Roll-over Legal Advice:

A roll-over is defined as the situation when assets or interests held in one entity are exchanged or replaced for assets or interests in another entity. This can occur in a number of scenarios such as when a takeover or merger occurs, or when a company or trust restructures. There are many different types of rollovers such as a script for script CGT roll-over, trust roll-over, superannuation roll-over, roll-over between spouses or roll-over to company by partners.  Our qualified taxation and financial specialists can have regard to your situation on a comprehensive level, and may assist in ensuring that you take advantage of rollovers should they be applicable to you. 

Essentially, there are two types of roll-overs, these being replacement-asset roll-overs and same-asset roll-overs. A replacement-asset roll-over involves a CGT event happening in relation to an asset which the taxpayer no longer owns after the roll-over. Instead, the taxpayer owns a different asset for instance the replacement asset after the roll-over. In such a case, any capital gain or loss arising from the CGT event which gave rise to the roll-over is deferred until a later time when a CGT event happens to the replacement asset. The CGT characteristics of the original asset are transferred to the replacement asset. In the case of a replacement-asset roll-over, any CGT liability remains with the taxpayer, even though that liability arises in relation to a different asset. In addition, a roll-over from an individual or from partners in a partnership to a wholly-owned company involves business assets being replaced by shares (i.e. replacement assets) in the company.

A same-asset roll-over involves a CGT event happening in relation to an asset which changes hands from one taxpayer to another, with the roll-overs attaching to the asset in the hands of the transferee taxpayer. In such a case, any capital gain or loss arising in the hands of the transferor taxpayer from a CGT event is disregarded. Any capital gain or loss which later arises from another CGT event happening to the asset is only relevant for the transferee taxpayer. The CGT characteristics of a roll-over asset are transferred with the asset from the transferor taxpayer to the transferee taxpayer. In the case of same-asset roll-overs, any CGT liability is transferred from one taxpayer to another, though that liability attaches to the same asset. In addition, a roll-overs from an individual or from partners in a partnership to a wholly-owned company involves business assets (i.e. same assets) being rolled over to the company.

One example of the application of roll-over is a roll-over for a trust structure. An optional roll-over is available where a trust disposes of all of its assets to a company and the beneficiaries’ interests in the trust are exchanged for shares in the company. Both the trust and its beneficiaries can access the roll-overs. Also, tax roll-overs are generally available where a trust, or two or more trusts, restructure into a single company. The following requirements must be met all of the CGT assets of the trust (or trusts) must be disposed of to the company during the trust restructuring period apart from assets retained to pay existing or expected debts of the trust; the company is generally a shelf company at the time the asset disposals commence; and all the beneficiaries must own shares in the company in the same proportion as they owned interests in the trust, and the market value of the interests before and after the restructure must be substantially the same. The benefits of using a roll-over is  that there may be significant discounts, reductions or concessions available in terms of Capital Gains Tax (CGT) that may apply when an asset is transferred or acquired. Our full service integrated practice of skilled and experienced lawyers, accountants, mortgage brokers and financial advisors may able to greatly assist you in the development and execution of the appropriate roll-over should it be ideal, suitable and useful in your situation.

If you need further legal advice on your matter, you may book an appointment with us by telephone on (02) 9233 4048 or by email to info@navado.com.au.

This webpage (and any material or wording appearing on this webpage) is provided for general information purposes only and does not constitute any Legal Advice. It does not take into account your objectives, your instructions or all of the relevant facts and/or circumstances. Navado accepts no responsibility to any person who relies on the information provided on this website. We further refer you to our Disclaimer.