11 May 10 Changes to CGT to make it easier for businesses to restructure
The Government will introduce legislation to make amendments to the CGT provisions to improve the ability of businesses to restructure.
The Government will:
- extend the CGT rollover for the conversion of a body to an incorporated company;
- make the share sale facility exclusion more broadly available for CGT rollovers; and
- allow CGT demerger relief for certain demerger groups that currently cannot access the relief.
The three measures will apply to CGT events happening after 7.30 pm (AEST) on 11 May 2010.
In relation to the first change, the Government will amend the CGT rollover rules to allow Indigenous incorporated bodies to convert to a company incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act) without immediate CGT consequences. Also, Indigenous companies will be able to move between the Corporations Act 2001 and the CATSI Act without CGT consequences.
In relation to the second amendment, the Government will allow Australian interest holders access to a broader range of CGT rollovers where an entity restructures using a share or interest sale facility for foreign interest holders. Currently, where a business restructures and it uses a share or interest sale facility for foreign interest holders, Australian resident interest holders are unable to access some CGT rollovers.
The share sale facility exclusion that currently operates in limited circumstances for Authorised Deposit-taking Institutions will be extended to operate more broadly for other entities and for other relevant CGT rollovers.
In relation to the third change, the Government will amend the CGT demerger relief provisions to allow another member of a demerger group to qualify as the head entity of the group where the existing head entity cannot demerge its interests in the demerger group. The measure will correct a defect in the current legislation that prevents demerger groups from accessing demerger relief where the head entity is a corporation sole or a complying superannuation entity.
For more information, see the Assistant Treasurer's media release, No 2010/90, 11 May 2010.