• Rollover relief conditions

    From 1 July 2006 the ESS rules, and related capital gains tax treatment, will apply to certain stapled securities that include an ordinary share (acquired after 30 June 2006), and are listed for quotation on the official list of the Australian Securities Exchange.

    If you acquire qualifying ESS interests (ESS interests that meet certain qualifying conditions), you will not be required to declare the discount on those ESS interests as assessable income until cessation time (up to 10 years from the date of acquisition – earlier if certain events happen). Alternatively, you can elect to declare the discount as income in the year in which you acquired the ESS interests.

    The rules are different depending on when you acquired your ESS interests and when the takeover or restructure affecting them occurred.

    Acquisition before 1 July 2009, takeover or restructure before 1 July 2009

    Where you have not elected to declare the discount at acquisition and a cessation time has not already occurred in relation to your ESS interests in the old company, you can receive rollover relief where a corporate takeover or restructure results in those ESS interests being replaced by ESS interests in the new company. Rollover relief applies if your replacement ESS interests:

    • match the ESS interests in the old company, and
    • meet certain conditions.

    Your replacement ESS interests in the new company that are matching ESS interests are treated as if they are a continuation of your ESS interests in the old company. You can continue to defer declaring the discount as income for up to 10 years after the time you acquired the original ESS interests in the old company.

    Acquisition after 30 June 2009, takeover or restructure after 30 June 2009

    If you acquire ESS interests, you are required to report the discount as income received at acquisition. However, where specified criteria are met, you may be eligible to defer declaring the discount. The discount on those ESS interests will be reported at a deferred taxing point.

    If you have deferred declaring the discount as income and a deferred taxing point has not already occurred in relation to your ESS interests in the old company, you can receive rollover relief where a corporate takeover or restructure results in those ESS interests being replaced by ESS interests in the new company. Rollover relief applies if your replacement ESS interests:

    • match the ESS interests in the old company, and
    • meet certain conditions under the new ESS provisions.

    Your replacement ESS interests in the new company that are matching ESS interests are treated as if they are a continuation of your ESS interests in the old company.

    You can continue to defer declaring the discount as income for up to 15 years (seven years for ESS interests acquired before 1 July 2015) after you acquired the original shares or rights in the old company.

    Acquistion before 1 July 2009, takeover or restructure after 30 June 2009

    Where a takeover or restructure occurs after 30 June 2009 to ESS interests acquired before 1 July 2009, follow the rules for ESS interests acquired after 30 June 2009.

      Last modified: 01 Jul 2015QC 27176