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13 May 08 Modify the scrip for scrip roll over provisions for corporate restructures

The Government will modify the scrip for scrip capital gains tax roll over provisions to ensure that, for corporate restructures, the acquiring entity’s cost base of shares in the target entity reflects the tax costs of the target entity’s net assets, with effect from 7.30 pm (AEST) on 13 May 2008. This cost base will also be used in determining the value of the target entity’s assets in consolidation if the target entity subsequently joins the acquiring entity’s consolidated group. This measure has an ongoing unquantifiable revenue impact.

Under the current provisions, the acquiring entity obtains a market value cost base for the shares it acquires in the target entity. This can result in significant unintended tax benefits arising if, for example, the target entity subsequently joins the acquiring entity’s consolidated group. The measure will prevent companies from obtaining unintended tax benefits if they restructure.

For a copy of the Assistant Treasurer's press release, No 2008/33, 13 May 2008, go here

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