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The ATO has published a Decision Impact Statement on the decision of the Full Court of the Federal Court in FCT v Fabig [2013] FCAFC 99.

The case concerned whether partial scrip-for-scrip rollover relief was available to the taxpayers in relation to their exchange of shares in one company for those in another, where the consideration received by them was disproportionate to their shareholding.

The Full Court of the Federal Court (Edmonds, Griffiths and Davies JJ) upheld the Commissioner’s appeals from the decisions of the AAT in Dickinson and FCT [2013] AATA 25 (21 January 2013) and Fabig and FCT [2013] AATA 26 (21 January 2013).

In the view of the ATO, the decision does not impact upon the Commissioner’s practices. In applying s 124-780(2)(c) of the Income Tax Assessment Act 1997, the ATO will evaluate whether participation was available on substantially the same terms by reference to the arrangement in question and also, consistent with Justice Davies’ judgment in the Full Court (at [25]), other matters beyond the arrangement itself. This will include, in appropriate cases, any Shareholders’ Agreement.

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