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With effect from 7.30pm (AEST) on 11 May 2010, amendments were made to the CGT demerger provisions, so that demerger groups which currently include corporations sole or a complying super entity can benefit from the CGT demerger roll-over, by allowing another entity to be the head entity of such demerger groups.

The amendments were made by the Tax Laws Amendment (2011 Measures No 9) Act 2012, which received the Royal Assent on 21 March 2012.

The ATO has announced its proposed administrative treatment of these amendments.

The ATO accepted tax returns as lodged during the period up until enactment of the legislation. Assessments were not subject to review until the outcome of the proposed amendment was known.

As the new law is now enacted, taxpayers will need to review their positions:

  • Those taxpayers who chose roll-over relief which accords with the changes do not need to do anything more.
  • Those taxpayers who did not choose roll-over relief can seek amendments and, if a reduction in liability results, interest on overpayment will be paid.
  • Those taxpayers who chose to anticipate the roll-over relief, but find that this does not accord with the changes will need to seek amendments.

In these cases no tax shortfall penalties will be applied and any interest accrued will be remitted to the base interest rate up to the date of enactment (21 March 2012) of the law change. In addition, any interest in excess of the base rate accruing after 21 March 2012 will be remitted where taxpayers actively seek to amend assessments within a reasonable timeframe after 21 March 2012.

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