CGT and business restructures - share or interest sale facilities for foreign interest holders in a restructure

Introduction

The capital gains tax (CGT) law has been amended to ensure that entities that restructure can use a share or interest facility to deal with foreign held interests without Australian tax residents automatically failing a key requirement of certain CGT rollovers.

The changes apply to CGT events happening after 7.30 pm (by legal time in the Australian Capital Territory) on 11 May 2010.

Under the new law, an interest holder is considered to be foreign where the issuing of an interest to that interest holder would be subject to foreign law. This means that a foreign interest holder could also be an Australian resident for tax purposes or could own taxable Australian property.