Tax Laws Amendment (2011 Measures No. 9) Act 2012 (12 of 2012)

Schedule 2   Capital gains tax and certain business restructures

Part 1   Share and interest sale facilities for foreign interest holders in a restructure

Income Tax Assessment Act 1997

9   At the end of Division 125

Add:

Subdivision 125-E - Miscellaneous

Table of sections

125-235 Share and interest sale facilities

125-235 Share and interest sale facilities

Share and interest sale facilities

(1) An entity (the investor ) is treated as owning an *ownership interest (the roll-over interest ) in a *demerged entity at a time (the deeming time ), if:

(a) the investor owned an ownership interest in a company or trust that was the *head entity of a *demerger group; and

(b) a *demerger happens to the demerger group; and

(c) because:

(i) a *foreign law impedes the ability of a member of the demerger group to issue or transfer the roll-over interest to the investor; or

(ii) it would be impractical or unreasonably onerous to determine whether a foreign law impedes the ability of a member of the demerger group to issue or transfer the roll-over interest to the investor;

it is *arranged that the member will issue or transfer the roll-over interest to another entity (the facility ) under the demerger instead of to the investor; and

(d) in accordance with that arrangement and as a result of the demerger, the facility:

(i) becomes the owner of the roll-over interest (which is a new or replacement interest in the demerged entity); and

(ii) owns the roll-over interest at the deeming time; and

(e) under the arrangement, the investor is entitled to receive from the facility:

(i) an amount equivalent to the *capital proceeds of any *CGT event that happens in relation to the roll-over interest (less expenses); or

(ii) if a CGT event happens in relation to the roll-over interest together with CGT events happening in relation to other ownership interests - an amount equivalent to the investor’s proportion of the total capital proceeds of the CGT events (less expenses).

(2) The facility is treated as not owning the roll-over interest at the deeming time.

(3) This section applies for the purposes of:

(a) applying this Division in relation to the demerger; and

(b) item 2 of the table in subsection 115-30(1), to the extent that it relates to a roll-over under this Division that involves the demerger.