This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.
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A demerger involves the restructuring of a corporate or fixed trust group by splitting its operations into two or more entities or groups. Under a demerger the owners of the head entity of the group (that is, the shareholders of the company or unit holders of the trust) acquire a direct interest (shares or units) in an entity that was formerly part of the group.
If you owned interests in a company or fixed trust that is the head entity of a demerger group and you received new interests in the demerged company or trust, you may be entitled to a demerger rollover.
Generally, the head entity undertaking the demerger will advise whether you are entitled to roll-over but you should seek our advice if you are in any doubt. The Tax Office may have provided advice in the form of a class ruling on a specific demerger confirming that a rollover is available. You can find out by visiting our website at ato.gov.au
Even if you do not choose a rollover, you must recalculate the cost base and reduced cost base of each of your original interests in the head entity and your new interests in the demerged entity.
Our website has a demergers calculator to help you make these calculations. It also has other products and information to help you, such as question and answer sheets. You can access these from the demergers homepage at ato.gov.au/demergers (follow the link under 'Shareholder information').
Last modified: 04 Mar 2016QC 19437