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This is a Bill, not an Act. For current law, see the Acts databases.
1998-99
The Parliament of
the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
Presented and read a first
time
Taxation Laws
Amendment (Demutualisation of Non-insurance Mutual Entities) Bill
1999
No. ,
1999
(Treasury)
A Bill
for an Act to amend the law relating to income tax in respect of the
demutualisation of mutual entities other than insurance companies, and for
related purposes
ISBN: 0642
390525
Contents
Part 1—Insertion of Schedule
2H 3
Part 2—Consequential
amendments 48
A Bill for an Act to amend the law relating to income
tax in respect of the demutualisation of mutual entities other than
insurance companies, and for related purposes
The Parliament of Australia enacts:
This Act may be cited as the Taxation Laws Amendment (Demutualisation
of Non-insurance Mutual Entities) Act 1999.
This Act commences on the day on which it receives the Royal
Assent.
Each Act that is specified in a Schedule to this Act is amended or
repealed as set out in the applicable items in the Schedule concerned, and any
other item in a Schedule to this Act has effect according to its
terms.
Part
1—Insertion of Schedule
2H
1 After Schedule 2G
Insert:
Table of Subdivisions
Guide to Division 326
326-A Application, key concepts and related
expressions
326-B How demutualisation is to be effected
326-C CGT consequences of extinguishment of membership
rights in mutual entity
326-D CGT consequences of disposal of demutualisation shares
or an interest in such shares by a member of a mutual entity where the entity or
a holding company of the entity becomes a listed public company
326-E CGT consequences of disposal of demutualisation shares
or interests in such shares by a member of a mutual entity where the entity or a
holding company of the entity becomes a company that is not a listed public
company
326-F Variation of amount taken to be paid for shares or an
interest in shares by a member of a mutual entity who made a capital gain or
capital loss from disposal of membership rights in another mutual
entity
326-G CGT consequences of disposal of rights or interests
resulting from extinguishment of membership rights
326-H CGT consequences of transfer of ordinary
shares
326-I CGT consequences of disposal of demutualisation shares
or an interest in such shares by a trustee on behalf of a
member
326-J CGT consequences of change in rights attaching to
special shares or replacement of special shares by ordinary
shares
326-K CGT consequences of disposal of shares or an interest
in shares acquired under a roll-over provision
326-L CGT consequences of payment to member of demutualised
entity out of accumulated surplus of the entity
326-M Indexation
326-N Non-CGT consequences of issue of demutualisation
shares
This Division sets out the taxation consequences of the demutualisation of
mutual entities other than insurance companies.
Table of sections
326-5 Application
326-10 Mutual entity and demutualisation
326-15 Provisions relating to listing on a stock
exchange
326-20 Demutualisation resolutions etc.
326-25 Demutualisation shares
326-30 Existing members and new members
326-35 Pre-CGT members and post-CGT members
(1) This Division applies to the demutualisation of a mutual entity
referred to in section 326-10 if, and only if:
(a) where the demutualisation resolution day was 4 February 1999 or was or
is a later day—the members of the entity have passed a resolution, in
accordance with the entity’s constitution, that this Division is to apply
to the demutualisation; and
(b) the entity was a resident immediately before the demutualisation
resolution day; and
(c) the demutualisation has been or is implemented as mentioned in section
326-40; and
(d) the continuity of beneficial interest test in section 326-60 is
satisfied in relation to the demutualisation; and
(e) the demutualisation of the entity was or is completed on or after 12
May 1998.
(2) For the purposes of paragraph (1)(e), the demutualisation of an entity
is taken to have been or to be completed:
(a) if the demutualisation is implemented in accordance with the direct
method or the distributing trust method of demutualisation—on the day on
which all the shares in the company that the entity became or becomes that were
or are to be issued in connection with the demutualisation have been issued;
or
(b) if the demutualisation is implemented in accordance with the holding
company method of demutualisation—on the day on which all the shares in
the holding company that were or are to be issued in connection with the
demutualisation have been issued.
(3) If this Division applies to the demutualisation of a mutual entity as
mentioned in subsection (1), Subdivisions 326-C to 326-N provide for
modifications of this Act and the Income Tax Assessment Act 1997 as those
Acts have effect in respect of the entity.
(4) For the purposes of this Division, the giving of consideration (other
than the payment of an amount) for the acquisition of shares or an interest in
shares is taken to constitute the payment of an amount equal to the value of the
consideration.
(5) In so far as this Division has effect for the purposes of Part
IIIA:
(a) a reference to a person making or not making a capital gain is taken
to be a reference to a capital gain accruing or not accruing, as the case may
be, to the person; and
(b) a reference to a person making or not making a capital loss is taken
to be a reference to the person incurring or not incurring, as the case may be,
a capital loss; and
(c) a reference to a person being taken to have paid an amount for the
acquisition of a share or an interest in a share is a reference to a person
being taken to have paid the amount as consideration for the acquisition of the
share or interest.
(1) An entity is a mutual entity if, and only if,
immediately before the demutualisation resolution day, it is a body corporate
that:
(a) is not an insurance company within the meaning of subsection 121AB(2);
and
(b) is not a mutual affiliate company within the meaning of section 121AC;
and
(c) is not carried on for the object of securing a profit or pecuniary
gain for its members; and
(d) does not have capital divided into shares held by its members;
and
(e) does not hold property in which any of its members has a disposable
interest (whether directly or indirectly) except in the event of the winding up
of the entity.
(2) A mutual entity that has passed a demutualisation resolution is called
a demutualising entity.
(3) A mutual entity is demutualised if it ceases to be a
mutual entity otherwise than by ceasing to be a body corporate. Such an entity
is called a demutualised entity.
(4) A reference to a demutualising entity includes a
reference to a demutualised entity.
(1) A share is listed if it is listed for quotation in the
official list of Australian Stock Exchange Limited.
(2) The expression listed public company has the same
meaning as in the Income Tax Assessment Act 1997.
(3) A listing resolution, in relation to the demutualisation
of a mutual entity, is a resolution passed by the members of the entity
requiring the entity, or a holding company of the entity, to become a listed
public company.
(4) The day on which demutualisation shares are first listed is the
demutualisation listing day.
(1) The demutualisation resolution, in relation to the
demutualisation of a mutual entity, is a resolution passed by the members of the
entity to proceed with the demutualisation of the entity.
(2) The demutualisation resolution day, in relation to the
demutualisation of a mutual entity, is the day on which the demutualisation
resolution was or is passed.
(3) The limitation period, in relation to the
demutualisation of a mutual entity, is the period of 2 years beginning on the
demutualisation resolution day or such further period as the Commissioner
allows.
The demutualisation shares, in relation to a demutualised
entity, are:
(a) the ordinary shares in the entity that are issued as mentioned in
paragraphs 326-45(1)(c) and (d); and
(b) the ordinary shares in the holding company that are issued as
mentioned in paragraphs 326-50(1)(d) and (e); and
(c) the ordinary shares in the entity that are issued as mentioned in
paragraphs 326-55(1)(f) and (g); and
(d) the special shares in the entity that are issued as mentioned in
paragraph 326-55(1)(c).
(1) An existing member of a mutual entity that demutualises
is:
(a) a person who was a member of the entity on the earlier of the
following days:
(i) the demutualisation resolution day;
(ii) the share allocation cut-off day; or
(b) a person who became entitled to an allocation of demutualisation
shares because of the death of a person referred to in paragraph (a).
(2) If the members of a mutual entity that is being demutualised have
passed or pass a resolution to the effect that any person who became or becomes
a member after a specified day is not entitled to an allocation of
demutualisation shares, that day is the share allocation cut-off
day in relation to the demutualisation of the entity.
(3) A new member of a mutual entity that demutualises is a
person who is a member of the entity other than an existing member.
(4) A reference to a member of a mutual entity that
demutualises is taken, unless the contrary intention appears, to be a reference
to a person who is an existing member or a new member of the entity.
(1) A person is a pre-CGT member of a demutualising entity
if:
(a) the person’s membership rights in the entity are a pre-CGT asset
within the meaning of the Income Tax Assessment Act 1997; or
(b) both of the following apply:
(i) the person acquired membership rights in the entity by disposing of
membership rights in another mutual entity; and
(ii) the person acquired membership rights in the other entity before 20
September 1985.
(2) A person is a post-CGT member of a demutualising entity
if the person is not a pre-CGT member.
Table of sections
326-40 Methods of demutualisation
326-45 Direct method
326-50 Holding company method
326-55 Distributing trust method
326-60 Continuity of beneficial interest
test
A demutualisation of a mutual entity is to be implemented in accordance
with one of the methods set out in sections 326-45, 326-50 and 326-55.
(1) The direct method of demutualisation is as follows:
(a) all membership rights in the entity are extinguished;
(b) the entity becomes a company with a share capital;
(c) shares (ordinary shares) of only one class in the entity
are issued within the limitation period to existing members in exchange for the
membership rights referred to in paragraph (a);
(d) shares (also ordinary shares) of the same class in the
entity may be issued within the limitation period to new members;
(e) if a listing resolution was passed by the members of the
entity—the ordinary shares are listed within the limitation
period.
Note: Other things may happen in connection with the
implementation of the demutualisation.
(2) The following diagram shows, where this demutualisation method is
used, the issue of shares to members of the entity.
(1) The holding company method of demutualisation is as follows:
(a) all membership rights in the entity are extinguished;
(b) the entity becomes a company with a share capital;
(c) shares of only one class in the entity are issued to a company (the
holding company) within the limitation period;
(d) shares (ordinary shares) of only one class in the
holding company are issued within the limitation period to existing members in
exchange for the membership rights referred to in paragraph (a);
(e) shares (also ordinary shares) in the holding company of
the same class may be issued within the limitation period to new
members;
(f) if a listing resolution was passed by the entity—the ordinary
shares are listed within the limitation period.
Note: Other things may happen in connection with the
implementation of the demutualisation.
(2) The following diagram shows the main events that occur where this
demutualisation method is used.
(1) The distributing trust method of demutualisation is as
follows:
(a) all membership rights in the mutual entity are extinguished;
(b) the entity becomes a company with a share capital;
(c) shares (special shares) carrying only voting rights in
respect of the demutualised entity are issued within the limitation period to a
trustee to hold for the benefit of the members;
(d) the issue takes place before the issue of the ordinary shares
mentioned in paragraphs (f) and (g);
(e) after the issue of all the ordinary shares, the rights attaching to
the special shares become the same as those attaching to the ordinary shares and
the special shares are dealt with in accordance with paragraph (h) as if they
were ordinary shares;
(f) shares (ordinary shares) of only one class in the entity
are, within the limitation period, issued to the trustee to hold on behalf of
existing members in exchange for the membership rights referred to in paragraph
(a) and, in accordance with the choice of each existing member, to transfer to
the member the shares held on behalf of the member or to dispose of those shares
on behalf of the member;
(g) shares (also ordinary shares) of the same class in the
entity may, within the limitation period, be issued to the trustee on behalf of
new members and, in accordance with the choice of each new member, to transfer
to the member the shares held on behalf of the member or to dispose of those
shares on behalf of the member;
(h) within the limitation period the trustee:
(i) sells the ordinary shares issued to the trustee and distributes the
proceeds to the member; or
(ii) transfers the ordinary shares to the member;
(i) if a listing resolution was passed by the entity—the ordinary
shares are listed within the limitation period.
Note: Other things may happen in connection with the
implementation of the demutualisation.
(2) The trustee must be the trustee of a trust established solely for the
purposes of performing functions under subsection (1).
(3) The following diagram shows the main events that occur where this
demutualisation method is used.
(1) This section sets out a test (the continuity of beneficial
interest test) that must be satisfied before this Division applies to
the demutualisation of a mutual entity.
(2) The continuity of beneficial interest test is satisfied if:
(a) an opportunity is given to each existing member of the mutual
entity:
(i) to take up shares in the demutualised entity or in a holding company
to which shares in the demutualised entity are issued; or
(ii) to have shares in the demutualised entity issued to a trustee on
behalf of the member; and
(b) at least 90% of the ordinary shares in the demutualised entity or
holding company that are issued in connection with the demutualisation of the
entity are so issued to existing members or to a trustee on behalf of existing
members; and
(c) the accumulated surplus of the mutual entity is allocated or
distributed in the form of shares, or cash from the sale of shares, to existing
members in proportions that broadly accord with any one or more of the
following:
(i) the respective amounts contributed by the members to the
entity;
(ii) the respective values of the membership rights of the
members;
(iii) the respective rights of the members on the winding up of the
entity.
(3) In this section:
accumulated surplus, in relation to a demutualised entity,
means the net assets of the entity on the demutualisation resolution
day.
Table of sections
326-65 Extinguishment of membership rights
Application
(1) This section applies where membership rights are extinguished as
mentioned in paragraph 326-45(1)(a), 326-50(1)(a) or 326-55(1)(a).
Modification
(2) A capital gain or capital loss arising from the extinguishment of the
membership rights of a member is to be disregarded.
Table of sections
326-70 Application of Subdivision
326-75 Capital losses made from certain disposals to be
disregarded
326-80 Disposal by pre-CGT member of a demutualisation share
(other than a demutualisation original share) or an interest in such a share
before demutualisation listing day where member did not acquire membership
rights by disposing of membership rights in another mutual
entity
326-85 Disposal by pre-CGT member of a demutualisation share
(other than a demutualisation original share) or an interest in such a share on
or after demutualisation listing day where member did not acquire membership
rights by disposing of membership rights in another mutual
entity
326-90 Disposal by pre-CGT member of a demutualisation share
(other than a demutualisation original share) or an interest in such a share
where member acquired membership rights by disposing of membership rights in
another mutual entity
326-95 Disposal by post-CGT member of a demutualisation
share (other than a demutualisation original share) or an interest in such a
share
326-100 Disposal by pre-CGT member of a demutualisation
original share or a non-demutualisation bonus share, or an interest in such a
share, before demutualisation listing day where member did not acquire
membership rights by disposing of membership rights in another mutual
entity
326-105 Disposal by pre-CGT member of a demutualisation
original share or a non-demutualisation bonus share, or an interest in such a
share, on or after demutualisation listing day where member did not acquire
membership rights by disposing of membership rights in another mutual
entity
326-110 Disposal by pre-CGT member of a demutualisation
original share or a non-demutualisation bonus share, or an interest in such a
share, where member acquired membership rights by disposing of membership rights
in another mutual entity
326-115 Disposal by post-CGT member of a demutualisation
original share or a non-demutualisation bonus share, or an interest in such a
share
326-120 Adjusted market value
326-125 Undeducted membership costs
326-130 Adjusted first day trading price of demutualisation
shares
(1) This Subdivision applies where a member (the disposer)
of a mutual entity which, or a holding company of which, becomes a listed public
company disposes of an asset consisting of:
(a) a demutualisation share or an interest in such a share; or
(b) other shares (non-demutualisation bonus shares) in the
same company, or an interest in such shares, where:
(i) the shares are bonus shares mentioned in Division 8 of Part IIIA and
any of the demutualisation shares (whether or not disposed of at the time) are
the original shares mentioned in that Division; or
(ii) the shares are bonus equities mentioned in Subdivision 130-A of the
Income Tax Assessment Act 1997 and any of the demutualisation shares
(whether or not disposed of at the time) are the original equities mentioned in
that Subdivision.
(2) For the purposes of this Subdivision, if any of the original shares
mentioned in Division 8 of Part IIIA or any of the original equities mentioned
in Subdivision 130-A of the Income Tax Assessment Act 1997 is a
demutualisation share, it is called a demutualisation original
share.
A capital loss that the disposer makes from a disposal to which section
326-80 or 326-100 applies is to be disregarded.
(1) If:
(a) the disposal is a disposal of a demutualisation share (other than a
demutualisation original share) or an interest in such a share; and
(b) the disposer did not acquire membership rights in the demutualising
entity by disposing of membership rights in another mutual entity; and
(c) the disposer is a pre-CGT member; and
(d) the disposal occurs before the demutualisation listing day;
then, for the purpose of working out whether the disposer made a capital
gain or capital loss from the disposal, the disposer is taken to have done the
following:
(e) to have paid for the acquisition of the share or interest the amount
worked out by using the formula:
(f) to have paid that amount on the demutualisation resolution
day;
(g) to have acquired the share or interest on the demutualisation
resolution day.
(2) In the formula in paragraph (1)(e):
total number of shares means the total number of
demutualisation shares issued.
(1) If:
(a) the disposal is a disposal of a demutualisation share (other than a
demutualisation original share) or an interest in such a share; and
(b) the disposer did not acquire membership rights in the demutualising
entity by disposing of membership rights in another mutual entity; and
(c) the disposer is a pre-CGT member; and
(d) the disposal occurs on or after the demutualisation listing
day;
then, for the purpose of working out whether the disposer made a capital
gain or capital loss from the disposal, the disposer is taken to have done the
following:
(e) to have paid for the acquisition of the share or interest the lesser
of the following amounts:
(i) the amount worked out by using the formula:
(ii) the amount worked out by using the formula:
(f) to have paid the amount referred to in paragraph (e) on the
demutualisation resolution day;
(g) to have acquired the share or interest on the demutualisation
resolution day.
(2) In the formula in subparagraph (1)(e)(i):
total number of shares means the total number of
demutualisation shares issued.
(1) If:
(a) the disposal is a disposal of a demutualisation share (other than a
demutualisation original share) or an interest in such a share; and
(b) the disposer acquired membership rights in the demutualising entity by
disposing of membership rights in another mutual entity; and
(c) the disposer is a pre-CGT member;
then, for the purpose of working out whether the disposer made a capital
gain or capital loss from the disposal, the disposer is taken to have done the
following:
(d) to have paid for the acquisition of the share or interest both of the
following amounts:
(i) the amount worked out by using the formula:
(ii) any amount actually paid for the acquisition;
(e) to have paid the amount referred to in subparagraph (d)(i) on the
demutualisation resolution day;
(f) to have paid any amount referred to in subparagraph (d)(ii) when it
was actually paid;
(g) to have acquired the share or interest on the demutualisation
resolution day.
(2) In the formula in subparagraph (1)(d)(i):
number of disposer’s shares means the number of
demutualisation shares issued to the disposer or in which the disposer had an
interest.
number of members means the total number of members of the
other mutual entity at the time of the disposal of the membership rights in that
entity.
(1) If:
(a) the disposal is a disposal of a demutualisation share (other than a
demutualisation original share) or an interest in such a share; and
(b) the disposer is a post-CGT member;
then, for the purpose of working out whether the disposer made a capital
gain or capital loss from the disposal, the disposer is taken to have done the
following:
(c) to have paid for the acquisition of the share or interest both of the
following amounts:
(i) the amount worked out by using the formula:
(ii) any amount actually paid for the acquisition;
(d) to have paid the amount referred to in subparagraph (c)(i) on the
demutualisation resolution day;
(e) to have paid any amount referred to in subparagraph (c)(ii) when it
was actually paid;
(f) to have acquired the share or interest on the demutualisation
resolution day.
(2) In the formula in subparagraph (1)(c)(i):
number of disposer’s shares means the number of
demutualisation shares issued to the disposer or in which the disposer had an
interest.
(1) If:
(a) the disposal is a disposal of either:
(i) a demutualisation original share or an interest in such a share;
or
(ii) a non-demutualisation bonus share or an interest in such a share;
and
(b) the disposer did not acquire membership rights in the demutualising
entity by disposing of membership rights in another mutual entity; and
(c) the disposer is a pre-CGT member; and
(d) the disposal occurs before the demutualisation listing day;
then, for the purpose of working out whether the disposer made a capital
gain or capital loss from the disposal, the following paragraphs have
effect:
(e) for the purpose of applying Division 8 of Part IIIA of this Act or
Subdivision 130-A of the Income Tax Assessment Act 1997, the amount paid
for the acquisition of all the demutualisation original shares that is to be
taken into account under that Division or Subdivision, as the case may be, is
taken to be the amount worked out by using the formula:
(f) if the disposal is a disposal of a demutualisation original share or
an interest in such a share, the disposer is taken:
(i) to have paid the amount referred to in paragraph (e) on the
demutualisation resolution day; and
(ii) to have acquired the share or interest on the demutualisation
resolution day.
(2) In the formula in paragraph (1)(e):
number of disposer’s shares means the number of
demutualisation original shares issued to the disposer or in which the disposer
had an interest.
total number of shares means the total number of
demutualisation shares issued.
(1) If:
(a) the disposal is a disposal of either:
(i) a demutualisation original share or an interest in such a share;
or
(ii) a non-demutualisation bonus share or an interest in such a share;
and
(b) the disposer did not acquire membership rights in the demutualising
entity by disposing of membership rights in another mutual entity; and
(c) the disposer is a pre-CGT member; and
(d) the disposal occurs on or after the demutualisation listing
day;
then, for the purpose of working out whether the disposer made a capital
gain or capital loss from the disposal, the following paragraphs have
effect:
(e) for the purpose of applying Division 8 of Part IIIA of this Act or
Subdivision 130-A of the Income Tax Assessment Act 1997, the amount paid
for the acquisition of all the demutualisation original shares that is to be
taken into account under that Division or Subdivision, as the case may be, is
taken to be the lesser of the following amounts:
(i) the amount worked out by using the formula:
(ii) the amount worked out by using the formula:
(f) if the disposal is a disposal of a demutualisation original share or
an interest in such a share, the disposer is taken:
(i) to have paid the amount referred to in paragraph (e) on the
demutualisation resolution day; and
(ii) to have acquired the share or interest on the demutualisation
resolution day.
(2) In the formulas in subparagraphs 1(e)(i) and (ii):
number of disposer’s shares means the number of
demutualisation original shares issued to the disposer or in which the disposer
had an interest.
total number of shares means the total number of
demutualisation shares issued.
(1) If:
(a) the disposal is a disposal of either:
(i) a demutualisation original share or an interest in such a share;
or
(ii) a non-demutualisation bonus share or an interest in such a share;
and
(b) the disposer acquired membership rights in the demutualising entity by
disposing of membership rights in another mutual entity; and
(c) the disposer is a pre-CGT member;
then, for the purpose of working out whether the disposer made a capital
gain or capital loss from the disposal, the following paragraphs have
effect:
(d) for the purpose of applying Division 8 of Part IIIA of this Act or
Subdivision 130-A of the Income Tax Assessment Act 1997, the amount paid
for the acquisition of all the demutualisation original shares that is to be
taken into account under that Division or Subdivision, as the case may be, is
taken to be the sum of the following amounts:
(i) the amount worked out by using the formula:
(ii) any amount actually paid for the acquisition;
(e) if the disposal is a disposal of a demutualisation original share or
an interest in such a share, the disposer is taken:
(i) to have paid the amount referred to in subparagraph (d)(i) on the
demutualisation resolution day; and
(ii) to have paid any amount referred to in subparagraph (d)(ii) when it
was actually paid; and
(iii) to have acquired the share or interest on the demutualisation
resolution day.
(2) In the formula in subparagraph (1)(d)(i):
number of members means the total number of members of the
other entity at the time of the disposal of the membership rights in that
entity.
If:
(a) the disposal is a disposal of either:
(i) a demutualisation original share or an interest in such a share;
or
(ii) a non-demutualisation bonus share or an interest in such a share;
and
(b) the disposer is a post-CGT member;
then, for the purpose of working out whether the disposer made a capital
gain or capital loss from the disposal, the following paragraphs have
effect:
(c) for the purpose of applying Division 8 of Part IIIA of this Act or
Subdivision 130-A of the Income Tax Assessment Act 1997, the amount paid
for the acquisition of all the demutualisation original shares that is to be
taken into account under that Division or Subdivision, as the case may be, is
taken to be the sum of:
(i) an amount equal to the undeducted membership costs; and
(ii) any amount actually paid for the acquisition;
(d) if the disposal is a disposal of a demutualisation original share or
an interest in such a share, the disposer is taken:
(i) to have paid the amount referred to in subparagraph (c)(i) on the
demutualisation resolution day; and
(ii) to have paid any amount referred to in subparagraph (c)(ii) when it
was actually paid; and
(iii) to have acquired the share or interest on the demutualisation
resolution day.
Where membership rights not acquired by disposal of rights in another
entity
(1) For the purposes of this Subdivision, the adjusted market
value, when the expression is used in relation to a disposer who did not
acquire membership rights in the demutualising entity by disposing of membership
rights in another mutual entity, is the market value, as determined by a
qualified valuer, of the demutualising entity on the demutualisation resolution
day. However, in making the determination the valuer is to disregard the class C
franking surplus of that entity on that day.
Where membership rights acquired by disposal of rights in another
entity
(2) For the purposes of this Subdivision but subject to subsection (3),
the adjusted market value, when the expression is used in relation
to a disposer who acquired membership rights in the demutualising entity by
disposing of membership rights in another mutual entity, is the market value, as
determined by a qualified valuer, of the other entity at the time immediately
before the disposer disposed of membership rights in the other entity. However,
in making the determination the valuer is to disregard the franking surplus of
the other entity at that time.
Indexation of amount mentioned in subsection (2)
(3) If the indexation factor (see section 326-235) of the amount worked
out under subsection (2) is more than one, that amount is taken to be replaced
by that amount as indexed under Subdivision 326-M.
(1) For the purposes of this Subdivision, the undeducted membership
costs, when the expression is used in relation to a disposer who did not
acquire membership rights in the demutualising entity by the disposal of
membership rights in another mutual entity, are the sum of the undeducted
amounts of the costs that were incurred by the disposer in acquiring and
maintaining membership in the demutualising entity less any distributions
that:
(a) were made by the demutualising entity to the disposer before any
shares in the demutualised entity were issued; and
(b) were not included in the disposer’s assessable income of any
year of income.
(2) For the purposes of this Subdivision, the undeducted membership
costs, when the expression is used in relation to a disposer who
acquired membership rights in the demutualising entity by the disposal of
membership rights in another mutual entity, are:
(a) if the disposer was a pre-CGT member—the sum of the undeducted
amounts of the costs that were incurred by the disposer in maintaining
membership in the demutualising entity less any distributions that:
(i) were made by the demutualising entity to the disposer before any
shares in the demutualised entity were issued; and
(ii) were not included in the disposer’s assessable income of any
year of income; or
(b) if the disposer is a post-CGT member, the sum of:
(i) the undeducted amounts of the costs that were incurred by the disposer
in acquiring and maintaining membership in the other entity; and
(ii) the undeducted amounts of the costs that were incurred by the
disposer in maintaining membership in the demutualising entity;
less any distributions that:
(iii) were made by the demutualising entity or the other entity to the
disposer before any shares in the demutualised entity were issued; and
(iv) were not included in the disposer’s assessable income of any
year of income.
(3) If at any time 2 or more persons were joint members of a mutual
entity, any costs incurred by any one or more of them in acquiring or
maintaining the joint membership are taken to have been incurred by each of
them.
(4) Subject to subsection (5), the undeducted amount of a
cost is the amount of the cost to the extent to which a deduction has
not been allowed, and is not allowable, in respect of it.
(5) If:
(a) an amount of a cost referred to in subsection (1) or (2) was incurred
before the demutualisation resolution day; and
(b) the indexation factor (see section 326-235) of the amount is more than
one;
a reference in this section to the undeducted amount of that cost is a
reference to the undeducted amount as indexed under Subdivision 326-M.
(1) For the purposes of this Subdivision, the adjusted first day
trading price of demutualisation shares is the amount worked out using
the formula:
(2) In this section:
first day trading price of demutualisation shares means the
price per share, as published by Australian Stock Exchange Limited, at which the
demutualisation shares were last traded, on the stock market maintained by
Australian Stock Exchange Limited, on the demutualisation listing day.
value of franking surplus means the value, as determined by a
qualified valuer, of the class C franking surplus of the demutualised entity on
the demutualisation listing day.
Table of sections
326-135 Application of Subdivision
326-140 Disposal by pre-CGT member of a demutualisation
share (other than a demutualisation original share) or an interest in such a
share where member did not acquire membership rights by disposing of membership
rights in another mutual entity
326-145 Disposal by pre-CGT member of a demutualisation
share (other than a demutualisation original share) or an interest in such a
share where member acquired membership rights by disposing of membership rights
in another mutual entity
326-150 Disposal by post-CGT member of a demutualisation
share (other than a demutualisation original share) or an interest in such a
share
326-155 Disposal by pre-CGT member of a demutualisation
original share or a non-demutualisation bonus share, or an interest in such a
share, where member did not acquire membership rights by disposing of membership
rights in another mutual entity
326-160 Disposal by pre-CGT member of a demutualisation
original share or a non-demutualisation bonus share, or an interest in such a
share, where member acquired membership rights by disposing of membership rights
in another mutual entity
326-165 Disposal by post-CGT member of a demutualisation
original share or a non-demutualisation bonus share or an interest in such a
share
326-170 Various adjusted market values
326-175 Undeducted membership costs
(1) This Subdivision applies where a member (the disposer)
of a mutual entity which, or a holding company of which, becomes a company that
is not a listed public company disposes of an asset consisting of:
(a) a demutualisation share or an interest in such a share; or
(b) other shares (non-demutualisation bonus shares) in the
same company, or an interest in such shares, where:
(i) the shares are bonus shares mentioned in Division 8 of Part IIIA of
this Act and any of the demutualisation shares (whether or not disposed of at
the time) are the original shares mentioned in that Division; or
(ii) the shares are bonus equities mentioned in Subdivision 130-A of the
Income Tax Assessment Act 1997 and any of the demutualisation shares
(whether or not disposed of at the time) are the original equities mentioned in
that Subdivision.
(2) For the purposes of this Subdivision, if any of the original shares
mentioned in Division 8 of Part IIIA of this Act, or any of the original
equities mentioned in Subdivision 130-A of the Income Tax Assessment Act
1997, is a demutualisation share, it is called a demutualisation
original share.
(1) If:
(a) the disposal is a disposal of a demutualisation share (other than a
demutualisation original share) or an interest in such a share; and
(b) the disposer did not acquire membership rights in the demutualisation
entity by disposing of membership rights in another mutual entity; and
(c) the disposer is a pre-CGT member;
then, for the purpose of working out whether the disposer made a capital
gain or capital loss from the disposal, the disposer is taken to have done the
following:
(d) to have paid for the acquisition of the share or interest the amount
worked out by using the formula:
(e) to have paid that amount on the demutualisation resolution
day;
(f) to have acquired the share or interest on the demutualisation
resolution day.
(2) In the formula in paragraph (1)(d):
total number of shares means the total number of
demutualisation shares issued.
(1) If:
(a) the disposal is a disposal of a demutualisation share (other than a
demutualisation original share) or an interest in such a share; and
(b) the disposer acquired membership rights in the demutualising entity by
disposing of membership rights in another mutual entity; and
(c) the disposer is a pre-CGT member;
then, for the purpose of working out whether the disposer made a capital
gain or capital loss from the disposal, the disposer is taken to have done the
following:
(d) to have paid for the acquisition of the share or interest both of the
following amounts:
(i) the amount worked out by using the formula:
(ii) any amount actually paid for the acquisition;
(e) to have paid the amount referred to in subparagraph (d)(i) on the
demutualisation resolution day;
(f) to have paid any amount referred to in subparagraph (d)(ii) when it
was actually paid;
(g) to have acquired the share or interest on the demutualisation
resolution day.
(2) In the formula in subparagraph (1)(d)(i):
number of disposer’s shares means the number of
demutualisation shares issued to the disposer or in which the disposer had an
interest.
number of members means the total number of members of the
other mutual entity at the time of the disposal of the membership rights in that
entity.
(1) If:
(a) the disposal is a disposal of a demutualisation share (other than a
demutualisation original share) or an interest in such a share; and
(b) the disposer is a post-CGT member;
then, for the purpose of working out whether the disposer made a capital
gain or capital loss from the disposal, the disposer is taken to have done the
following:
(c) to have paid for the acquisition of the share or interest both of the
following amounts:
(i) the amount worked out by using the formula:
(ii) any amount actually paid for the acquisition;
(d) to have paid the amount referred to in subparagraph (c)(i) on the
demutualisation resolution day;
(e) to have paid any amount referred to in subparagraph (c)(ii) when it
was actually paid;
(f) to have acquired the share or interest on the demutualisation
resolution day.
(2) In the formula in subparagraph (1)(c)(i):
number of disposer’s shares means the number of
demutualisation shares issued to the disposer or in which the disposer had an
interest.
(1) If:
(a) the disposal is a disposal of either:
(i) a demutualisation original share or an interest in such a share;
or
(ii) a non-demutualisation bonus share or an interest in such a share;
and
(b) the disposer did not acquire membership rights in the demutualising
entity by disposing of membership rights in another mutual entity; and
(c) the disposer is a pre-CGT member;
then, for the purpose of working out whether the disposer made a capital
gain or capital loss from the disposal, the following paragraphs
apply:
(d) for the purpose of applying Division 8 of Part IIIA of this Act or
Subdivision 130-A of the Income Tax Assessment Act 1997, the amount paid
for the acquisition of all the demutualisation original shares that is to be
taken into account under that Division or Subdivision, as the case may be, is
taken to be the amount worked out by using the formula:
(e) if the disposal is a disposal of a demutualisation original share or
an interest in such a share, the disposer is taken:
(i) to have paid the amount referred to in paragraph (d) on the
demutualisation resolution day; and
(ii) to have acquired the share or interest on the demutualisation
resolution day.
(2) In the formula in paragraph (1)(d):
number of disposer’s shares means the number of
demutualisation original shares issued to the disposer or in which the disposer
had an interest.
total number of shares means the total number of
demutualisation shares issued.
(1) If:
(a) the disposal is a disposal of either:
(i) a demutualisation original share or an interest in such a share;
or
(ii) a non-demutualisation bonus share or an interest in such a share;
and
(b) the disposer acquired membership rights in the demutualising entity by
disposing of membership rights in another mutual entity; and
(c) the disposer is a pre-CGT member;
then, for the purpose of working out whether the disposer made a capital
gain or capital loss from the disposal, the following paragraphs have
effect:
(d) for the purpose of applying Division 8 of Part IIIA of this Act or
Subdivision 130-A of the Income Tax Assessment Act 1997, the amount paid
for the acquisition of all the demutualisation original shares that is to be
taken into account under that Division or Subdivision, as the case may be, is
taken to be both of the following amounts:
(i) the amount worked out by using the formula:
(ii) any amount actually paid for the acquisition; and
(e) if the disposal is a disposal of a demutualisation original share or
an interest in such a share, the disposer is taken to have done the
following:
(i) to have paid the amount referred to in subparagraph (d)(i) on the
demutualisation resolution day;
(ii) to have paid any amount referred to in subparagraph (d)(ii) when it
was actually paid;
(iii) to have acquired the share or interest on the demutualisation
resolution day.
(2) In the formula in subparagraph (1)(d)(i):
number of members means the total number of members of the
other mutual entity at the time of the disposal of the membership rights in that
entity.
If:
(a) the disposal is a disposal of either:
(i) a demutualisation original share or an interest in such a share;
or
(ii) a non-demutualisation bonus share or an interest in such a share;
and
(b) the disposer is a post-CGT member;
then, for the purpose of working out whether the disposer made a capital
gain or capital loss from the disposal, the following paragraphs have
effect:
(c) for the purpose of applying Division 8 of Part IIIA of this Act or
Subdivision 130-A of the Income Tax Assessment Act 1997, the amount paid
for the acquisition of all the demutualisation original shares that is to be
taken into account under that Division or Subdivision, as the case may be, is
taken to be both of the following amounts:
(i) an amount equal to the undeducted membership costs;
(ii) any amount actually paid for the acquisition;
(d) if the disposal is a disposal of a demutualisation original share or
an interest in such a share, the disposer is taken to have done the
following:
(i) to have paid the amount referred to in subparagraph (c)(i) on the
demutualisation resolution day;
(ii) to have paid any amount referred to in subparagraph (c)(ii) when it
was actually paid;
(iii) to have acquired the share or interest on the demutualisation
resolution day.
Application
(1) This section has effect for the purposes of this
Subdivision.
Where membership rights not acquired by disposal of rights in another
entity
(2) The adjusted market value, when the expression is used
in relation to a disposer who did not acquire membership rights in the
demutualising entity by disposing of membership rights in another mutual entity,
is the lesser of the issue day adjusted market value and the resolution day
adjusted market value.
Where membership rights acquired by disposal of rights in another
entity
(3) The adjusted market value, when the expression is used
in relation to a disposer who acquired membership rights in the demutualising
entity by disposing of membership rights in another mutual entity, is the
disposal day adjusted market value.
Issue day adjusted market value
(4) The issue day adjusted market value is the market value,
as determined by a qualified valuer, of the demutualised entity on the day on
which the demutualisation shares were issued. However, in making the
determination the valuer is to disregard the class C franking surplus of the
demutualised entity on that day.
Resolution day adjusted market value
(5) The resolution day adjusted market value is the market
value, as determined by a qualified valuer, of the demutualising entity on the
demutualisation resolution day. However, in making the determination the valuer
is to disregard the class C franking surplus of the demutualising entity on that
day.
Disposal day adjusted market value
(6) Subject to subsection (7), the disposal day adjusted market
value is the market value, as determined by a qualified valuer, of the
other entity at the time immediately before the disposer disposed of membership
rights in the other entity. However, in making the determination the valuer is
to disregard the franking surplus of the other entity at that time.
Indexation of amount mentioned in subsection (6)
(7) If the indexation factor (see section 326-235) of the amount worked
out under subsection (6) is more than one, that amount is taken to be replaced
by that amount as indexed under Subdivision 326-M.
(1) For the purposes of this Subdivision, the undeducted membership
costs, when the expression is used in relation to a disposer who did not
acquire membership rights in the demutualising entity by the disposal of
membership rights in another mutual entity, are the sum of the undeducted
amounts of the costs that were incurred by the disposer in acquiring and
maintaining membership in the demutualising entity less any distributions
that:
(a) were made by the demutualising entity to the disposer before any
shares in the demutualised entity were issued; and
(b) were not included in the disposer’s assessable income of any
year of income.
(2) For the purposes of this Subdivision, the undeducted membership
costs, when the expression is used in relation to a disposer who
acquired membership rights in the demutualising entity by the disposal of
membership rights in another mutual entity, are the sum of:
(a) if the disposer was a pre-CGT member—the undeducted amounts of
the costs that were incurred by the disposer in maintaining membership in the
demutualising entity less any distributions that:
(i) were made by the demutualising entity to the disposer before any
shares in the demutualised entity were issued; and
(ii) were not included in the disposer’s assessable income of any
year of income; or
(b) if the disposer is a post-CGT member, the sum of:
(i) the undeducted amounts of the costs that were incurred by the disposer
in acquiring and maintaining membership in the other entity; and
(ii) the undeducted amounts of the costs that were incurred by the
disposer in maintaining membership in the demutualising entity;
less any distributions that:
(iii) were made by the demutualising entity or the other entity to the
disposer before any shares in the demutualised entity were issued; and
(iv) were not included in the disposer’s assessable income of any
year of income.
(3) If at any time 2 or more persons were joint members of a mutual
entity, any costs incurred by any one or more of them in acquiring or
maintaining the joint membership are taken to have been incurred by each of
them.
(4) Subject to subsection (5), the undeducted amount of a
cost is the amount of the cost to the extent to which a deduction has
not been allowed, and is not allowable, in respect of it.
(5) If:
(a) an amount of a cost referred to in subsection (1) or (2) was incurred
before the demutualisation resolution day; and
(b) the indexation factor (see section 326-235) of the amount is more than
one;
a reference in this section to the undeducted amount of that cost is a
reference to the undeducted amount as indexed under Subdivision 326-M.
Table of sections
326-180 Amount taken to be paid for acquisition of shares or
interest by member to be increased by capital gain or reduced by capital
loss
(1) This section applies if:
(a) a post-CGT member of a mutual entity that has been demutualised
acquired membership rights in the entity by the disposal of membership rights in
another mutual entity; and
(b) the member made a capital gain or capital loss from the disposal of
membership rights in the other mutual entity; and
(c) the member has acquired shares or an interest in shares in the
demutualised entity or in a company that holds shares in the demutualised
entity.
(2) If the member disposes of a demutualisation original share or a
non-demutualisation bonus share, the amount paid for the acquisition of all the
demutualisation original shares is taken to be increased by the amount of the
capital gain or reduced by the amount of the capital loss, as the case may
be.
(3) If subsection (2) does not apply, the amount that is taken, under
Subdivision 326-D or 326-E, to have been paid by the member for the acquisition
of the share or interest is taken to be increased by the proportionate part of
the amount of the capital gain or reduced by the proportionate part of the
amount of the capital loss, as the case may be.
Table of sections
326-185 Disposal of right to receive shares in demutualised
entity
326-190 Extinguishment of right to shares in demutualised
entity by the issue of the shares
326-195 Disposal of right to receive shares in holding
company
326-200 Disposal of interest in trust that holds shares in
demutualised entity
(1) This section applies if:
(a) under the direct method of demutualisation of a mutual entity, the
membership rights of an existing member of the entity are extinguished;
and
(b) as a result of the extinguishment of the rights, the member acquires a
right or an interest in a right to have shares in the demutualised entity issued
to the member; and
(c) the member disposes of the whole or a part of the right or interest
otherwise than by receiving the shares.
(2) For the purpose of working out whether the member made a capital gain
or capital loss from the disposal, the member is taken to have done the
following:
(a) to have paid for the acquisition of the right or interest in the right
the amount worked out by using the formula:
(b) to have paid that amount, and to have acquired the right or interest,
on the demutualisation resolution day.
(3) In the formula in paragraph (2)(a):
cost of a share or interest means the amount that would have
been taken to have been paid by the member for the acquisition of a share or an
interest in a share in the demutualised entity under Subdivisions 326-D, 326-E
and 326-F if the disposal had been the disposal of the shares to which the right
or interest in the right related.
number of shares means the number of shares to which the
right or interest in the right related.
(4) If the member is a pre-CGT member who did not acquire membership
rights in the demutualising entity by disposing of membership rights in another
mutual entity, any capital loss made from the disposal before the
demutualisation listing day, or, if there is no such day, before the day on
which the shares in the demutualised entity were issued, is to be
disregarded.
If, under the direct method of demutualisation or the holding company
method of demutualisation, shares in a demutualised entity are issued to an
existing member, neither Part IIIA of this Act nor Parts 3-1 and 3-3 of the
Income Tax Assessment Act 1997 apply in respect of any disposal of, or
any CGT event constituted by the extinguishment of, as the case may be, the
member’s right to have the shares issued to the member.
(1) This section applies if:
(a) under the holding company method of demutualisation of a mutual
entity:
(i) the membership rights of an existing member of the entity are
extinguished; and
(ii) shares in the demutualised entity are issued to a company (the
holding company); and
(b) as a result of the extinguishment of the rights, the member acquires a
right or an interest in a right to have shares in the holding company issued to
the member; and
(c) the member disposes of the whole or a part of the right or interest
otherwise than by receiving the shares.
(2) For the purpose of working out whether the member made a capital gain
or capital loss from the disposal, the member is taken to have done the
following:
(a) to have paid for the acquisition of the right or interest in the right
the amount worked out by using the formula:
(b) to have paid that amount, and to have acquired the right or interest,
on the demutualisation resolution day.
(3) In the formula in paragraph (2)(a):
cost of a share or interest means the amount that would have
been taken to have been paid by the member for the acquisition of a share or an
interest in a share in the holding company under Subdivisions 326-D, 326-E and
326-F if the disposal had been the disposal of the shares in the holding company
to which the right or interest in the right related.
number of shares means the number of shares in the holding
company to which the right or interest in the right related.
(4) If the member is a pre-CGT member who did not acquire membership
rights in the demutualising entity by disposing of membership rights in another
mutual entity, any capital loss made from the disposal before the
demutualisation listing day, or, if there is no such day, before the day on
which the shares in the holding company were issued, is to be
disregarded.
(1) This section applies if:
(a) under the distributing trust method of demutualisation of a mutual
entity:
(i) the membership rights of an existing member of the entity are
extinguished; and
(ii) shares in the demutualised entity are issued to a trustee;
and
(b) as a result of the extinguishment of the rights, the member acquires
an interest in the trust constituted by the right to have shares in the
demutualised entity held by the trustee transferred by the trustee to the member
or disposed of by the trustee on behalf of the member; and
(c) the member disposes of the whole or a part of the interest otherwise
than by receiving the shares or proceeds of the sale of the shares.
(2) For the purpose of working out whether the member made a capital gain
or capital loss from the disposal, the member is taken to have done the
following:
(a) to have paid for the acquisition of the interest in the trust the
amount worked out by using the formula:
(b) to have paid that amount, and to have acquired the interest, on the
demutualisation resolution day.
(3) In the formula in paragraph (2)(a):
cost of a share means the amount that would have been taken
to have been paid by the member for the acquisition of a share in the
demutualised entity under Subdivisions 326-D, 326-E and 326-F if the disposal
had been the disposal of the shares to which the interest or the part of the
interest in the trust related.
number of shares means the number of shares in the
demutualised entity to which the interest in the trust related.
(4) If the member is a pre-CGT member who did not acquire membership
rights in the demutualising entity by disposing of membership rights in another
mutual entity, any capital loss made from the disposal before the
demutualisation listing day, or, if there is no such day, before the day on
which the shares in the demutualised entity were issued, is to be
disregarded.
Table of sections
326-205 Transfer of share or distribution of proceeds of
sale of share not to have any CGT consequences
If a trustee transfers an ordinary share or distributes the proceeds of
the sale of an ordinary share as mentioned in subparagraph 326-55(1)(h)(ii),
neither Part IIIA of this Act nor Parts 3-1 and 3-3 of the Income Tax
Assessment Act 1997 apply in respect of any disposal, or any CGT event, as
the case may be, constituted by or arising from the transfer or
distribution.
Table of sections
326-210 Disposal by a trustee
If:
(a) under the distributing trust method of demutualisation, shares in a
demutualised entity are issued to a trustee on behalf of a member; and
(b) the trustee disposes of a share or an interest in a share, or disposes
of a non-demutualisation bonus share or an interest in such a share, on behalf
of the member;
the disposal is taken for the purposes of Subdivisions 326-D, 326-E and
326-F to have been a disposal of the share or interest by the member.
Table of sections
326-215 Change of rights to, and replacement of, special
shares
(1) This Subdivision applies where, under the distributing trust method of
demutualisation of a mutual entity, the rights attaching to special shares
issued to a trustee on behalf of a member become the same as the rights
attaching to ordinary shares.
(2) Neither Part IIIA of this Act nor Parts 3-1 and 3-3 of the Income
Tax Assessment Act 1997 apply in respect of the change in rights.
Table of sections
326-220 Disposal of shares or interest in
shares
(1) This section applies where:
(a) under any method of demutualisation, a mutual entity, or a holding
company of a mutual entity, becomes a listed public company; and
(b) a disposal of a share, or of an interest in a share, in the entity or
holding company takes place before the demutualisation listing day;
and
(c) a roll-over provision applies to the disposal; and
(d) the person who disposed of the share or interest would, except for
section 326-75 and paragraph (c) of this subsection, have made a capital loss as
a result of the disposal; and
(e) the person who is taken to acquire the share or interest under the
roll-over provision (the transferee) disposes of the share or
interest.
(2) If the disposal by the transferee takes place before the
demutualisation listing day, any capital loss that the transferee makes from
that disposal is disregarded.
(3) If the disposal by the transferee takes place on or after the
demutualisation listing day, Subdivision 326-D applies to the disposal referred
to in paragraph (1)(b) as if that disposal had taken place on or after that
day.
(4) In this section:
disposal includes a disposal that would have occurred except
for section 160X.
roll-over provision means:
(a) section 160X; or
(b) any provision of Division 17 of Part III; or
(c) Division 128 of the Income Tax Assessment Act 1997;
or
(d) any provision of Divisions 122 and 126 of Part 3-3 of the Income
Tax Assessment Act 1997.
Table of sections
326-225 Payment out of assets of demutualised entity that is
not included in assessable income is taken not to be a dividend
If:
(a) a payment out of the assets of a demutualised entity is made to a
taxpayer who holds shares or an interest in shares in the entity; and
(b) the amount paid is a dividend that is not included in the
taxpayer’s assessable income;
the payment is taken, for the purposes of section 160ZL or for the purposes
of section 104-135 of the Income Tax Assessment Act 1997, not to be the
payment of a dividend.
Table of sections
326-230 Indexing of amounts
326-235 Indexation factor
326-240 Index number
Some provisions of this Division require amounts to be indexed. An amount
is indexed by multiplying it by its indexation factor.
(1) For the indexation of the amount worked out under subsection
326-120(2) or 326-170(6) in relation to a person who acquired membership rights
in a demutualising entity by the disposal of membership rights in another mutual
entity, the indexation factor is:
(2) For the indexation of an undeducted amount referred to in subsections
326-125(1) and (2) or 326-175(1) and (2) of a cost incurred by a person in
acquiring or maintaining membership in a demutualising entity or another entity,
the indexation factor is:
(3) An indexation factor is to be worked out to 3 decimal places (rounding
up if the fourth decimal place is 5 or more).
(1) The index number for a quarter is the All Groups
Consumer Price Index number (being the weighted average of the 8 capital cities)
first published by the Australian Statistician for the quarter.
(2) If the Australian Statistician changes the reference base for an index
number, only index numbers published in terms of the new base are to be used
after the change.
Table of sections
326-245 General taxation consequences of issue of
demutualisation shares
If any demutualisation shares are issued to a taxpayer under any method
of demutualisation, no amount is to be included in the taxpayer’s
assessable income because of the issue of the shares to the
taxpayer.
Part
2—Consequential
amendments
2 At the end of section
160ARDM
Add:
(3) If:
(a) an amount or amounts are transferred as mentioned in subsection (1) in
connection with the demutualisation of a mutual entity (other than a mutual
entity formed by the merger of 2 or more mutual entities); and
(b) Division 326 applies to the demutualisation;
the following provisions have effect:
(c) where the amount or the sum of the amounts transferred does not exceed
the total of the capital amounts:
(i) that were contributed to the entity by members of the entity before it
was demutualised; and
(ii) in respect of which deductions are not allowable to the members;
and
(iii) that were not payments for goods or services provided by the
entity;
subsection (1) does not apply to the amount transferred;
(d) where the amount or the sum of the amounts transferred exceeds the
total of those capital amounts—subsection (1) applies only to the
excess.
(4) If:
(a) an amount or amounts are transferred as mentioned in subsection (1) in
connection with the demutualisation of a mutual entity formed by the merger of 2
or more mutual entities; and
(b) Division 326 applies to the demutualisation;
the following provisions have effect:
(c) where the amount or the sum of the amounts transferred does not exceed
the total of the capital amounts:
(i) that were contributed to the demutualising entity before the
completion of the demutualisation by persons who became members of that entity
after the merger took place; and
(ii) in respect of which deductions are not allowable to those members;
and
(iii) that were not payments for goods or services provided by that
entity;
and the market values of the merging entities, as determined by a
qualified valuer, at the time of the merger—subsection (1) does not apply
to the amount transferred;
(d) where the amount or the sum of the amounts transferred exceeds the
total of those capital amounts and market values—subsection (1) applies
only to the excess.
3 At the end of section
160ARDQ
Add:
(3) If:
(a) an amount or amounts are transferred as mentioned in subsection (1) in
connection with the demutualisation of a mutual entity (other than a mutual
entity formed by the merger of 2 or more mutual entities); and
(b) Division 326 applies to the demutualisation;
the following provisions have effect:
(c) where the amount or the sum of the amounts transferred does not exceed
the total of the capital amounts:
(i) that were contributed to the entity by members of the entity before it
was demutualised; and
(ii) in respect of which deductions are not allowable to the members;
and
(iii) that were not payments for goods or services provided by the
entity;
subsection (1) does not apply to the amount transferred;
(d) where the amount or the sum of the amounts transferred exceeds the
total of those capital amounts—only the amount of the excess is to be
treated for the purposes of this section as having been transferred.
(4) If:
(a) an amount or amounts are transferred as mentioned in subsection (1) in
connection with the demutualisation of a mutual entity formed by the merger of 2
or more mutual entities; and
(b) Division 326 applies to the demutualisation;
the following provisions have effect:
(c) where the amount or the sum of the amounts transferred does not exceed
the total of the capital amounts:
(i) that were contributed to the demutualising entity before the
completion of the demutualisation by persons who became members of that entity
after the merger took place; and
(ii) in respect of which deductions are not allowable to those members;
and
(iii) that were not payments for goods or services provided by that
entity;
and the market values of the merging entities, as determined by a
qualified valuer, at the time of the merger—subsection (1) does not apply
to the amount transferred;
(d) where the amount or the sum of the amounts transferred exceeds the
total of those capital amounts and market values—only the amount of the
excess is to be treated for the purposes of this section as having been
transferred.
4 Application
Subsections 160ARDM(4) and 160ARDQ(4) apply only to a demutualising entity
in respect of which the demutualisation resolution day was earlier than 11
August 1998.
5 After subsection
160ZZPH(1)
Insert:
(1A) This section does not apply if the company is a mutual entity that is
being demutualised and to whose demutualisation Division 326
applies.
1 Section 109-60 (after table item
4)
Insert:
|
4A |
CGT event happens to CGT asset in connection with the demutualisation of a
mutual entity other than an insurance company |
on the demutualisation resolution day |
Division 326 |
2 Section 112-97 (after table item
5)
Insert:
|
5A |
CGT event happens to CGT asset in connection with the demutualisation of a
mutual entity other than an insurance company |
First element of cost base and reduced cost base |
Division 326 |
3 At the end of section
124-520
Add:
(3) This section does not apply if the body is a mutual entity that is
being demutualised and to whose demutualisation Division 326 of the Income
Tax Assessment Act 1936 applies.