124-240 Exchange of shares in the same company
124-245 Exchange of units in the same unit trust
124-240 Exchange of shares in the same company
You can choose to obtain a roll-over if:
(a) you own *shares (the original shares) of a certain class in a company; and
(b) the company redeems or cancels all shares of that class; and
(c) the company issues you with new shares (and you receive nothing else) in substitution for the original shares; and
(d) the market value of the new shares just after they were issued is at least equal to the market value of the original shares just before they were redeemed or cancelled; and
(e) the total paid up capital of the company just after the new shares were issued is the same as just before the original shares were redeemed or cancelled; and
(f) one of these requirements is satisfied:
(i) you are an Australian resident at the time of the redemption or cancellation; or
(ii) if you are not an Australian resident at that time—the original shares have the *necessary connection with Australia.
Note 1: The roll-over consequences are set out in Subdivision 124-A. The original assets are the original shares. The new assets are the new shares.
Note 2: Section 103-25 tells you when you have to make the choice.
124-245 Exchange of units in the same unit trust
You can choose to obtain a roll-over if:
(a) you own units (the original units) of a certain class in a unit trust; and
(b) the trustee redeems or cancels all units of that class; and
(c) the trustee issues you with new units (and you receive nothing else) in substitution for the original units; and
(d) the market value of the new units just after they were issued is at least equal to the market value of the original units just before they were redeemed or cancelled; and
(e) this requirement is satisfied:
(i) you are an Australian resident at the time of the redemption or cancellation; or
(ii) if you are not an Australian resident at that time—the original units have the *necessary connection with Australia.
Note: The roll-over consequences are set out in Subdivision 124-A. The original assets are the original units. The new assets are the new units.
124-295 Exchange of rights or option to acquire shares in a company
124-300 Exchange of rights or option to acquire units in a unit trust
124-295 Exchange of rights or option to acquire shares in a company
(1) You can choose to obtain a roll-over if:
(a) you own rights (the original rights) to *acquire *shares in a company or to acquire an option to acquire *shares in a company; or
(b) you own an option (the original option) to acquire *shares in a company;
and these other requirements are satisfied.
Note: Section 103-25 tells you when you have to make the choice.
(2) The
*shares must:(a) be consolidated and divided into new shares of a larger amount; or
(b) be subdivided into new shares of a smaller amount.
(3) The company must cancel the original rights or original option because of the consolidation or subdivision.
(4) The company must:
(a) issue you with new rights (relating to the new
(b) issue you with a new option (relating to the new shares) in substitution for the original option.
(5) You must receive nothing else in substitution for the original rights or original option.
(6) The market value of the new rights or new option just after it was issued must be at least equal to the market value of the original rights or original option just before it was cancelled.
(7) One of these requirements must be satisfied:
(a) you must be an Australian resident at the time of the cancellation; or
(b) if you are not an Australian resident at that time—the original rights or original option have the
Note: The roll-over consequences are set out in Subdivision 124-A. The original asset is the original rights or original option. The new asset is the new rights or new option.
124-300 Exchange of rights or option to acquire units in a unit trust
(1) You can choose to obtain a roll-over if:
(a) you own rights (the original rights) to *acquire units in a unit trust or to acquire an option to acquire units in a unit trust; or
(b) you own an option (the original option) to acquire units in a unit trust;
and these other requirements are satisfied.
Note: Section 103-25 tells you when you have to make the choice.
(2) The units must:
(a) be consolidated and divided into new units of a larger amount; or
(b) be subdivided into new units of a smaller amount.
(3) The trustee must cancel the original rights or original option because of the consolidation or subdivision.
(4) The trustee must:
(a) issue you with new rights (relating to the new units) in substitution for the original rights; or
(b) issue you with a new option (relating to the new units) in substitution for the original option.
(5) You must receive nothing else in substitution for the original rights or original option.
(6) The market value of the new rights or new option just after it was issued must be at least equal to the market value of the original rights or original option just before it was cancelled.
(7) One of these requirements must be satisfied:
(a) you must be an Australian resident at the time of the cancellation; or
(b) if you are not an Australian resident at that time—the original rights or original option have the
Note: The roll-over consequences are set out in Subdivision 124-A. The original asset is the original rights or original option. The new asset is the new rights or new option.
Subdivision 124-G—Exchange of shares in one company for shares in another company
124-350 What this Subdivision is about
This Subdivision sets out when you can obtain a roll-over if:
· you own shares in a company; and
· there is a reorganisation of its affairs so that you become the owner of new shares in another company.
124-355 Summary of rules
Disposal case
124-360 Disposal of shares in one company for shares in another one
124-365 Other requirements to be satisfied
Redemption or cancellation case
124-370 Redemption or cancellation of shares in one company for shares in another one
124-375 Other requirements to be satisfied
Rules applying to both cases
124-380 Requirements to be satisfied in both cases
Consequences for the interposed company
124-385 Consequences for the interposed company
(1) This Subdivision deals with 2 cases in which you can choose to obtain a roll-over because of the reorganisation of a company’s affairs.
Note: Section 103-25 tells you when you have to make the choice.
(2) The first case is if you dispose of shares in one company to another company and the other company issues you with new shares. You can find the specific rules relevant to this case in sections 124-360 and 124-365.
(3) The second case is if your shares in one company are redeemed or cancelled and another company issues you with new shares in return. You can find the specific rules relevant to this case in sections 124-370 and 124-375.
(4) There are some rules that apply in both cases: see section 124-380.
(5) There are also consequences for the other company if you can choose to obtain the roll-over: see section 124-385.
[This is the end of the Guide.]
124-360 Disposal of shares in one company for shares in another one
You can choose to obtain a roll-over if:
(a) you are a *member of a company (the original company); and
(b) you and at least one other entity (the exchanging members) own all the *shares in it; and
(c) under a *scheme for reorganising its affairs, the exchanging members *dispose of all their shares in it to another company (the interposed company) in exchange for shares in the interposed company (and nothing else);
and the requirements in sections 124-365 and 124-380 are satisfied.
Note: The roll-over consequences are set out in Subdivision 124-A. The original assets are your shares in the original company. The new assets are your new shares in the interposed company.
124-365 Other requirements to be satisfied
(1) The interposed company must own all the *shares in the original company just after all the exchanging members have *disposed of their shares in the original company (the completion time).
(2) Just after the completion time, each exchanging member must own:
(a) a whole number of *shares in the interposed company; and
(b) a percentage of the *shares in the interposed company that were issued to all the exchanging members that is equal to the percentage of the shares in the original company (that were *disposed of to the interposed company) that the member owned.
(3) The ratio of:
• the market value of each exchanging member’s *shares in the interposed company to the market value of the shares in the interposed company issued to all the exchanging members (worked out just after the completion time);
must equal the ratio of:
• the market value of that member’s shares in the original company that were *disposed of to the interposed company to the market value of all the shares in the original company that were disposed of to the interposed company (worked out just before the first disposal).
Example: There are 100 shares in A Pty Ltd (the original company), all having the same rights. B Pty Ltd (the interposed company) acquires all the shares in A by issuing each shareholder in A 10 shares in itself for each share they have in A. All shares in B have the same rights. Bill owned 15 shares in A and received 150 shares in B in exchange.
(4) Either:
(a) you are an Australian resident at the time you
(b) if you are not an Australian resident at that time—your
*shares in the original company have the *necessary connection with Australia.Redemption or cancellation case
124-370 Redemption or cancellation of shares in one company for shares in another one
(1) You can choose to obtain a roll-over if you are a *member of a company (the original company) and under a *scheme for reorganising its affairs:
(a) another company (the interposed company) *acquires no more than 5 *shares in the original company; and
(b) these are the first shares that the interposed company acquires in the original company; and
(c) you and at least one other entity (the exchanging members) own all the remaining shares in the original company; and
(d) the original company redeems or cancels those remaining shares; and
(e) each exchanging member receives shares (and nothing else) in the interposed company in return for their shares in the original company being redeemed or cancelled;
and the requirements in sections 124-375 and 124-380 are satisfied.
Note: The roll-over consequences are set out in Subdivision 124-A. The original assets are your shares in the original company. The new assets are your new shares in the interposed company.
(2) The original company can issue other
*shares in itself to the interposed company as part of the scheme.Note: Some of the interposed company’s shares in the original company may be taken to be acquired before 20 September 1985: see section 124-385.
124-375 Other requirements to be satisfied
(1) The interposed company must own all the *shares in the original company just after all the exchanging members have had their shares in the original company redeemed or cancelled (the completion time).
(2) Just after the completion time, each exchanging member must own:
(a) a whole number of *shares in the interposed company; and
(b) a percentage of the *shares in the interposed company that were issued to all the exchanging members that is equal to the percentage of the shares in the original company (that were redeemed or cancelled) that the member owned.
(3) The ratio of:
• the market value of each exchanging member’s *shares in the interposed company to the market value of the shares in the interposed company issued to all the exchanging members (worked out just after the completion time);
must equal the ratio of:
• the market value of that member’s shares in the original company that were redeemed or cancelled to the market value of all the shares in the original company that were redeemed or cancelled (worked out just before the first redemption or cancellation).
Example: There are 100 shares in X Pty Ltd (the original company), all having the same rights. X issues 2 shares to Y Pty Ltd (the interposed company) and cancels all other shares in itself. Y issues each shareholder in X 10 shares in itself for each share they had in X. All shares in Y have the same rights. Wil owned 10 shares in X and received 100 shares in Y in exchange.
(4) Either:
(a) you are an Australian resident at the time your
(b) if you are not an Australian resident at that time—your
*shares in the original company have the *necessary connection with Australia.124-380 Requirements to be satisfied in both cases
(1) The *shares issued in the interposed company must not be *redeemable shares.
(2) Each exchanging member who is issued *shares in the interposed company must own the shares from the time they are issued to the completion time.
(3) Just after the completion time:
(a) the exchanging members must own all the *shares in the interposed company; or
(b) entities other than those members must own no more than 5 *shares in the interposed company and the market value of those shares expressed as a percentage of the market value of all the shares in the interposed company is such that it is reasonable to treat the exchanging members as owning all the shares.
(4) The original company and interposed company must be Australian residents at the completion time.
Choice to be made by interposing company
(5) The interposed company must choose that section 124-385 apply. It must make its choice within 2 months after the completion time, or within such further time as the Commissioner allows.
Note: This is an exception to the general rule about choices in section 103-25.
Consequences for the interposed company
124-385 Consequences for the interposed company
(1) A whole number of the *shares that the interposed company owns in the original company (just after the completion time) are taken to have been *acquired before 20 September 1985 if any of the original company’s assets as at the completion time were acquired by it before that day.
Note: Generally, a capital gain or capital loss you make from a CGT asset that you acquired before 20 September 1985 can be disregarded: see Division 104.
(2) The number (worked out as at the completion time) is the greatest possible that (when expressed as a percentage of all the
*shares) does not exceed:
expressed as a percentage of:
(3) The first element of the
*cost base of the interposed company’s *shares in the original company that are not taken to have been *acquired before 20 September 1985 is:
less:
(4) The first element of the
*reduced cost base of the interposed company’s *shares is worked out similarly.(5) A liability of the original company that is not a liability in respect of a specific asset or assets of the company is taken to be a liability in respect of all the assets of the company.
Note: An example is a bank overdraft.
(6) If a liability is in respect of 2 or more assets, the proportion of the liability that is in respect of any one of those assets is equal to:
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