Supplementary Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello MP)General outline and financial impact
Amendment 1 to Schedule 5 - relief for employee share scheme participants in the event of a corporate restructure
This amendment changes the date of effect of the measure from Royal Assent to 1 July 2004. This ensures that an employee who is issued new shares or rights as a result of a corporate restructure can treat the new shares or rights as a continuation of their old shares or rights, from 1 July 2004.
Date of effect: This amendment will apply to corporate restructures which occur on or after 1 July 2004.
Proposal announced: This amendment has not previously been announced.
Financial impact: The cost to the revenue is unquantifiable but expected to be small. The new commencement date of 1 July 2004 will bring forward any revenue impact.
Compliance cost impact: This amendment is expected to have a minimal impact on compliance costs.
Chapter 1 - Amendment 1 to Schedule 5 - relief for employee share scheme participants in the event of a corporate restructure
Explanation of amendment 1
1.1 Amendment 1 amends Schedule 5 to change the commencement date to 1 July 2004. Schedule 5 ensures that when an employee is issued new shares or rights as a result of a corporate restructure, they will be able to treat them as a continuation of their old shares or rights. This ensures that a taxing point does not arise for the employee. It also ensures continuity of treatment for capital gains tax purposes.
1.2 It was originally proposed that the measure apply to corporate restructures which occur on or after Royal Assent. This amendment will ensure that employee share scheme participants involved in a corporate restructure on or after 1 July 2004 are eligible for the relief. The new date of effect also aligns with the date of effect for recent measures to provide relief for employee share scheme participants in a restructure contained in Tax Laws Amendment (2004 Measures No. 7) Act 2005.
1.3 Although this amendment will result in the employee share scheme amendments having retrospective effect, it enables more employee shareholders who have recently experienced a corporate restructure to benefit from the measure.
Application and transitional provisions
1.4 The amendment made by this Schedule will commence on Royal Assent of the Tax Laws Amendment (Loss Recoupment Rules and Other Measures) Bill 2005.