Commonwealth Consolidated Acts Commonwealth Consolidated ActsPart 1 -- Share and interest sale facilities for foreign interest holders in a restructure
Income Tax Assessment Act 1997
1 At the end of Subdivision 124 - A
Add:
124 - 20 Share and interest sale facilities
Share and interest sale facilities
(1) An entity (the investor ) is treated as owning an * ownership interest (the roll - over interest ) in a company or trust (the issuer ) at a time (the deeming time ), if:
(a) the investor owned an ownership interest (the original interest ) in a company or trust; and
(b) a transaction happened in relation to the original interest; and
(c) because:
(i) a * foreign law impedes the ability of the issuer to issue or transfer the roll - over interest to the investor; or
(ii) it would be impractical or unreasonably onerous to determine whether a foreign law impedes the ability of the issuer to issue or transfer the roll - over interest to the investor;
it is * arranged that the issuer will issue or transfer the roll - over interest to another entity (the facility ) under the transaction instead of to the investor; and
(d) in accordance with that arrangement and as a result of the transaction, the facility:
(i) becomes the owner of the roll - over interest; and
(ii) owns the roll - over interest at the deeming time; and
(e) under the arrangement, the investor is entitled to receive from the facility:
(i) an amount equivalent to the * capital proceeds of any * CGT event that happens in relation to the roll - over interest (less expenses); or
(ii) if a CGT event happens in relation to the roll - over interest together with CGT events happening in relation to other ownership interests--an amount equivalent to the investor's proportion of the total capital proceeds of the CGT events (less expenses).
(2) The facility is treated as not owning the roll - over interest at the deeming time.
(3) This section applies for the purposes of:
(a) applying one of the following provisions (the roll - over provision ) in relation to the transaction:
(i) Subdivision 124 - G (Exchange of shares in one company for shares in another company);
(ii) Subdivision 124 - H (Exchange of units in a unit trust for shares in a company);
(iii) Subdivision 124 - I (Change of incorporation);
(iv) Subdivision 124 - N (Disposal of assets by a trust to a company);
(v) Subdivision 124 - Q (Exchange of stapled ownership interests for ownership interests in a unit trust); and
(b) the following provisions, to the extent that they relate to a roll - over under the roll - over provision that involves the transaction:
(i) item 2 of the table in subsection 115 - 30(1);
(ii) sections 124 - 10 and 124 - 15.
Incorporated bodies
(4) Without limiting this section, it also has effect, in a case covered by subparagraph ( 3)(a)(iii) (about Subdivision 124 - I), as if each reference in this section to an * ownership interest in a company or trust were a reference to:
(a ) an interest in an incorporated body; and
(b ) any rights relating to the body owned by the entity that owns that interest.
(5) This section applies, in a case covered by subparagraph ( 3)(a)(iii) (about Subdivision 124 - I), in relation to rights as a * member of a company incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 in the same way as it applies in relation to * shares in a company.
2 At the end of paragraphs 124 - 360(1)(c) and 124 - 370(1)(e)
Add:
Note: See section 124 - 20 if an exchanging member uses a share sale facility.
3 Subsections 124 - 382(3) and (4)
Repeal the subsections.
4 At the end of paragraphs 124 - 445(c) and 124 - 455(1)(e)
Add:
Note: See section 124 - 20 if an exchanging member uses a share sale facility.
5 Subsection 124 - 860(6) (note)
Omit "Note", substitute "Note 1".
6 At the end of subsection 124 - 860(6)
Add:
Note 2: See section 124 - 20 if an entity uses an interest sale facility.
7 At the end of paragraph 124 - 1045(1)(d)
Add:
Note: See section 124 - 20 if an exchanging member uses an interest sale facility.
8 Section 124 - 1065
Repeal the section.
9 At the end of Division 125
Add:
Subdivision 125 - E -- Miscellaneous
Table of sections
125 - 235 Share and interest sale facilities
125 - 235 Share and interest sale facilities
Share and interest sale facilities
(1) An entity (the investor ) is treated as owning an * ownership interest (the roll - over interest ) in a * demerged entity at a time (the deeming time ), if:
(a) the investor owned an ownership interest in a company or trust that was the * head entity of a * demerger group; and
(b) a * demerger happens to the demerger group; and
(c) because:
(i) a * foreign law impedes the ability of a member of the demerger group to issue or transfer the roll - over interest to the investor; or
(ii) it would be impractical or unreasonably onerous to determine whether a foreign law impedes the ability of a member of the demerger group to issue or transfer the roll - over interest to the investor;
it is * arranged that the member will issue or transfer the roll - over interest to another entity (the facility ) under the demerger instead of to the investor; and
(d) in accordance with that arrangement and as a result of the demerger, the facility:
(i) becomes the owner of the roll - over interest (which is a new or replacement interest in the demerged entity); and
(ii) owns the roll - over interest at the deeming time; and
(e) under the arrangement, the investor is entitled to receive from the facility:
(i) an amount equivalent to the * capital proceeds of any * CGT event that happens in relation to the roll - over interest (less expenses); or
(ii) if a CGT event happens in relation to the roll - over interest together with CGT events happening in relation to other ownership interests--an amount equivalent to the investor's proportion of the total capital proceeds of the CGT events (less expenses).
(2) The facility is treated as not owning the roll - over interest at the deeming time.
(3) This section applies for the purposes of:
(a) applying this Division in relation to the demerger; and
(b) item 2 of the table in subsection 115 - 30(1), to the extent that it relates to a roll - over under this Division that involves the demerger.
10 At the end of Subdivision 126 - G
Add:
126 - 265 Interest sale facilities
Interest sale facilities
(1) For the purposes of this Subdivision, an entity (the investor ) is treated as owning a * membership interest (the roll - over interest ) in the receiving trust at a time (the deeming time ), if:
(a) the investor owned a membership interest in the transferring trust; and
(b) a trust is created, or a transfer happens, (the transaction ) as mentioned in paragraph 126 - 225(1)(a) in relation to * CGT assets of the transferring trust; and
(c) because:
(i) a * foreign law impedes the ability of the receiving trust to issue or transfer the roll - over interest to the investor; or
(ii) it would be impractical or unreasonably onerous to determine whether a foreign law impedes the ability of the receiving trust to issue or transfer the roll - over interest to the investor;
it is * arranged that the receiving trust will issue or transfer the roll - over interest to another entity (the facility ) under the transaction instead of to the investor; and
(d) in accordance with that arrangement and as a result of the transaction, the facility:
(i) becomes the owner of the roll - over interest; and
(ii) owns the roll - over interest at the deeming time; and
(e) under the arrangement, the investor is entitled to receive from the facility:
(i) an amount equivalent to the * capital proceeds of any * CGT event that happens in relation to the roll - over interest (less expenses); or
(ii) if a CGT event happens in relation to the roll - over interest together with CGT events happening in relation to other membership interests--an amount equivalent to the investor's proportion of the total capital proceeds of the CGT events (less expenses).
(2) The facility is treated as not owning the roll - over interest at the deeming time.
11 Application of amendments
The amendments made by this Part apply to CGT events happening after 7.30 pm (by legal time in the Australian Capital Territory) on 11 May 2010.
Income Tax Assessment Act 1997
12 After subsection 125 - 65(2)
Insert:
(2A) Neither a corporation sole nor a * complying superannuation entity is a member of a * demerger group.
13 Paragraph 125 - 70(1)(g)
Omit " * superannuation fund", substitute " * non - complying superannuation fund".
14 Application of amendments
The amendments made by this Part apply to CGT events happening after 7.30 pm (by legal time in the Australian Capital Territory) on 11 May 2010.
Part 3 -- Roll - overs for change of incorporation
Income Tax Assessment Act 1997
15 Subdivision 124 - I
Repeal the Subdivision, substitute:
Subdivision 124 - I -- Change of incorporation
124 - 510 What this Subdivision is about
Roll - over relief is available for members of a body that is incorporated under one law and is converted to, or replaced with, a body incorporated under another law.
Table of sections
Object of this Subdivision
124 - 515 Object of this Subdivision
Change of incorporation without change of entity
124 - 520 Change of incorporation without change of entity
Old corporation wound up
124 - 525 Old corporation wound up
Special consequences of some roll - overs
124 - 530 Shares in company replacing pre - CGT and post - CGT mix of interest and rights in body
124 - 535 Rights as member of Indigenous corporation replacing pre - CGT and post - CGT mix of interest and rights in body
124 - 515 Object of this Subdivision
The object of this Subdivision is to ensure that CGT considerations for * members of a body incorporated under a law do not impede a change of incorporation involving converting the body to, or replacing it with, a company incorporated under:
(a) the Corporations Act 2001 or a similar * foreign law; or
(b) the Corporations (Aboriginal and Torres Strait Islander) Act 2006 .
Note: Subdivision 620 - A provides a roll - over for the assets of the body.
Change of incorporation without change of enti t y
124 - 520 Change of incorporation without change of entity
(1) This section applies if:
(a) you are a * member of a body incorporated under a law described in column 1 of an item of the table; and
(b) the body is converted into a company incorporated under a law described in column 2 of the item, without creating a new legal entity; and
(c) it is reasonable to conclude that there is no significant difference:
(i) between the ownership of the body, and of rights relating to the body held by entities that owned the body, just before the conversion and the ownership of the company just after the conversion; or
(ii) between the mix of ownership of the body, and of rights relating to the body held by entities that owned the body, just before the conversion and the mix of ownership of the company just after the conversion.
Note: See section 124 - 20 if an entity uses a share or interest sale facility.
Laws the body and company are incorporated under | ||
| Column 1 Body incorporated under this law | Column 2 Company incorporated under this law |
1 | A law other than the Corporations Act 2001 and a similar * foreign law relating to companies | The Corporations Act 2001 or a similar foreign law relating to companies |
2 | A law other than the Corporations (Aboriginal and Torres Strait Islander) Act 2006 | The Corporations (Aboriginal and Torres Strait Islander) Act 2006 |
(2) You can choose to obtain a roll - over if:
(a) as a result of the conversion you are issued with * shares in the company and you receive nothing else; and
(b) either you are an Australian resident at the time of the conversion or, if you are a foreign resident at that time:
(i) each of your interest and your other rights (if any) relating to the body was * taxable Australian property just before that time; and
(ii) the shares are taxable Australian property when they are issued.
Note 1: The roll - over consequences are set out in Subdivision 124 - A and section 124 - 530.
Note 2: Section 103 - 25 tells you when you have to make the choice.
(3) If the company is incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 , subsection ( 2) applies in relation to rights as a * member of the company in the same way as that subsection applies to * shares in a company.
Note: This may allow you to choose to obtain a roll - over. The roll - over consequences are set out in Subdivision 124 - A and section 124 - 535.
Exception for demutualisation of certain bodies
(4) This section does not apply to demutualisation of a body if Division 326 in Schedule 2H to the Income Tax Assessment Act 1936 applies to the demutualisation.
Note: That Division deals with demutualisation of entities other than insurance companies and health insurers.
124 - 525 Old corporation wound up
(1) This section applies if:
(a) a body is incorporated under a law described in column 1 of an item of the table; and
(b) a company is incorporated under a law described in column 2 of the item; and
(c) the body ceases to exist, but the company continues to exist, after the time (the switch time ) the * members of the body receive * shares in the company, or rights as members of it if it is incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 , on account of:
(i) their interests in the body; and
(ii) their other rights (if any) relating to the body; and
(d) the members of the body do not receive anything else on account of the expected ending of those interests and rights; and
(e) it is reasonable to conclude that there is no significant difference:
(i) between the ownership of the body, and of rights relating to the body held by entities that owned the body, just before the switch time and the ownership of the company just after the switch time; or
(ii) between the mix of ownership of the body, and of rights relating to the body held by entities that owned the body, just before the switch time and the mix of ownership of the company just after the switch time; and
Note: See section 124 - 20 if an entity uses a share or interest sale facility.
(f) the body * disposes of all its * CGT assets to the company, except any assets expected to be needed to meet the body's existing or expected liabilities before it ceases to exist.
Laws the body and company are incorporated under | ||
| Column 1 Body incorporated under this law | Column 2 Company incorporated under this law |
1 | A law other than the Corporations Act 2001 and a similar * foreign law relating to companies | The Corporations Act 2001 or a similar foreign law relating to companies |
2 | A law other than the Corporations (Aboriginal and Torres Strait Islander) Act 2006 | The Corporations (Aboriginal and Torres Strait Islander) Act 2006 |
(2) You can choose to obtain a roll - over if:
(a) you were a * member of the body just before the switch time; and
(b) your ownership of your interest in the body ends at a time (the end time ) after the switch time; and
(c) at the end time you have the * shares in the company that you received at the switch time; and
(d) either you are an Australian resident at the end time or, if you are a foreign resident at the end time:
(i) each of your interest in the body and your other rights (if any) relating to the body was * taxable Australian property just before the end time; and
(ii) the shares in the company that you received at the switch time are taxable Australian property at the end time.
Note 1: The roll - over consequences are set out in Subdivision 124 - A and section 124 - 530.
Note 2: Section 103 - 25 tells you when you have to make the choice.
(3) If the company is incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 , subsection ( 2) applies in relation to rights as a * member of the company in the same way as that subsection applies to * shares in a company.
Note: This may allow you to choose to obtain a roll - over. The roll - over consequences are set out in Subdivision 124 - A and section 124 - 535.
Special consequences of some roll - ove r s
124 - 530 Shares in company replacing pre - CGT and post - CGT mix of interest and rights in body
(1) This section applies if:
(a) you choose to obtain a roll - over under section 124 - 520 or 124 - 525 relating to * shares you have in the company on account of the following (your original assets ):
(i) your interest in the body mentioned in that section;
(ii) your other rights relating to the body mentioned in that section; and
(b) you * acquired some of your original assets before 20 September 1985 and the rest of them on or after that day.
(2) You are taken to have * acquired so many of the * shares before 20 September 1985 as is reasonable, having regard to:
(a) the number and * market value of your original assets; and
(b) the number and market value of the shares.
(3) The first element of the * cost base of each of the * shares not taken by subsection ( 2) to have been * acquired before 20 September 1985 (your post - CGT shares ) is such amount as is reasonable having regard to:
(a) the total of the cost bases of your original assets that you acquired on or after 20 September 1985; and
(b) the number and * market value of your post - CGT shares.
(4) The reduced cost base of each of your post - CGT shares is worked out similarly.
(5) This section has effect despite subsections 124 - 15(5) and (6).
(1) This section applies if:
(a) you choose to obtain a roll - over under section 124 - 520 or 124 - 525 relating to rights (the replacement rights ) you have as a * member of a company incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 on account of the following (your original assets ):
(i) your interest in the body mentioned in that section;
(ii) your other rights relating to the body mentioned in that section; and
(b) you * acquired any of your original assets before 20 September 1985.
(2) You are taken to have * acquired the replacement rights before 20 September 1985.
(3) This section has effect despite subsection 124 - 15(5).
16 Before Part 3 - 90
Insert:
Part 3 - 80 -- Roll - overs applying to assets generally
Table of Subdivisions
620 - A Corporations covered by Subdivision 124 - I
Subdivision 620 - A -- Corporations covered by Subdivision 124 - I
620 - 5 What this Subdivision is about
There are tax - neutral consequences of a body, that is incorporated under one law and ceases to exist, disposing of an asset to a company incorporated under another law, if the ownership of the company is not significantly different from the ownership of the body.
Table of sections
Application and object of this Subdivision
620 - 10 Application
620 - 15 Object
CGT consequences
620 - 20 Disregard body's capital gains and losses from CGT assets
620 - 25 Cost base and pre - CGT status of CGT asset for company
Consequences for depreciating assets
620 - 30 Roll - over relief for balancing adjustment events
Consequences for trading stock
620 - 40 Body taken to have sold trading stock to company
Consequences for revenue assets
620 - 50 Body taken to have sold revenue assets to company
Application and object of this Subdivisi o n
This Subdivision applies to a body that is incorporated under one law and ceases to exist, and to a company incorporated under another law, if section 124 - 525 applies in relation to the body and the company.
Note: That section applies if the ownership of the company is not significantly different from the ownership of the body and rights relating to the body.
The object of this Subdivision is to ensure tax - neutral consequences when the body ceases to hold an asset and also if the asset becomes held by the company.
620 - 20 Disregard body's capital gains and losses from CGT assets
(1) This section applies if:
(a) the body * disposes of a * CGT asset to the company because the body ceases to exist; or
(b) another * CGT event happens to a CGT asset of the body because the body ceases to exist.
(2) A * capital gain or a * capital loss the body makes from the * CGT asset is disregarded.
620 - 25 Cost base and pre - CGT status of CGT asset for company
(1) This section applies to a * CGT asset if the body * disposes of it to the company because the body ceases to exist.
(2) The first element of the * CGT asset's * cost base for the company is equal to the asset's cost base for the body in connection with the * disposal.
(3) The first element of the * CGT asset's * reduced cost base for the company is worked out similarly.
(4) If the body * acquired the * CGT asset before 20 September 1985, the company is taken to have acquired the CGT asset before that day.
Consequences for depreciating asse t s
620 - 30 Roll - over relief for balancing adjustment events
(1) This section applies if:
(a) there is a * balancing adjustment event because the body disposes of a * depreciating asset in an income year to the company because the body ceases to exist; and
(b) the disposal involves a * CGT event.
(2) This Act applies as if:
(a) there were roll - over relief under subsection 40 - 340(1) for the * balancing adjustment event; and
(b) the body were the transferor mentioned in that subsection and subsection 328 - 243(1A); and
(c) the company were the transferee mentioned in that subsection and subsection 328 - 243(1A).
Note: Some effects of this are as follows:
(a) the balancing adjustment event does not affect the body's assessable income or deductions (see subsection 40 - 345(1));
(b) the company can deduct for the decline in value of the asset on the same basis as the body did (see subsection 40 - 345(2));
(c) Division 45 (Disposal of leases and leased plant) applies to the company as if it had done the things the body did (see subsection 40 - 350(1)).
(3) Disregard paragraph 328 - 243(1A)(c) in determining whether subsection 328 - 243(1A) applies.
Consequences for trading sto c k
620 - 40 Body taken to have sold trading stock to company
(1) This subsection applies to each item of * trading stock that the body disposes of to the company because the body ceases to exist.
(2) The body is taken to have sold, and the company is taken to have bought, the item (in the ordinary course of * business and dealing with each other at arm's length), at the time of the disposal (or just before that time if the disposal occurred when the body ceased to exist), for:
(a) the * cost of the item for the body; or
(b) if the body held the item as * trading stock at the start of the income year, the * value of the item for the body then.
(3) The company is taken to have held the item as * trading stock when it bought the item.
Consequences for revenue asse t s
620 - 50 Body taken to have sold revenue assets to company
Disposal
(1) Subsections ( 2) and (3) apply to a * CGT asset:
(a) that the body * disposes of to the company because the body ceases to exist; and
(b) that is a * revenue asset of the body just before the disposal.
Note: Trading stock and depreciating assets are not revenue assets. See section 977 - 50.
(2) The body is taken to have disposed of the * revenue asset to the company for an amount such that the body would not make a profit or a loss on the disposal.
(3) For the purpose of calculating any profit or loss on a future disposal of, cessation of owning, or other realisation of, the * revenue asset, the company is taken to have paid the body that amount for the disposal of the revenue asset to the company.
Ceasing to own or other realising
(4) Subsection ( 5) applies to a * CGT asset:
(a) that the body ceases to own, or otherwise realises, because the body ceases to exist; and
(b) that is a * revenue asset of the body just before the cessation or realisation.
Note: Trading stock and depreciating assets are not revenue assets. See section 977 - 50.
(5) The body is taken to have disposed of the * revenue asset for an amount such that the body would not make a profit or a loss on the disposal.
Division 2--Consequential amendments
Income Tax Assessment Act 1997
17 Subsection 40 - 340(1) (note)
Omit "Note:", substitute "Note 1:".
18 At the end of subsection 40 - 340(1)
Add:
Note 2: This Act also applies as if there were roll - over relief under this subsection in the circumstances set out in section 620 - 30 (which is about a body incorporated under one law ceasing to exist and disposing of its assets to a company incorporated under another law that has not significantly different ownership).
19 At the end of subsection 70 - 80(1)
Add:
Note: An incorporated body is treated as disposing of an item of its trading stock in the ordinary course of business if the body ceases to exist and disposes of the asset to a company that has not significantly different ownership: see Division 620.
20 After section 112 - 53AA
Insert:
112 - 53AB Change of incorporation
Change of incorporation | |||
Item | In this situation: | Element affected: | See section: |
1 | Shares in company that has changed its incorporation or has ownership not significantly different from that of a former body incorporated under another law | First element of cost base and reduced cost base | 124 - 530 |
21 Section 112 - 97 (at the end of the table)
Add:
35 | A CGT asset is held by a company that has ownership not significantly different from that of a former body that held the asset and was incorporated under another law | First element of cost base and reduced cost base | Section 620 - 25 |
22 Section 112 - 115 (cell at table item 11, column headed "For the rules about this roll - over:")
Repeal the cell, substitute:
Change of incorporation |
23 Section 112 - 150 (at the end of the table)
Add:
11 | Corporations covered by Subdivision 124 - I | sections 620 - 10, 620 - 15, 620 - 20 and 620 - 25 |
Division 3--Application of amendments
Income Tax (Transitional Provisions) Act 1997
24 At the end of Division 124
Add:
Subdivision 124 - I -- Change of incorporation
Table of sections
124 - 510 Application of Subdivision 124 - I of the Income Tax Assessment Act 1997
124 - 510 Application of Subdivision 124 - I of the Income Tax Assessment Act 1997
Subdivision 124 - I of the Income Tax Assessment Act 1997 , as amended by Schedule 2 to the Tax Laws Amendment (2011 Measures No. 9) Act 201 2 , applies to CGT events happening after 7.30 pm (by legal time in the Australian Capital Territory) on 11 May 2010.
25 After Part 3 - 45
Insert:
Part 3 - 80 -- Roll - overs applying to assets generally
Table of Subdivisions
620 - A Corporations covered by Subdivision 124 - I
Subdivision 620 - A -- Corporations covered by Subdivision 124 - I
Table of sections
620 - 10 Application of Subdivision 620 - A of the Income Tax Assessment Act 1997
620 - 10 Application of Subdivision 620 - A of the Income Tax Assessment Act 1997
Subdivision 620 - A of the Income Tax Assessment Act 1997 applies in relation to the cessation of existence of bodies corporate occurring after 7.30 pm (by legal time in the Australian Capital Territory) on 11 May 2010.