Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-40 - RULES AFFECTING EMPLOYEES AND OTHER TAXPAYERS RECEIVING PAYG WITHHOLDING PAYMENTS  

Division 83A - Employee share schemes  

Subdivision 83A-C - Deferred inclusion of gain in assessable income  

Takeovers and restructures

SECTION 83A-130   Takeovers and restructures  

Object and scope

83A-130(1)    
The object of this section is to allow this Division to continue to apply if:

(a) at least one of the following applies:

(i) an *arrangement (the takeover ) is entered into that is intended to result in a company (the old company ) becoming a *100% subsidiary of another company;

(ii) *ESS interests in a company (the old company ) acquired under *employee share schemes can reasonably be regarded as having been replaced, wholly or partly, by ESS interests in one or more other companies as a result of a change (the restructure ) in the ownership (including the structure of the ownership) of the old company or a *demerger subsidiary of the old company; and

(b) just before the takeover or restructure, you held ESS interests (the old interests ) in the old company that you acquired under an employee share scheme.

Treat new interests as continuations of old interests

83A-130(2)    
For the purposes of this Division, treat any *ESS interests (the new interests ) in a company (the new company ) that you acquire in connection with the takeover or restructure as a continuation of the old interests, to the extent that:

(a) as a result of the arrangement or change, you stop holding the old interests; and

(b) the new interests can reasonably be regarded as matching any of the old interests.

Note:

In determining to what extent something can reasonably be regarded as matching any of the old interests, one of the factors to consider is the respective market values of that thing and of the old interests.

83A-130(3)    

Subsection 83A-45(4) (about the minimum holding period) is taken to apply to the *ESS interests.

83A-130(4)    
Subsections (2) and (3) only apply if the new interests relate to ordinary *shares.

Old interest not matched by new interests

83A-130(5)    
For the purposes of this Division, treat yourself as having disposed of the old interests to the extent that, in connection with the takeover or restructure, you acquire anything that:

(a) can reasonably be regarded as matching any of the old interests; but

(b) is not treated by subsection (2) as a continuation of those interests.

Continuation of your employment

83A-130(6)    
For the purposes of this Division, treat your employment by:

(a) the new company; or

(b) a *subsidiary of the new company; or

(c) a holding company (within the meaning of the Corporations Act 2001 ) of the new company; or

(d) a subsidiary of a holding company (within the meaning of the Corporations Act 2001 ) of the new company;

as a continuation of the employment in respect of which you acquired the old interests.

Apportionment of cost base of old interests

83A-130(7)    
Treat yourself as having given, as consideration for the assets mentioned in subsection (8), the amount worked out by apportioning among those assets, according to their respective *market values immediately after the takeover or restructure, the total of:

(a) the *cost bases of the old interests when you stop holding them; and

(b) the cost bases of the assets mentioned in paragraph (8)(b) immediately after the takeover or restructure (ignoring the effect of this subsection).

83A-130(8)    
The assets are:

(a) the things that:

(i) you acquired in connection with the takeover or restructure; and

(ii) can reasonably be regarded as matching the old interests;

(including all of the new interests); and

(b) in a case covered by subparagraph (1)(a)(ii) - any *ESS interests in the old company that:

(i) you held just before, and continue to hold just after, the restructure; and

(ii) that can reasonably be regarded as matching the old interests.

Exceptions

83A-130(9)    
This section only applies if:

(a) at or about the time you acquire the new interests, you are employed as mentioned in subsection (6); and

(b) at the time you acquire the new interests:

(i) you do not hold a beneficial interest in more than 10% of the *shares in the new company; and

(ii) you are not in a position to cast, or to control the casting of, more than 10% of the maximum number of votes that might be cast at a general meeting of the new company.

83A-130(10)    

For the purposes of paragraph (9)(b), you are taken to:

(a) hold a beneficial interest in any *shares in the new company that you can acquire under an *ESS interest that is a beneficial interest in a right to acquire a beneficial interest in such shares; and

(b) be in a position to cast votes as a result of holding that interest in those shares.