Extension of the capital gains tax roll-over for conversion of a body to an incorporation

As part of the 2010-2011 Federal Budget, the government announced an extension of the capital gains tax roll-over to include incorporated bodies converting to the Corporations (Aboriginal and Torres Strait Islander) Act 2006 and transfers of incorporation from the Corporations Act 2001 to the Corporations (Aboriginal and Torres Strait Islander) Act 2006 without immediate capital gains tax consequences.

The change allows for roll-over where an incorporated body is to be wound up and then subsequently reincorporated under a different corporations law (that is, the Corporations (Aboriginal and Torres Strait Islander) Act 2006 or the Corporations Act 2001 or similar foreign law). This includes providing a roll-over for any gains or losses realised by the original entity when it ceased to own its capital gains tax assets, trading stock, and depreciating and revenue assets that become assets of the newly incorporated entity as part of the reincorporation.

The second element of the change reduces the current limitations in respect of the transfer of rights in an incorporated body. This change allows a taxpayer to receive shares on incorporation that reflect all of the interests and rights they held in the body prior to the transfer of incorporation.

This measure received royal assent on 21 March 2012 and takes effect from 7.30pm AEST on 11 May 2010.

Media release

For more information, refer to:

• media release 090 issued by Senator the Hon Nick Sherry on 11 May 2010
• 2010-2011 Budget - Paper 2, part one.

Legislation and supporting material

• Tax Laws Amendment (2011 Measures No.9) Act 2012
• Explanatory Memorandum

Administrative treatment If a taxpayer has self-assessed under the previous law, they may need to seek an amendment. If this leads to a reduction in tax payable, we will pay interest on any overpayment of tax. If taxpayers have self-assessed by anticipating the change they will not need to do anything more.