27 Oct 11 CGT and "no goodwill" incorporated professional practices - TD 2011/26
On 26 October 2011, the ATO issued Taxation Determination TD 2011/26, entitled "Income tax: capital gains tax: if a share in a 'no goodwill' incorporated professional practice is disposed of for no consideration, will the Commissioner accept, for the purposes of calculating the market value of the share upon a possible application of s 116-30(1) of ITAA 1997 that the goodwill of the company can be taken to have no value?"
It was previously released in draft form as TD 2010/D3.
The answer to the question posed by the Determination is: "Yes, the Commissioner will accept in calculating the market value of the share in applying s 116-30(1) of ITAA 1997, that the goodwill of the company can be taken to have a value of nil. This approach will apply only for dealings done at arm's length for admissions to, and exits from, the professional practice in the natural 'ebb and flow' of natural person practitioner-shareholders into and out of the company."