New Business Tax System (Taxation of Financial Arrangements) Act (No. 1) 2003 (133 of 2003)

Schedule 1   Removal of taxing point on conversion or exchange of traditional securities

Income Tax Assessment Act 1936

2   At the end of section 26BB

Add:

(4) Subsection (2) does not apply to a gain on the disposal or redemption of a traditional security if:

(a) the disposal or redemption occurs because the traditional security is converted into ordinary shares in a company that is:

(i) the issuer of the traditional security; or

(ii) a connected entity of the issuer of the traditional security; and

(b) the traditional security was issued on the basis that it will or may convert into ordinary shares in:

(i) the issuer of the traditional security; or

(ii) the connected entity.

(5) Subsection (2) does not apply to a gain on the disposal or redemption of a traditional security if:

(a) the disposal or redemption is in exchange for ordinary shares in a company that is neither:

(i) the issuer of the traditional security; nor

(ii) a connected entity of the issuer of the traditional security; and

(b) in the case of a disposal - the disposal is to:

(i) the issuer of the traditional security; or

(ii) a connected entity of the issuer of the traditional security; and

(c) the traditional security was issued on the basis that it will or may be:

(i) disposed of to the issuer of the traditional security or to the connected entity; or

(ii) redeemed;

in exchange for ordinary shares in the company.