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INCOME TAX ASSESSMENT ACT 1997 - SECT 124.781

Replacement of trust interests

  (1)   There is a roll - over if:

  (a)   an entity (also the original interest holder ) exchanges:

  (i)   a unit or other interest (also the holder's original interest ) in a trust (also the original entity ) for a unit or other interest (also the holder's replacement interest ) in another trust (also the acquiring entity and the replacement entity ); or

  (ii)   an option, right or similar interest (also the holder's original interest ) issued by the original entity that gives the holder an entitlement to acquire a unit or other interest in the original entity for a similar interest (also the holder's replacement interest ) in another trust (also the acquiring entity and the replacement entity ); and

  (b)   entities have * fixed entitlements to all of the income and capital of the original entity and the acquiring entity; and

  (c)   the exchange is in consequence of an * arrangement that satisfies subsection   (2) or (2A); and

  (d)   the conditions in subsections   (3) and (4) are satisfied.

Note 1:   There are some exceptions: see section   124 - 795.

Note 2:   The original interest holder can obtain only a partial roll - over if the capital proceeds for its original interest include something other than its replacement interest: see section   124 - 790.

Conditions for arrangement

  (2)   The * arrangement must:

  (a)   result in the acquiring entity owning 80% or more of the * trust voting interests in the original entity or, if there are none, 80% or more of the units or other interests in the original entity; and

  (b)   be one in which at least all owners of trust voting interests (or of units or other interests) in the original entity (except the acquiring entity) could participate; and

  (c)   be one in which participation was available on substantially the same terms for all of the owners of interests or units of a particular type in the original entity.

Conditions for arrangement--takeover bids

  (2A)   The * arrangement must:

  (a)   satisfy paragraph   (2)(a); and

  (b)   be, be part of, or include a takeover bid (within the meaning of the Corporations Act 2001 ) for the original interests by the acquiring entity that is not carried out in contravention of the provisions mentioned in paragraphs 612(a) to (g) of that Act.

Note:   For exemption and modification of provisions by ASIC (and review by the takeovers panel) see Part   6.10 of the Corporations Act 2001 . For Court declarations excusing contraventions see section   1325D of that Act.

Conditions for roll - over

  (3)   The conditions are:

  (a)   the original interest holder * acquired its original interest on or after 20   September 1985; and

  (b)   apart from the roll - over, it would make a * capital gain from a * CGT event happening in relation to its original interest; and

  (c)   it chooses to obtain the roll - over or, if section   124 - 782 applies to it for the * arrangement, it and the trustee of the acquiring entity jointly choose to obtain the roll - over; and

  (d)   if that section applies to it, it informs that trustee in writing of the * cost base of its original interest as at the time just before a CGT event happened in relation to it.

Note:   If the original interest holder also exchanges a CGT asset that it acquired before 20   September 1985, the cost base of any interest received in exchange for it is worked out under section   124 - 800.

Further roll - over conditions in certain cases

  (4)   These conditions must be satisfied if the original interest holder and the trustee of the acquiring entity did not deal with each other at * arm's length and neither the original entity nor the acquiring entity had at least 300 beneficiaries just before the * arrangement started:

  (a)   the * market value of the original interest holder's * capital proceeds for the exchange is at least substantially the same as the market value of its original interest; and

  (b)   its replacement interest carries the same kind of rights and obligations as those attached to its original interest.

Note:   There are some cases where a trust will not be regarded as having 300 beneficiaries: see section   124 - 810.

CUFS

  (5)   This section applies to the holder of a Chess Unit of Foreign Security as if the holder held the underlying interests that the unit represents.

Note:   A Chess Unit of Foreign Security is an interest, traded on the stock market operated by ASX Limited, in a foreign share, unit or interest.

Meaning of trust voting interest

  (6)   A trust voting interest in a trust is an interest in the trust that confers rights of the same or a similar kind as the rights conferred by a * voting share in a company.


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