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08 Dec 1010 Discussion Paper on tax relief for consolidated groups that undertake demergers

In media release No 2010/021 issued 7 December 2010, the Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten, announced the release of a Discussion Paper on changes to the income tax law that will alleviate tax consequences that arise when a consolidated group or ME group restructures by undertaking a demerger.

If a consolidated group or MEC group restructures by undertaking a demerger and the demerged entities form a new group, then:

  • Any capital gain that would otherwise arise because a demerged entity has net liabilities at the time of a demerger will be disregarded
  • The tax costs of assets held by subsidiary members of the new group will be retained.

These changes will apply to demergers that take place after 9 November 2010; that is, after the date that the changes were announced in the Mid-Year Economic and Fiscal Outlook 2010-11.

Submissions on the Discussion Paper are requested by Friday, 28 January 2011.


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