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Class Ruling

CR 2006/124


Income tax: scrip for scrip roll-over: exchange of ordinary shares in Alinta Limited under the Alinta Scheme of Arrangement

Attention Please note that the PDF version is the authorised version of this ruling.
Attention This document has changed over time. View its history.


LEGALLY BINDING SECTION: 
What this Ruling is about1
Date of effect9
Withdrawal13
Scheme14
Ruling27
NOT LEGALLY BINDING SECTION: 
Appendix 1: Explanation35
Appendix 2: Detailed contents list94

Exclamation This publication provides you with the following level of protection:

This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953.

A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes.

If you rely on this ruling, we must apply the law to you in the way set out in the ruling (or in a way that is more favourable for you if we are satisfied that the ruling is incorrect and disadvantages you, and we are not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you.

What this Ruling is about

1. This Ruling sets out the Commissioner's opinion on the way in which the relevant provision(s) identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates.

2. It should be noted that while this Ruling gives certainty to shareholders in respect of the issues addressed in the Ruling section, the Commissioner has not been asked to form a view, and has not formed a view, on the other tax issues relating to the overall arrangements to merge Alinta Limited (referred to in this Ruling as Alinta Ltd) and The Australian Gas Light Company (AGL) and those arrangements integral and ancillary to them.

Relevant provision(s)

3. The relevant provisions dealt with in this Ruling are the following provisions of the Income Tax Assessment Act 1997 (ITAA 1997):

·
 section 104-10;
·
 section 109-10;
·
 subsection 115-30(1);
·
 subsection 116-20(1); and
·
 Subdivision 124-M.

All legislative references in this Ruling are to the ITAA 1997 unless otherwise stated.

Class of entities

4. The class of entities to which this Ruling applies are the shareholders of Alinta Ltd who:

·
 owned ordinary shares in Alinta Ltd and hold these on capital account at the time that the scheme commenced;
·
 transferred their Alinta Ltd shares to Numar Pty Limited (New Alinta Sub) in exchange for Alinta Mergeco Limited (referred to as New Alinta Ltd) ordinary shares under the Alinta Scheme of Arrangement (Alinta Scheme);
·
 choose to obtain CGT roll-over relief under Subdivision 124-M; and
·
 were 'residents of Australia' within the meaning of that expression in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) at the time that the scheme commenced.

Qualifications

5. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling.

6. The class of entities defined in this Ruling may rely on its contents provided the scheme was carried out in accordance with the scheme described in paragraphs 14 to 26 of this Ruling. This class of entities is referred to as the 'Alinta Ltd shareholders' throughout this Ruling.

7. If the scheme carried out was materially different from the scheme that is described in this Ruling, then:

·
 this Ruling has no binding effect on the Commissioner because the scheme entered into is not the scheme on which the Commissioner has ruled; and
·
 this Ruling may be withdrawn or modified.

8. This work is copyright. Apart from any use as permitted under the Copyright Act 1968 , no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to:

 Commonwealth Copyright Administration
 Attorney General's Department
 Robert Garran Offices
 National Circuit
 Barton ACT 2600
 or posted at: http://www.ag.gov.au/cca

Date of effect

9. This Ruling applies to the income year ending 30 June 2007 or substituted accounting period. However, the Ruling does not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of the Ruling. Furthermore, the Ruling only applies to the extent that:

·
 it is not later withdrawn by notice in the Gazette ; or
·
 the relevant provisions are not amended.

10. If this Ruling is inconsistent with a later public or private ruling, the relevant class of entities may rely on either ruling which applies to them (item 1 of subsection 357-75(1) of Schedule 1 to the Taxation Administration Act 1953 (TAA)).

11. If this Ruling is inconsistent with an earlier private ruling, the private ruling is taken not to have been made if, when this Ruling is made, the following two conditions are met:

·
 the income year or other period to which the rulings relate has not begun; and
·
 the scheme to which the rulings relate has not begun to be carried out.

12. If the above two conditions do not apply, the relevant class of entities may rely on either ruling which applies to them (item 3 of subsection 357-75(1) of Schedule 1 to the TAA).

Withdrawal

13. This Ruling is withdrawn and ceases to have effect after 30 June 2007. However, the Ruling continues to apply after its withdrawal in respect of the relevant provisions ruled upon to all entities within the specified class who entered into the specified scheme during the term of the Ruling, subject to there being no change in the scheme or in the entities involvement in the scheme.

Scheme

14. This description is based on a number of documents provided to the Commissioner. These documents, or relevant parts of them, as the case may be, form part of and are to be read with this description. The relevant documents or parts of documents incorporated into this description of the arrangement include:

·
 Class Ruling application dated 6 June 2006 from Alinta Ltd;
·
 Information received from Alinta Ltd dated between 20 July 2006 and 30 October 2006 providing further information about the scheme;
·
 The Alinta Scheme of Arrangement;
·
 Scheme Booklet for the Alinta Scheme;
·
 The Merger Implementation Agreement;
·
 The Transaction Implementation Deed;
·
 The Relationship Deed; and
·
 The Regulatory Deed.

Note: certain information received from PricewaterhouseCoopers and Alinta has been provided on a commercial-in-confidence basis and will not be disclosed or released under the Freedom of Information legislation.

Background

15. The scheme that is the subject of this Ruling involves the exchange of Alinta Ltd shares for New Alinta Ltd ordinary shares. This is part of a wider arrangement which involves a merger of Alinta Ltd's and AGL's infrastructure and asset management businesses and the separation of AGL's energy business to create two new listed entities.

Alinta Ltd

16. Alinta Ltd is an Australian resident company which was listed on the Australian Stock Exchange (ASX) and was the head company of a tax consolidated group. Alinta Ltd provides energy related products and services and managed, operated and owned assets in Australia and New Zealand.

AGL

17. AGL is an Australian resident company which was listed on the ASX and was the head company of a tax consolidated group. AGL was a major retailer of gas and electricity. It has an extensive portfolio of wholly and partly-owned investments in energy infrastructure, infrastructure management and other energy businesses.

The merger transaction

18. Alinta Ltd and AGL merged their respective businesses by creating a separate ownership structure to hold their combined energy and their combined infrastructure assets. This merger was achieved through a series of interdependent steps outlined below.

Establishment of New Alinta Ltd consolidated group

19. New Alinta Ltd was established with an initial issued share capital of 2 ordinary shares held in equal proportions by the Chief Executive Officer of Alinta Ltd and the Chief Executive Officer of AGL). New Alinta Ltd holds all the units in Alinta Mergeco Trust, which in turn holds all the issued shares in New Alinta Sub. Each of New Alinta Ltd, Alinta Mergeco Trust and New Alinta Sub are 'residents of Australia' within the meaning of that expression in subsection 6(1) of the ITAA 1936.

20. New Alinta Ltd made the choice to form a tax consolidated group comprising Alinta Mergeco Trust and New Alinta Sub, with New Alinta Ltd as the head company of that group before the implementation of the Alinta Scheme (refer to paragraphs 21 to 23 of this Ruling). New Alinta Ltd ordinary shares are listed on the ASX and commenced trading on a deferred settlement basis on 12 October 2006.

The Alinta Scheme

21. Following the formation of the New Alinta Ltd tax consolidated group the Alinta Scheme was implemented. Under the Alinta Scheme all Alinta Ltd shareholders transferred their Alinta Ltd shares to New Alinta Sub. This transfer occurred on the date described in the Alinta Scheme documentation as the 'Implementation Date', which was 25 October 2006.

22. In consideration for the transfer of their Alinta Ltd shares, each Alinta Ltd shareholder received one ordinary share in New Alinta Ltd for each Alinta Ltd share transferred to New Alinta Sub under the Alinta Scheme. These shares were issued to each Alinta Ltd shareholder by New Alinta Ltd on the Implementation Date.

23. Foreign Alinta Ltd shareholders were entitled to participate in the Alinta Scheme on the same terms as other Alinta Ltd shareholders. However certain foreign shareholders had their New Alinta Ltd ordinary shares issued to a nominee who sold the shares on their behalf.

Other matters

24. On the Implementation Date no Alinta Ltd shareholder was either a 'significant stakeholder' or 'common stakeholder' within the meaning of those terms in Subdivision 124-M.

25. Alinta Ltd was incorporated on 21 January 2000. Therefore, all ordinary shares on issue in Alinta Ltd were acquired after 20 September 1985 (that is, there are no pre-CGT Alinta Ltd shares on issue).

26. After the Alinta Scheme was completed New Alinta Ltd changed its name from Alinta Mergeco Limited to Alinta Ltd.

Ruling

CGT event A1 happens

27. CGT event A1 happened when Alinta Ltd shareholders disposed of their Alinta Ltd shares to New Alinta Sub on the Implementation Date under the Alinta Scheme (section 104-10).

28. Alinta Ltd shareholders made a capital gain from CGT event A1 happening if the capital proceeds received for the disposal of each Alinta Ltd share exceeded its cost base. Shareholders made a capital loss if those capital proceeds were less than the share's reduced cost base (subsection 104-10(4)).

29. The capital proceeds received for each Alinta Ltd share are the market value of each New Alinta Ltd ordinary share received under the Alinta Scheme (subsection 116-20(1)).

Choosing scrip for scrip roll-over

30. An Alinta Ltd shareholder can choose scrip for scrip roll-over under Subdivision 124-M provided:

(a)
 the shareholder made a capital gain from CGT event A1 happening to their Alinta shares; and
(b)
 any capital gain that may be made upon a future CGT event happening in relation to the New Alinta Ltd ordinary share they received under the scheme would not be disregarded (except because of a roll-over).

31. If an Alinta Ltd shareholder chooses scrip for scrip roll-over the capital gain arising from the disposal of their Alinta share is disregarded (subsection 124-785(1)).

Cost base of New Alinta Ltd ordinary shares

32. If an Alinta Ltd shareholder chooses scrip for scrip roll-over the first element of the cost base and reduced cost base of their New Alinta Ltd ordinary share is the cost base of the corresponding Alinta Ltd share they disposed of (subsection 124-785(2)).

Acquisition date of the New Alinta Ltd ordinary shares

33. The acquisition date of the New Alinta Ltd ordinary shares is the date they are issued to each Alinta Ltd shareholder (section 109-10).

34. For Alinta Ltd shareholders who choose scrip for scrip roll-over, the acquisition date of their New Alinta Ltd ordinary shares for CGT discount purposes is the date they acquired the corresponding Alinta Ltd shares that were disposed of for the relevant New Alinta Ltd ordinary shares (item 2 of the table in subsection 115-30(1)).

Commissioner of Taxation

13 December 2006

Appendix 1 - Explanation

Exclamation This Appendix is provided as information to help you understand how the Commissioner's view has been reached. It does not form part of the binding public ruling.

CGT event A1 happens

35. CGT event A1 in section 104-10 happens if there is a change in the ownership of an asset from one entity to another. On the disposal of the Alinta Ltd shares to New Alinta Sub, a change of ownership of Alinta Ltd shares occurred and therefore CGT event A1 happened.

Time of the event

36. The time when CGT event A1 happens determines the income year in which any capital gain or capital loss is made and whether the CGT discount applies to any capital gain.

37. Subsection 104-10(3) provides that the time CGT event A1 happens is when the person enters into a contract for the disposal of the shares, or if there is no contract, when the change of ownership occurs.

38. Under the Alinta Scheme, the disposal does not happen under a contract (see paragraph 9 of the Addendum to Taxation Determination TD 2002/4). Accordingly, Alinta Ltd shareholders disposed of their shares on the Implementation Date which was the date on which their Alinta Ltd shares were disposed of to New Alinta Sub.

Capital gain or capital loss

39. A capital gain will be made on an Alinta Ltd share if the capital proceeds from the disposal of that share were more than its cost base. A capital loss was made if the capital proceeds from the disposal were less than the share's reduced cost base (subsection 104-10(4)).

40. Subsection 116-20(1) provides that the capital proceeds from a CGT event are the total of the money and the market value of any property received or entitled to be received (worked out at the time of the event) in respect of the event happening.

41. The capital proceeds Alinta Ltd shareholders received for the disposal of an Alinta Ltd share is therefore the market value of a New Alinta Ltd ordinary share. The Commissioner accepts that the market value of a New Alinta Ltd ordinary share may be determined by reference to the ASX volume weighted average price (VWAP) of these shares on the Implementation Date.

Choosing scrip for scrip roll-over

42. Scrip for scrip roll-over enables a shareholder to disregard a capital gain from a share that is disposed of as part of a corporate takeover or merger if the shareholder receives a replacement share in exchange.

43. A capital gain is disregarded completely if the only capital proceeds the shareholder receives is a replacement share(s). If the shareholder receives some other form of capital proceeds, the capital gain is disregarded only to the extent of the shares received. The roll-over also provides that the cost base and reduced cost base of the replacement share is based on the cost base and reduced cost base of the original share at the time of the roll-over.

Requirements for scrip for scrip roll-over - Subdivision 124-M

44. Subdivision 124-M contains a number of conditions for, and exceptions to, a shareholder being eligible to choose scrip for scrip roll-over. The main conditions and exceptions that are relevant to the circumstances of the Alinta Scheme that is the subject of this Ruling are:

(i)
 shares are exchanged for shares in another company;
(ii)
 the exchange occurs as part of a single arrangement;
(iii)
 conditions for roll-over are satisfied;
(iv)
 further conditions are not applicable; and
(v)
 exceptions to obtaining scrip for scrip roll-over are not applicable.

45. These conditions are explained below.

Shares are exchanged for shares in another company

46. Subparagraph 124-780(1)(a)(i) requires an entity (an Alinta Ltd shareholder) to exchange a share in a company for a share in another company.

47. This requirement is satisfied, as under the Alinta Scheme each Alinta Ltd shareholder received ordinary shares in New Alinta Ltd in exchange for the disposal of their Alinta Ltd shares.

The exchange occurs as part of a single arrangement

48. Paragraph 124-780(1)(b) requires that shares in an entity (Alinta Ltd, the original entity) be exchanged in consequence of a single arrangement. In the context of the scrip for scrip roll-over provisions, the Alinta Scheme constitutes a single arrangement. The single arrangement must also satisfy the following conditions.

(a) 80% ownership

49. Paragraph 124-780(2)(a) requires that shares in an entity (Alinta Ltd, the original entity) be exchanged in consequence of a single arrangement that results in another entity (New Alinta Sub, the acquiring entity) becoming the owner of 80% or more of the voting shares in the original entity (Alinta Ltd).

50. Subparagraph 124-780(2)(a)(ii) provides that this requirement will be satisfied if one or more companies that are members of a wholly-owned group increase the percentage of voting shares they hold in the original entity to 80% or more.

51. Under the Alinta Scheme, 100% of the ordinary shares issued in Alinta Ltd were transferred to New Alinta Sub (including those held under Employee Share Plans), increasing the percentage of ownership interests it holds in Alinta Ltd to more than 80%. These ordinary shares satisfy the definition of 'voting share' in subsection 995-1(1).

52. Therefore, the requirements of subparagraph 124-780(2)(a)(ii) have been met under the Alinta Scheme.

(b) All voting share owners participate

53. Paragraph 124-780(2)(b) requires that the exchange of shares must be in consequence of a single arrangement in which at least all owners of voting shares in the original entity (apart from the acquiring entity or members of the acquiring entity's wholly-owned group) could participate.

54. This requirement is satisfied because all the owners of Alinta Ltd shares were entitled to participate in the Alinta Scheme.

(c) Participation is on substantially the same terms

55. Paragraph 124-780(2)(c) requires that the exchange is in consequence of a single arrangement in which participation was available on substantially the same terms for all of the owners of interests of a particular type in the original entity (Alinta Ltd).

56. This requirement is satisfied because the Alinta Scheme provided that all shareholders in Alinta Ltd were entitled to participate in the Alinta Scheme on the same terms.

57. The issue of New Alinta Ltd ordinary shares to a nominee on behalf of certain foreign Alinta Ltd shareholders does not prevent the arrangement from being on substantially the same terms for all owners of Alinta Ltd shares.

Conditions for roll-over are satisfied

58. Paragraph 124-780(1)(c) requires that the conditions for roll-over outlined in subsection 124-780(3) are met. These conditions must be met in relation to each Alinta Ltd share for which scrip for scrip roll-over is chosen.

59. The conditions in subsection 124-780(3) are as follows.

(a) The Alinta Ltd shares are post-CGT shares

60. Paragraph 124-780(3)(a) requires the original interest holder (an Alinta Ltd shareholder) to have acquired its original interest (Alinta Ltd shares) on or after 20 September 1985.

61. All Alinta Ltd ordinary shares were acquired after 20 September 1985 (see paragraph 25 of this Ruling). Therefore, this condition is met for all Alinta Ltd ordinary shares.

(b) An Alinta Ltd shareholder would otherwise make a capital gain

62. Paragraph 124-780(3)(b) requires that apart from the roll-over, the original interest holder (an Alinta Ltd shareholder) would make a capital gain from a CGT event happening in relation to its original interest (an Alinta Ltd share).

63. As explained at paragraph 39 of this Ruling, a capital gain was made on an Alinta Ltd share if the capital proceeds from the disposal of that share was more than its cost base. Therefore, whether this condition is met will depend on the individual circumstances of each Alinta Ltd shareholder.

(c) Alinta Ltd shareholders receive replacement interests in the acquiring entity or the ultimate holding company

64. Paragraph 124-780(3)(c) requires that the replacement interest is in the acquiring entity (New Alinta Sub), or in the ultimate holding company of the wholly owned group which includes the acquiring entity.

65. This requirement is satisfied as the Alinta Ltd shareholders received ordinary shares in New Alinta Ltd, which is the ultimate holding company of a wholly owned group that includes the acquiring entity (New Alinta Sub).

66. Paragraph 124-780(3)(c) is satisfied on the basis that New Alinta Ltd and New Alinta Sub are members of the same wholly owned group, as that term is defined in section 995-1. As New Alinta Ltd is not a 100% subsidiary of another company, and as New Alinta Ltd beneficially owns all of the units in Alinta Mergeco Trust, which in turn owns 100% of the shares in New Alinta Sub, New Alinta Ltd is the ultimate holding company of a wholly-owned group of which New Alinta Sub is a member, in accordance with section 975-500.

(d) An Alinta Ltd shareholder can choose scrip for scrip roll-over

67. Paragraph 124-780(3)(d) requires that the original interest holder (an Alinta Ltd shareholder) chooses roll-over, or if section 124-782 applies to it for the Alinta Scheme, it and the replacement entity jointly choose to obtain the roll-over.

68. Section 124-782 has no application to the Alinta Scheme since there are no significant stakeholders or common stakeholders under the arrangement (see paragraph 24 of this Ruling).

69. Subject to their eligibility (see paragraph 30 of this Ruling), whether an Alinta Ltd shareholder chooses to obtain roll-over in relation to the disposal of an Alinta Ltd share is a question of fact to be determined for each individual shareholder.

Further conditions are not applicable

70. Subsection 124-780(4) provides that the additional requirements in subsection 124-780(5) must be satisfied if the original interest holder (Alinta Ltd shareholder) and the acquiring entity (New Alinta Sub) did not deal with each other at arm's length and:

(a)
 neither the original entity (Alinta Ltd) nor the replacement entity (New Alinta Ltd) had at least 300 members just before the arrangement started (paragraph 124-780(4)(a)); or
(b)
 the original interest holder (Alinta Ltd shareholder), the original entity (Alinta Ltd) and the acquiring entity (New Alinta Sub) were all members of the same linked group just before the arrangement started (paragraph 124-780(4)(b)).

71. Paragraph 124-780(4)(a) does not apply because Alinta Ltd had at least 300 members just before the arrangement started. Paragraph 124-780(4)(b) does not apply as the Alinta Ltd shareholders, Alinta Ltd and New Alinta Sub were not members of the same linked group just before the arrangement commenced.

Exceptions to obtaining scrip for scrip roll-over are not applicable

72. Section 124-795 contains a number of exceptions where scrip for scrip rollover cannot be chosen. The exceptions in subsection 124-795 are as follows.

(a) Alinta Ltd shareholders are residents of Australia

73. Subsection 124-795(1) provides that a roll-over is not available if, just before the disposal, the original interest holder was a foreign resident unless, just after the acquisition of the replacement interest, the replacement entity is an Australian resident.

74. The class of entities to whom this Ruling applies is limited to Alinta Ltd shareholders who are residents of Australia at the time of the Alinta Scheme. As a consequence, the exception in subsection 124-795(1) does not apply to limit this Ruling in this regard.

(b) A capital gain cannot (apart from a roll-over) be otherwise disregarded

75. Paragraph 124-795(2)(a) provides that the roll-over is not available if any capital gain the original interest holder might make from their replacement interest would be disregarded.

76. Whether the capital gain arising because of the disposal of an Alinta Ltd share is disregarded under another provision of the ITAA 1997 (for example, the shareholder held their Alinta Ltd shares as trading stock) is a question of fact to be determined in respect of each Alinta Ltd shareholder.

77. Paragraph 124-795(2)(b) provides that roll-over is not available if the original interest holder and the acquiring entity are members of the same wholly-owned group just before the original interest holder stops owning their original interest, and the acquiring entity is a foreign resident.

78. This exception does not apply as the Alinta Ltd shareholders and New Alinta Sub were not members of the same wholly-owned group just before the Alinta Scheme was implemented. In addition, New Alinta Sub is not a foreign resident company.

(c) No roll-over is available to Alinta Ltd shareholders under either Division 122 or Subdivision 124-G

79. Subsection 124-795(3) provides that scrip for scrip roll-over is not available if a roll-over can be chosen under Division 122 or Subdivision 124-G.

80. This exception does not apply as neither of the roll-overs in Division 122 or Subdivision 124-G are available to the Alinta Ltd shareholders in respect of the disposal of their Alinta Ltd shares under the Alinta Scheme.

(d) Alinta Ltd is not a foreign resident

81. Subsections 124-795(4) and (5) provide that roll-over is not available for certain original entities that are foreign entities.

82. This exception does not apply as Alinta Ltd (the original entity) was not a foreign resident.

Consequences of choosing roll-over

Capital gain disregarded

83. Scrip for scrip roll-over enables a shareholder to disregard all or part of a capital gain from a share that is disposed of as part of a corporate takeover or merger if the shareholder receives a replacement share in exchange.

84. If the only capital proceeds the shareholder receives in respect of the disposal are replacement shares and the requisite conditions are satisfied, the capital gain is disregarded completely (subsection 124-785(1)).

85. Under the Alinta Scheme, Alinta Ltd shareholders only received New Alinta Ltd ordinary shares in respect of the disposal of their Alinta Ltd shares. Further, Alinta Ltd shareholders did not receive any ineligible proceeds (for the purposes of subsection 124-790(1)) under the Alinta Scheme. As a consequence, Alinta Ltd shareholders who choose scrip for scrip roll-over will disregard the entire amount of the capital gain made under CGT event A1 which happened on the disposal of their Alinta Ltd shares.

Cost base of New Alinta Ltd ordinary shares

If scrip for scrip roll-over is chosen

86. Subsections 124-785(2) and (4) require that where scrip for scrip roll-over is chosen, the first element of the cost base and the reduced cost base of each share received as a result of an exchange is determined by reasonably attributing to it the cost base of the original interest for which it was exchanged.

87. Therefore, where scrip for scrip roll-over is chosen, the first element of the cost base and the reduced cost base of the replacement New Alinta Ltd ordinary share that an Alinta Ltd shareholder received will be the cost base of the corresponding Alinta Ltd share which was exchanged.

88. As Alinta Ltd shareholders will not receive any ineligible proceeds under the Alinta Scheme, subsection 124-785(3) will not apply to reduce the amount of cost base of their original Alinta Ltd share that can be attributed to the replacement New Alinta Ltd ordinary share.

If scrip for scrip roll-over is not, or cannot, be chosen

89. Subsection 110-25(2) provides that the first element of the cost base of an asset is the total of:

·
 the money you paid or are required to pay in respect of acquiring it; and
·
 the market value of any other property given or required to be given in respect of acquiring it.

The market value of the property is worked out at the time of the acquisition.

90. For Alinta shareholders who do not, or cannot, choose scrip for scrip roll-over, the first element of the cost base and reduced cost base of their New Alinta Ltd ordinary shares is determined by the market value of the Alinta Ltd shares they disposed of under the Alinta Scheme.

91. The Commissioner accepts that the market value of an Alinta Ltd share disposed of under the Alinta Scheme will be the same as the market value of the New Alinta Ltd ordinary share received in exchange. The Commissioner accepts that the market value of a New Alinta Ltd ordinary share may be determined by reference to the ASX volume weighted average price (VWAP) of these shares on the Implementation Date.

Acquisition date of the New Alinta Ltd ordinary shares

92. The acquisition date of the New Alinta Ltd ordinary shares is the date they are issued (this is the same date as the Implementation Date) to each Alinta Ltd shareholder (section 109-10).

93. For Alinta Ltd shareholders who choose to obtain scrip for scrip roll-over, the acquisition date of their New Alinta Ltd ordinary shares for CGT discount purposes is the date they acquired their original Alinta Ltd shares which were disposed of in exchange for the relevant New Alinta Ltd ordinary shares (item 2 of the table in subsection 115-30(1)).

Appendix 2 - Detailed contents list

94. The following is a detailed contents list for this Ruling:

  Paragraph
What this Ruling is about 1
Relevant provision(s) 3
Class of entities 4
Qualifications 5
Date of effect 9
Withdrawal 13
Scheme 14
Background 15
Alinta Ltd 16
AGL 17
The merger transaction 18
Establishment of New Alinta Ltd consolidated group 19
The Alinta Scheme 21
Other matters 24
Ruling 27
CGT event A1 happens 27
Choosing scrip for scrip roll-over 30
Cost base of New Alinta Ltd ordinary shares 32
Acquisition date of the New Alinta Ltd ordinary shares 33
Appendix 1 - Explanation 35
CGT event A1 happens 35
Time of the event 36
Capital gain or capital loss 39
Choosing scrip for scrip roll-over 42
Requirements for scrip for scrip roll-over - Subdivision 124-M 44
Shares are exchanged for shares in another company 46
The exchange occurs as part of a single arrangement 48
(a) 80 % ownership 49
(b) All voting share owners participate 53
(c) Participation is on substantially the same terms 55
Conditions for roll-over are satisfied 58
(a) The Alinta Ltd shares are post-CGT shares 60
(b) An Alinta Ltd shareholder would otherwise make a capital gain 62
(c) Alinta Ltd shareholders receive replacement interests in the acquiring entity or the ultimate holding company 64
(d) An Alinta Ltd shareholder can choose scrip for scrip roll-over 67
Further conditions are not applicable 70
Exceptions to obtaining scrip for scrip roll-over are not applicable 72
(a) Alinta Ltd shareholders are residents of Australia 73
(b) A capital gain cannot (apart from a roll-over) be otherwise disregarded 75
(c) No roll-over is available to Alinta Ltd shareholders under either Division 122 or Subdivision 124-G 79
(d) Alinta Ltd is not a foreign resident 81
Consequences of choosing roll-over 83
Capital gain disregarded 83
Cost base of New Alinta Ltd ordinary shares 86
If scrip for scrip roll-over is chosen 86
If scrip for scrip roll-over is not, or cannot, be chosen 89
Acquisition date of the New Alinta Ltd ordinary shares 92
Appendix 2 - Detailed contents list 94

Not previously issued as a draft



References

ATO references:
NO  2006/24838

ISSN: 1445-2014

Related Rulings/Determinations:
TD 2002/4

Subject References:
arrangement
capital proceeds
CGT event
company
cost base
interests
merger
ordinary share
original interest
replacement interest
resident
roll-over
roll-over relief
scrip
scrip for scrip
share
shareholder

Legislative References:
ITAA 1936 6(1)
ITAA 1997 104-10
ITAA 1997 104-10(3)
ITAA 1997 104-10(4)
ITAA 1997 109-10
ITAA 1997 110-25(2)
ITAA 1997 115-30(1)
ITAA 1997 116-20(1)
ITAA 1997 Div 122
ITAA 1997 Subdiv 124-G
ITAA 1997 Subdiv 124-M
ITAA 1997 124-780(1)(a)(i)
ITAA 1997 124-780(1)(b)
ITAA 1997 124-780(1)(c)
ITAA 1997 124-780(2)(a)
ITAA 1997 124-780(2)(a)(ii)
ITAA 1997 124-780(2)(b)
ITAA 1997 124-780(2)(c)
ITAA 1997 124-780(3)
ITAA 1997 124-780(3)(a)
ITAA 1997 124-780(3)(b)
ITAA 1997 124-780(3)(c)
ITAA 1997 124-780(3)(d)
ITAA 1997 124-780(4)
ITAA 1997 124-780(4)(a)
ITAA 1997 124-780(4)(b)
ITAA 1997 124-780(5)
ITAA 1997 124-782
ITAA 1997 124-785(1)
ITAA 1997 124-785(2)
ITAA 1997 124-785(3)
ITAA 1997 124-785(4)
ITAA 1997 124-790(1)
ITAA 1997 124-795
ITAA 1997 124-795(1)
ITAA 1997 124-795(2)(a)
ITAA 1997 124-795(2)(b)
ITAA 1997 124-795(3)
ITAA 1997 124-795(4)
ITAA 1997 124-795(5)
ITAA 1997 975-500
ITAA 1997 995-1
ITAA 1997 995-1(1)
TAA 1953
TAA 1953 Sch 1 357-75(1)
Copyright Act 1968

CR 2006/124 history   Top  
   Date   Version   Change 
 You are here ®   1 July 2006   Original ruling   
    1 July 2007   Withdrawn   


 


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