ARTICLE · 19 DECEMBER 2008

Corporate Restructures And Takeovers – CGT Changes

Norton Rose Fulbright Australia

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As part of its 2008 Budget, the Federal Government announced changes to the capital gains tax (CGT) scrip for scrip rollover provisions to take effect from 13 May 2008.

AustraliaTax

Peter Norman

Anna Wilson

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As part of its 2008 Budget, the Federal Government announced changes to the capital gains tax (CGT) scrip for scrip rollover provisions to take effect from 13 May 2008. The changes are designed to prevent taxpayers gaining taxation advantages from the application of the rollover in corporate takeovers where the transaction is treated as a "restructure". On 3 December 2008 the Tax Laws Amendment (2008 Measures No 6) Bill 2008 (Bill) was introduced into Federal Parliament to implement these changes.

Applicable law

Scrip for scrip rollovers are commonly used in takeovers and other corporate restructures. Shareholders exchanging interests in one company (Target) for interests in another company (Acquirer) may be able to defer any CGT under the scrip for scrip rollover provisions in Division 124 of the Income Tax Assessment Act 1997 (Cth) provided certain conditions are satisfied. Division 124 also contains provisions to establish the Acquirer's cost base for the

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