From 1 July 2016 Small Businesses are allowed to change their structure http://www.mcnamaraandcompany.com.au/blog/new-business-restructuring-rules-for-small-businesses

This rollover is permitted where there is no material change to the ultimate economy ownership of the assets as a result of the transfer.  Please refer to section 328 – 430 Income Tax Assessment Act 1997.

Showing that there has been no material change to the ultimate economic ownership of the assets may prove to be difficult for discretionary trusts as there is no fixed ownership, i.e., the trust is discretionary.

However, Section 328 - 440 allows for a different test.  Where a family business is carried on through a discretionary trust as long as the ultimate economic ownership of the transferred assets remain within the family then there should be no tax liability, Capital Gains Tax or otherwise.
The above problems with not exist for sole traders, companies and units trusts as the ownership / entitlement is fixed.

If you would like to discuss further please contact us:
McNamara and Co - Chartered Accountants, located minutes from the Melbourne CBD
www.mcnamaraandcompany.com.au/contact-us
Phone +61 3 9428 1062
Email admin@mcnamaraandco.com

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