Business Restructure Roll-Overs Extended in Tax Law Bill No. 6 2014

The Tax and Superannuation Laws Amendment (2014 Measures No 6) Bill 2014 (the Bill) has now been passed by both Houses of Parliament and is expected to receive assent shortly.

The Bill amends the Income Tax Assessment Act 1997 by extending the CGT roll-over relief already provided to certain replacement asset roll-overs to also cover revenue assets and trading stock.

Specifically, the Bill provides that:

• the revenue asset and trading stock roll-overs will be available for exchange of units in a unit trust for shares in a company taking place after 10 May 2014;
   
• the revenue asset and trading stock roll-overs for exchange of shares in one company for shares in another company are extended beyond its previous limitation to consolidated groups with effect from 8 May 2012;
   
• from 7.30pm on 8 May 2012 business restructure roll-overs only apply where the new asset has the same character (ie is a revenue asset or trading stock) as the original asset; 
   
• a trust transferring an asset to a company or another trust may access a CGT roll-over if the receiving entity holds rights that are used to facilitate the transfer of assets to that entity. Previously, the receiving entity was not able to hold any assets other than a small amount of cash or debt. This change takes effect from:

o    1 November 2008 for transfers between trusts; and

o    7.30 pm on 10 May 2011 for transfers from trusts to companies; and

•  the revenue asset roll-over for exchange of shares in one company for shares in another company allows interest holders to defer a profit or loss on the exchange of shares under a corporate restructure.

The extension is not intended to cover scrip for scrip roll-overs under Sub-Division 124-M (which deals with interests held as revenue assets).

For more information on these issues please contact:

Melanie Twomey
Senior Associate
Harwood Andrews
T: 03 5225 5238
E: mtwomey@harwoodandrews.com.au

Ashleigh Wall
Associate
Harwood Andrews
T: 03 5226 8559
E: awall@harwoodandrews.com.au