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22 Jan 1313 Div 124-M scrip for scrip roll-over relief available - Dickinson and Fabig

The AAT has held that scrip for scrip roll-over relief under Div 124-M of ITAA 1997 was available to the taxpayers in relation to the sale of shares in one company (iMega) for cash and shares in the acquiring company (Photon), notwithstanding the fact that the proportion of cash and shares that each of the taxpayers received from or in the acquiring company was different to the value of shares that they held in the original company.

For roll-over relief to be available, each exchange must be in consequence of a single arrangement, where that arrangement is one in which participation was available on substantially the same terms for all of the owners of interests of a particular type in the original entity. The shareholders (including the taxpayers) had entered into a Shareholders Agreement which provided that the consideration for any sale would be split between them in proportions different to their respective shareholdings. The Commissioner argued that this meant that the shareholders' participation was not on substantially the same terms.

In finding for the taxpayers, the AAT said:

"In terms of the relevant legislation, Photon was making available an offer to all the Shareholders for all the shares in iMega. That offer was available to all Shareholders on the same terms. How it would be accepted was entirely a matter for the Shareholders who could accept and did so on terms that would give some Shareholders more and others less consideration. So long as the total amount did not exceed the amount Photon was willing to pay, Photon was indifferent as to the allocation of the consideration among the Shareholders. The fact that the Shareholders decided to take the offer on the basis that more consideration would be paid to some Shareholders and less to others does not detract from the fact that participation was 'available' on substantially the same terms to all Shareholders."

  • Dickinson and FCT [2013] AATA 25 (AAT, Professor Deutsch DP, 21 January 2013)
  • Fabig and FCT [2013] AATA 26 (AAT, Professor Deutsch DP, 21 January 2013)


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