Subdiv 122-B is the equivalent to Subdiv 122-A.
Subdiv 122-B
Think of them as fraternal twins. Both provide rollover relief when changing to a company. A from a sole trader or trust. B from a partnership.
Partnership
Subdiv 122-B is for partners in a partnership transferring their partnership assets into a company. It provides partners with CGT rollover relief in a similar fashion to the individuals and trustees in Subdiv 122-A. If they choose to do so.
Choice
Subdiv 122-B requires a choice. And all partners must make that choice. All partners must elect to apply the rollover.
Value
The added exception is that the value of each partner’s shares in the company must broadly equal the value of the partner’s interest in the partnership prior to the transfer. This is to ensure that values are not shifted from one partner to another.
Partners
The fractional capital gains and capital losses related to CGT assets held by the partnership are always calculated at the partners’ level not the partnership (s 106-5).
So the rollover relief must apply to the partners instead of the partnership.
Requirements
The rollover relief applies to only some CGT events and certain CGT assets as in Subdiv 122-A and has similar requirements in terms of consideration.
All partners must own the shares in the company immediately after disposal and the company is subject to tax in the usual way and the treatment of pre- and post assets and shares.
The partner and the company must both be Australian residents at the time of the CGT event, or each asset must be taxable Australian property at that time and the shares in the company must be taxable Australian property just after that time (s 122-135(6) and (7)).
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Structuring Business and Wealth
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Last Updated on 12 January 2019
