Commonwealth Consolidated Acts Commonwealth Consolidated Acts
Income Tax Assessment Act 1936
1 Section 139A (after table item dealing with Subdivision D)
Insert:
DA | Takeovers and restructures |
2 Subsection 139C(4)
After "The taxpayer does not", insert "(except for the purposes of Subdivision DA)".
3 Paragraph 139CA(2)(b)
Before "the later of", insert "subject to subsection (4),".
4 At the end of section 139CA
Add:
(4) Paragraph (2)(b) does not apply in relation to a share that, because of section 139DQ, is treated, for the purposes of this Division, as if it were a continuation of a share acquired under an employee share scheme.
Note: Subdivision DA can affect whether the taxpayer is treated as having disposed of a share or ceased employment.
5 Paragraphs 139CB(1)(c) and (d)
Before "if the right is exercised", insert "subject to subsection (3),".
6 After paragraph 139CB(1)(d)
Insert:
(da) if subsection (3) applies--the time when the taxpayer disposes of the share referred to in paragraph (3)(b);
7 At the end of section 139CB
Add:
Note: Subdivision DA can affect whether the taxpayer is treated as having disposed of a right or ceased employment.
(3) Paragraphs (1)(c) and (d) do not apply in relation to a right if:
(a) a share has been or is acquired as a result of the exercise of the right; and
(b) because of section 139DQ, another share is treated, for the purposes of this Division, as if it were a continuation of that share.
8 At the end of section 139CC
Add:
Note: Section 139DS can affect the amount of consideration that the taxpayer is treated as having paid or given.
9 After subsection 139DD(2)
Insert:
(2A) To avoid doubt, the taxpayer does not lose the right if, because of section 139DQ, another right is treated, for the purposes of this Division, as if it were a continuation of that right.
10 After subsection 139DD(3)
Insert:
(3A) To avoid doubt, the company does not cease to be the employer of the taxpayer or a holding company of the employer of the taxpayer if, because of section 139DQ, the taxpayer's employment by another company is treated, for the purposes of this Division, as if it were a continuation of that employment.
11 After Subdivision D of Division 13A of Part III
Insert:
Subdivision DA -- Takeovers and restructures
139DP Object of this Subdivision
The object of this Subdivision is to allow this Division to continue to apply, in appropriate circumstances, to 100% takeovers or restructures of companies that have employee share schemes.
139DQ The effect of 100% takeovers and restructures on employee share schemes
Treating acquisitions as continuations of existing shares etc.
(1) To the extent that:
(a) a taxpayer acquires:
(i) shares in a company (the new company ) that can reasonably be regarded as matching shares in another company (the old company ) that the taxpayer had acquired under an employee share scheme; or
(ii) rights in a company (the new company ) that can reasonably be regarded as matching rights in another company (the old company ) that the taxpayer had acquired under an employee share scheme; and
(b) the acquisition occurs in connection with a 100% takeover, or a restructure, of the old company; and
(c) as a result of the takeover or restructure, the taxpayer ceased to hold the shares or rights in the old company;
then, if the conditions in section 139DR are met, the matching shares or rights are treated, for the purposes of this Division, as if they were a continuation of the shares or rights in the old company.
Note: In determining to what extent something can reasonably be regarded as matching shares or rights in the old company, one of the factors to consider is the respective market values of that thing and of those shares or rights.
Treating acquisitions as disposals of existing shares etc.
(2) However, to the extent that, in connection with the takeover or restructure, the taxpayer acquires anything that:
(a) can reasonably be regarded as matching shares or rights in the old company that the taxpayer had acquired under an employee share scheme; but
(b) is not a matching share or right to which subsection (1) applies;
the taxpayer is treated, for the purposes of this Division, as having disposed of shares, or disposed of rights (other than by exercising them), that the taxpayer held, under an employee share scheme, in the old company immediately before the takeover or restructure.
Treating new employment as continuation of existing employment
(3) If subsection (1) applies, any employment of the taxpayer in:
(a) the new company; or
(b) a holding company of the new company; or
(c) a subsidiary of the new company or of a holding company of the new company;
is treated, for the purposes of this Division, as a continuation of the employment in respect of which he or she acquired the shares or rights in the old company or in a subsidiary of the old company.
139DR Conditions for the continuation of shares or rights
(1) The first condition is that, immediately before the takeover or restructure, the taxpayer held shares or rights in the old company under an employee share scheme.
(2) The second condition is that, at or about the time the taxpayer acquires the matching shares or rights, the taxpayer is an employee of:
(a) the new company; or
(b) a holding company of the new company; or
(c) a subsidiary of the new company or of a holding company of the new company.
(3) The third condition is that:
(a) to the extent that the matching shares or rights are shares, they are ordinary shares; or
(b) to the extent that the matching shares or rights are rights, they are rights to acquire ordinary shares.
(4) The fourth condition is that, if subsection 139DQ(1) did not apply, the cessation time, for the shares or rights in the old company to which the matching shares or rights relate, would occur as a result of the takeover or restructure.
(5) The fifth condition is that, at the time the taxpayer acquires the matching shares or rights, the taxpayer does not hold a legal or beneficial interest in more than 5% of the shares of the new company.
(6) The sixth condition is that, at that time, the taxpayer is not in a position to cast, or control the casting of, more than 5% of the maximum number of votes that may be cast at a general meeting of the new company.
(1) If:
(a) subsection 139DQ(1) applies to shares or rights that the taxpayer has acquired; and
(b) the taxpayer had paid or given consideration (the original consideration ) for an acquisition, under an employee share scheme, of any of the shares or rights in the old company (the original shares or rights );
the taxpayer is treated as having paid or given, for any of the apportionable assets for the original shares or rights, consideration of an amount worked out by spreading the original consideration proportionately among all the apportionable assets according to their market values immediately after the takeover or restructure.
Note: Subsection 139FA(4) alters the meaning of market value of a share or right for the purposes of this section.
(2) The apportionable assets for the original shares or rights are:
(a) all matching shares or rights held by the taxpayer that are treated because of this Division as a continuation of the original shares or rights; and
(b) anything else that the taxpayer acquired in connection with the takeover or restructure and that can reasonably be regarded as matching the original shares or rights; and
(c) in the case of a restructure--any shares or rights in the old company that the taxpayer held immediately before, and continues to hold immediately after, the restructure and that can reasonably be regarded as matching the original shares or rights.
12 At the end of section 139FA
Add:
(4) This section applies for the purposes of section 139DS as if references in this section to the one week period up to and including that day were references to the period consisting of that day.
13 Section 139GC
Omit " Corporations Law ", substitute " Corporations Act 2001 ".
14 After section 139GC
Insert:
The expression subsidiary has the same meaning as in the Corporations Act 2001 .
139GCB Meaning of 100% takeover
A 100% takeover of a company by another company is an arrangement that is intended to result in the company becoming a 100% subsidiary of the other company, or of a holding company or subsidiary of the other company.
A restructure of a company is a change in the ownership, or the structure of the ownership, of the company as a result of which some or all shares or rights held in the company under an employee share scheme immediately before the change:
(a) are replaced; or
(b) could reasonably be regarded as having been replaced;
wholly or partly by shares or rights in one or more other companies.
15 Section 139GH (before the table item dealing with Acquiring a share or right)
Insert:
100% takeover | 139GCB |
16 Section 139GH (at the end of the table)
Add:
Restructure | 139GCC |
Subsidiary | 139GCA |
Income Tax Assessment Act 1997
17 Subsection 130 - 80(1)
Repeal the subsection, substitute:
(1) This section sets out what happens if you:
(a) * acquire a * share or right at a discount (within the meaning of Subdivision C of Division 13A of Part III of the Income Tax Assessment Act 1936 ) under an * employee share scheme; or
(b) acquire a share or right that, because of section 139DQ of that Act, is treated, for the purposes of Division 13A of Part III of that Act, as if it were a continuation of a share or right acquired under an employee share scheme.
18 After subsection 130 - 83(1)
Insert:
(1A) If:
(a) a * CGT event happens in relation to the * share or right (the original share or right ); and
(b) it happens in connection with an acquisition (within the meaning of Subdivision C of Division 13A of Part III of the Income Tax Assessment Act 1936 ) of another share or right (the matching share or right ); and
(c) under section 139DQ of the Income Tax Assessment Act 1936 the matching share or right is treated, for the purposes of Division 13A of Part III of that Act, as if it were a continuation of the original share or right;
any * capital gain or * capital loss you make from the CGT event is disregarded.
19 Section 130 - 90 (heading)
Repeal the heading, substitute:
130 - 90 Share or right acquired under an employee share trust--beneficiary absolutely entitled
20 Subsection 130 - 90(3)
Repeal the subsection, substitute:
(3) Either:
(a) the individual, * associate or affiliate company must have acquired the * share or right under an * employee share scheme; or
(b) the share or right must, because of section 139DQ of the Income Tax Assessment Act 1936 , be a share or right that is treated, for the purposes of Division 13A of Part III of that Act, as if it were a continuation of a share or right acquired under an employee share scheme.
21 At the end of Subdivision 130 - D
Add:
130 - 95 Share or right acquired under an employee share trust--100% takeover or restructure
If:
(a) a * CGT event happens in relation to a * share or right (the original share or right ); and
(b) it happens in connection with an acquisition (within the meaning of Subdivision C of Division 13A of Part III of the Income Tax Assessment Act 1936 ) of another share or right (the matching share or right ) by the beneficiary of an * employee share trust; and
(c) under section 139DQ of the Income Tax Assessment Act 1936 the matching share or right is treated, for the purposes of Division 13A of Part III of that Act, as if it were a continuation of the original share or right;
any * capital gain or * capital loss the trustee of the employee share trust makes from the CGT event is disregarded.
22 Application
(1) The amendments made by this Schedule apply, and are taken to have applied, to acquisitions of shares or rights on or after 1 July 2004.
(2) In this item:
acquisition , of a share or right, has the same meaning as in Division 13A of Part III of the Income Tax Assessment Act 1936 .