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Demerger relief rules: What constitutes a “restructuring”?


With the release of TD 2020/6 and the accompanying public advice and guidance compendium, TD 2020/6EC, the A TO has finalised its position regarding the meaning of the word “restructuring” for the purposes of s 125-70(1) ITAA97 in the demerger relief rules. As expected, the ATO has maintained the views previously expressed in TD 2019/D1, which have been criticised for not reflecting the policy objectives of the demerger relief rules. The ATO does not accept that its interpretation of the demerger relief rules has become more restrictive, yet considers the new guidance should provide more transparency, consistency and clarity around the ATO’s views of demerger relief. Absent a legislative fix, the authors expect that TD 2020/6 will make it more difficult to obtain demerger relief in all but the most plain and vanilla demerger transactions in the future, impeding transaction structures that would otherwise facilitate commercial objectives such as capital raisings.

Author profiles

Cameron Blackwood ATI
Cameron brings more than a decade of transactional tax expertise to his role as Director in Greenwoods & Herbert Smith Freehills’ Sydney office. He specialises in advising clients on the tax complexities of mergers, acquisitions and restructures, including cross-border issues and all aspects of employee share schemes, and regularly works in close collaboration with Herbert Smith Freehills. After joining Greenwoods & Herbert Smith Freehills as a graduate in 2004, Cameron built his corporate experience advising companies on a wide range of advisory and compliance matters, including a secondment to BHP Billiton. His industry knowledge is broad and includes the mining, real estate and financial services sectors. Cameron is a member of The Tax Institute’s Large Business and International Committee and the NSW Technical Committee. He holds a Bachelor of Business (Hons) and Bachelor of Laws (Hons) from the University of Technology Sydney, and a Master of Taxation from the University of Sydney. Cameron is admitted as a solicitor in New South Wales. - Current at 30 November 2020
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Alistair Haskett FTI
Alistair is an Associate in the Melbourne office of Greenwoods & Herbert Smith Freehills. He joined Greenwoods in 2017 after completing the graduate program at leading global law firm, Herbert Smith Freehills. Alistair advises on a wide range of tax matters in the context of mergers and acquisitions, privatisations, projects and disputes across various industry sectors including infrastructure and financial services. - Current at 22 October 2020
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