ATO Interpretative Decision
ATO ID 2002/17 (Withdrawn)
Goods and Services Tax
GST and the amalgamation of two companiesFOI status: may be released
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This ATO ID is a straight application of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is entity A, a company, making a supply that is not a taxable supply pursuant to section 90-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it makes a supply of its assets to another company, entity B, in the course of an amalgamation with entity B?
Decision
Yes, entity A is making a supply that is not a taxable supply pursuant to section 90-5 of the GST Act when it makes a supply of its assets to another company, entity B, in the course of an amalgamation with entity B.
Facts
Entity A is a company. Entity A is amalgamating with another company, entity B. In the course of the amalgamation, entity A supplies all of its assets to entity B.
Entity B will be the single company that results from the amalgamation. Entity B is registered for goods and services tax (GST) and will remain registered for GST after the amalgamation.
Entity A is registered for GST.
Reasons for Decision
Section 90-5 of the GST Act sets out the circumstances when a supply, made in the course of a company amalgamation, is not a taxable supply.
Under subsection 90-5(1) of the GST Act, a supply made by an 'amalgamating company' to an 'amalgamated company', in the course of amalgamation, is not a taxable supply if the amalgamated company is registered or required to be registered for GST immediately after the amalgamation.
In the context of an amalgamation, section 195-1 of the GST Act defines the term 'amalgamating company' to mean any company that amalgamates with one or more other companies under the amalgamation. In this case, both entity A and entity B are amalgamating companies.
Under section 195-1 of the GST Act, the term 'amalgamated company' is also defined in the context of an amalgamation to mean the single company that results from and continues after the amalgamation. This single company may be one of the amalgamating companies or it may be a new company. In this case, the 'amalgamated company' is entity B as it is the single company that will result from this amalgamation.
Therefore, a supply by entity A, an amalgamating company, to entity B, the amalgamated company, in the course of the amalgamation is not a taxable supply if entity B is registered or required to be registered immediately after the amalgamation.
In this case, entity B is registered for GST and will remain registered for GST after the amalgamation. Therefore, entity A is not making a taxable supply pursuant to section 90-5 of the GST Act when it makes a supply of its assets to entity B in the course of an amalgamation with entity B.
Date of decision: 28 November 2001
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 90-5
subsection 90-5(1)
section 195-1
Keywords
Goods & services tax
GST company amalgamations
ISSN: 1445-2782
| Date: | Version: | |
| 28 November 2001 | Original statement | |
| You are here | 25 November 2005 | Archived |