The Minister for Revenue and Assistant Treasurer, Peter Dutton, clarified today the start date for the proposed changes to the tax consolidation regime following certain capital gains tax (CGT) rollovers.
“If an arrangement involves a listed company, the measure will apply where an intention to undertake a corporate action by takeover bid or scheme of arrangement is announced by either party to an approved stock exchange after 12 October 2007.“
“The new rules will not apply to an arrangement that was announced to an approved stock exchange before 13 October 2007, even if the announcement did not record the precise detail of every step and transaction to implement the arrangement.”
“If the arrangement involves an unlisted company, the measure applies to a corporate action by takeover bid or scheme of arrangement that is made to shareholders of the target company after 12 October 2007,” Mr Dutton said.
The changes will ensure that the tax cost setting rules do not apply to uplift the tax costs of the assets of an entity that joins a consolidated group or multiple entry consolidated group (MEC group) following a CGT rollover affecting the membership interests of the joining entity. The CGT rollovers to which the measure applies are:
- a scrip for scrip rollover (Subdivision 124-M of the Income Tax Assessment Act 1997);
- a CGT rollover that applies when an individual, trustee or partnership transfers assets to a wholly‑owned company (Subdivisions 122-A and 122-B);
- a CGT rollover that applies when pre‑CGT shares are exchanged for shares in another company (Subdivision 124-G); and
- a CGT rollover that applies when pre‑CGT interests in a trust are exchanged for shares in a company (Subdivision 124-H).
The measure will not affect a demerger transaction, unless that demerger happens as part of the arrangement that involves an entity joining a consolidated group or MEC group following a relevant CGT rollover.
The business community will be consulted on the development of legislation to give effect to these changes.