Rollover Partnership Interest Into A Company

Q&A Tax

Question :

Mr. Chan and his son are partners in a partnership. Their partnership interests are both Post CGT
Asset.

In Jan 2019, they decided to open a company and roll-over the partnership into the company under
s122-125 and apply the CGT roll-over relief.

Six months later, they have been offered a good price for their shares in the company, and they wish
to sell their shares in the company.

Is the 50% CGT Discount applicable given that the company shares only exist 6 months?

 

Answer :

The shares were acquired when the shares were actually allotted by the company to the partners.

S.115-34 states when you disposed of your interests in a CGT asset, or your interests in all the assets
of a business, to the company, it is taken that the company had acquired that asset when you acquired
your interests in it.

That means, in this case, the holding period of shares in the company is starting from the time when
Mr. Chan and his son acquire their interests in the partnership rather than six months.

They both satisfy the 12 months holding period rule to access the 50% CGT discount.

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