• For members of the demerger group

    There are three possible consequences for a demerger group that undertakes an eligible demerger:

    1. Capital gains or capital losses are disregarded if they arise under the following CGT events happening to the group's interests in the demerged entity:
      1. disposal (CGT event A1)
      2. cancellation (CGT event C2)
      3. ending of an option to acquire a share (CGT event C3), or
      4. capital gain made on certain pre-CGT shares or trust interests (CGT event K6).
       
    1. CGT event J1 (company stops being a member of a wholly owned group after rollover) does not happen to any member of the demerger group.
    2. Certain adjustments are required to be made to capital losses or the reduced cost base of assets retained in the group where the market value of those assets is reduced because the demerger shifts value out of those assets.

    No other cost base adjustments

    If the cost bases have been adjusted under the demerger provisions, no other adjustments are to be made as a result of the demerger (for example, under the general value shifting rules).

      Last modified: 03 Feb 2016QC 17023