14 years. Next year will be 15 years.

At this point, Mr C is now wanting to replace shareholder (director A) with Holding company B ( shares
in this Holding company being held by Family Trust, with its trustee being a corporate trustee with the
shares held by director A (husband) and director B (wife))

Today’s question is that will the business still be eligible for the 15-year exemption SBE concession
upon such a restructure?

 

Answer :

There should be no change in the beneficial ownership of the business assets of company XYZ, despite
a change in the shareholder of the company. This means, there is no break in the continuity of
ownership of the business assets owned by company XYZ before and after the restructure for the
purpose of the 15-year ownership condition under the 15-year exemption.

There are a number of conditions that need to be met by company XYZ to access the 15 years
exemption on the sale of the business. There are summarised below:

(a) A CGT event happens in relation to a CGT asset of the company in an income year;
(b) The event would (apart from the small business concessions) have resulted in a capital gain;
(c) The basic conditions for accessing the small business CGT concessions are satisfied;
(d) The asset has been owned for a continuous period of at least 15 years;
(e) The company had a significant individual for a total of at least 15 years (even if the 15 years was not
continuous and it was not always the same significant individual) during which the company owned the
asset; and
(f) An individual who was a significant individual just before the CGT event either:
– Was 55 or over at that time and the event happened in connection with the individual’s retirement; or
– Was permanently incapacitated at the time.

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