26 Jun 07 Minister announces rights changes to reverse McNeilIn a press release issued on 26 June 2007, the Minister for Revenue and Assistant Treasurer, Peter Dutton, announced amendments to the income tax law to restore the long-standing taxation treatment of rights issues.
“Shareholders issued with rights by companies seeking to raise capital will not have an income tax liability at the time of issue. Instead, the long-standing position to treat rights issues on capital account will be maintained”, Mr Dutton said.
Some consequential amendments will be made to the capital gains tax rules to ensure that rights issued by companies are treated consistently.
“These amendments will provide certainty for taxpayers by restoring the taxation treatment of rights issues that existed before the decision of the High Court of Australia in FCT v McNeil  HCA 5”, Mr Dutton said.
The amendments will apply from the 2001-02 income year. This will prevent any adverse application of McNeil’s case to companies and their shareholders. The Government will consult with stakeholders on the development of legislation to implement the changes.
For a copy of the Minister's press release, No 2007/074, 26 June 2007, go here