Miscellaneous 2020

Has the ATO created a demergency?

Source: The Tax Specialist Journal Article

Published Date: 1 Oct 2020


This article considers the ATO's views on the meaning of the term restructuring in the context of the demerger tax rules. As explained in the article, the ATO's interpretation is inconsistent with the long line of Australian and English cases that construe the related words reconstruction and reorganisation, the evident (and express) object of the demerger tax rules, the context in which the term appears and the broader structure of the tax legislation. Despite the evident deficiencies in the ATO's views, the practical reality for public market demerger transactions is that the ATO's interpretation of the law is, for all intents and purposes, the law. The need for legislative intervention is clear, and the ongoing review by the Board of Taxation of capital gains tax roll-overs provides an opportune setting for independent review and rectification.

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Miscellaneous 2020

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