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Has the ATO created a demergency?

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Published on 01 Oct 20 by "THE TAX SPECIALIST" JOURNAL ARTICLE

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.

Author profiles

Joe Power
Jayshil Prasad ATI
Jay Prasad is a Senior Associate in the tax group at Allens. Jay routinely advises on the income tax aspects of transactions and on tax disputes. He is particularly experienced in advising clients on large infrastructure projects and cross border investments. - Current at 18 June 2018
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