Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-80 - ROLL-OVERS APPLYING TO ASSETS GENERALLY  

Division 615 - Roll-overs for business restructures  

Subdivision 615-B - Further requirements for choosing to obtain roll-overs  

SECTION 615-20   Requirements relating to your interests in the original entity  

615-20(1)    
Immediately after the completion time, each exchanging member must own:

(a) a whole number of *shares in the interposed company; and

(b) a percentage of the shares in the interposed company that were issued to all the exchanging members that is equal to the percentage of the shares or units in the original entity that were:

(i) owned by the member; and

(ii) disposed of, redeemed or cancelled under the *scheme.

615-20(2)    
The following ratios must be equal:

(a) the ratio of:

(i) the *market value of each exchanging member ' s *shares in the interposed company; to

(ii) the market value of the shares in the interposed company issued to all the exchanging members (worked out immediately after the completion time);

(b) the ratio of:

(i) the market value of that member ' s shares or units in the original entity that were disposed of, redeemed or cancelled under the *scheme; to

(ii) the market value of all the shares or units in the original entity that were disposed of, redeemed or cancelled under the scheme (worked out immediately before the first disposal, redemption or cancellation).

Example 1:

There are 100 shares in A Pty Ltd (the original entity), all having the same rights. B Pty Ltd (the interposed company) acquires all the shares in A by issuing each shareholder in A 10 shares in itself for each share they have in A. All shares in B have the same rights. Bill owned 15 shares in A and received 150 shares in B in exchange.

Example 2:

There are 1,000 units in the A unit trust (the original entity), all having the same rights. 2 new units in A are issued to B Pty Ltd (the interposed company), and all other units in A are cancelled. Each unitholder in A is issued 10 shares in B for each 100 units they have in A. All shares in B have the same rights. Alison owned 200 units in A and received 20 shares in B in exchange.

615-20(3)    
Either:

(a) you are an Australian resident at the time your *shares or units in the original entity are disposed of, redeemed or cancelled under the *scheme; or

(b) if you are a foreign resident at that time:

(i) your shares or units in the original entity were *taxable Australian property immediately before that time; and

(ii) your shares in the interposed company are taxable Australian property immediately after the completion time.