Supplementary Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon Peter Costello MP)
Chapter 1 - Amendment 1 to Schedule 5 - relief for employee share scheme participants in the event of a corporate restructure
1.1 Amendment 1 amends Schedule 5 to change the commencement date to 1 July 2004. Schedule 5 ensures that when an employee is issued new shares or rights as a result of a corporate restructure, they will be able to treat them as a continuation of their old shares or rights. This ensures that a taxing point does not arise for the employee. It also ensures continuity of treatment for capital gains tax purposes.
1.2 It was originally proposed that the measure apply to corporate restructures which occur on or after Royal Assent. This amendment will ensure that employee share scheme participants involved in a corporate restructure on or after 1 July 2004 are eligible for the relief. The new date of effect also aligns with the date of effect for recent measures to provide relief for employee share scheme participants in a restructure contained in Tax Laws Amendment (2004 Measures No. 7) Act 2005 .
1.3 Although this amendment will result in the employee share scheme amendments having retrospective effect, it enables more employee shareholders who have recently experienced a corporate restructure to benefit from the measure.
1.4 The amendment made by this Schedule will commence on Royal Assent of the Tax Laws Amendment (Loss Recoupment Rules and Other Measures) Bill 2005.