In the 2011-12 Federal Budget, the government announced a series of minor amendments to the income tax law to ensure the proper functioning of capital gains tax (CGT).
The amendments ensure that the roll-over for the exchange of shares in one company for shares in another company operates properly so that if the original shares are held on revenue account at the time of the exchange, the profit or loss will be deferred. This change will have effect from 7.30pm (AEST) on 10 May 2011.
The changes also amend the roll-over for certain disposals of assets by a trust, allowing roll-over relief to apply where a transferee company or trust holds rights, just before the disposal or transfer time, associated with a deed or similar document (that is designed to facilitate the transfer of assets into the company or trust). The changes to the roll-over for the:
- disposal of assets by a trust to a company will have effect for CGT events happening after 7.30pm AEST on 10 May 2011
- transfer of assets between certain trusts will have effect for CGT events happening on or after 1 November 2008.
As part of the Mid-Year Economic and Fiscal Outlook (MYEFO) 2011-12, the government announced further amendments to make it easier for unit trusts to restructure their affairs in cases where they interpose a company, so that taxpayers hold shares in the company rather than units in the trust. The government will do this by allowing taxpayers who hold units in the trust as revenue assets or trading stock to defer the realisation of a profit or loss on their units until they dispose of the replacement shares. This measure will have effect from 7.30pm (AEST) on 10 May 2011.
In the 2012-13 Budget, the government announced further changes to broaden the scope and ensure the efficient operation of the revenue asset and trading stock roll-overs for the exchange of:
- shares in one company for shares in another company
- units in a unit trust for shares in a company.
These changes will apply from 7.30pm (AEST) on 8 May 2012.
Draft legislation and Explanatory Memorandum were released on 12 October 2012.
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We will accept tax returns as lodged during the period up until enactment of the legislation.
After the new law is enacted, you will need to review your position. If you:
- chose roll-over relief which is consistent with the changes, you do not need to do anything more
- did not choose roll-over relief you can seek amendments and if there is a reduction in your liability we will pay interest on the overpayment
- chose to anticipate the roll-over relief, but find that this is not consistent with the changes, you will need to seek amendments.
In these cases, we will not apply tax shortfall penalties and we will remit any interest accrued to the base interest rate up to the date of enactment of the law change. In addition, we will remit any interest in excess of the base rate accruing after the date of enactment where taxpayers actively seek to amend assessments within a reasonable timeframe after enactment.
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More information
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Last Modified: Wednesday, 28 November 2012