INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-3 - CAPITAL GAINS AND LOSSES: SPECIAL TOPICS  

Division 124 - Replacement-asset roll-overs  

Subdivision 124-M - Scrip for scrip roll-over  

Operative provisions

SECTION 124-783   Meaning of significant stakeholder , common stakeholder , significant stake and common stake  

Significant stakeholder

124-783(1)  
An original interest holder is a significant stakeholder for an *arrangement if it had:


(a) a *significant stake in the original entity just before the arrangement started; and


(b) a significant stake in the replacement entity just after the arrangement was completed.

124-783(2)  
Also, if an original interest holder is an acquiring entity, any other original interest holder is a significant stakeholder for an *arrangement if it:


(a) had a *significant stake in the original entity just before the *arrangement started; and


(b) is an *associate of the replacement entity just after the arrangement was completed. Common stakeholder

124-783(3)  
An original interest holder is a common stakeholder for an *arrangement if it had:


(a) a *common stake in the original entity just before the arrangement started; and


(b) a common stake in the replacement entity just after the arrangement was completed.

124-783(4)  
If an acquiring entity for an *arrangement is an original interest holder, each other original interest holder that has a replacement interest is a common stakeholder for the arrangement.

124-783(5)  
No original interest holder is a common stakeholder for an *arrangement if either the original entity or the replacement entity had at least 300 *members (for a company) or 300 beneficiaries (for a trust) just before the arrangement started. Significant stake

124-783(6)  
An entity has a significant stake in a company at a time if the entity, or the entity and the entity ' s *associates between them:


(a) have at that time *shares carrying 30% or more of the voting rights in the company; or


(b) have at that time the right to receive 30% or more of any *dividends that the company may pay; or


(c) have at that time the right to receive 30% or more of any distribution of capital of the company.

Example:

There are 4 shareholders in YZT Company: Sonja has 60%, Mario has 20%, Peter has 10% and Dave has 10%.

Sonja, Mario and Peter are associates. They each have a significant stake in YZT because, on an associate inclusive basis, they each have a 90% stake in YZT. Dave does not have a significant stake because his total stake, on an associate inclusive basis, is 10%.

124-783(7)  


An entity has a significant stake in a trust at a time if the entity, or the entity and the entity ' s *associates between them, had at that time the right to receive 30% or more of any distribution to beneficiaries of the trust of income or capital of the trust.

124-783(8)  
No original interest holder has a significant stake in a company that has at least 300 *members or a trust that has at least 300 beneficiaries if it is reasonable for the company or the trustee of the trust to conclude that this is the case on the information available to it.

Note:

There are some cases where a company or trust will not be regarded as having 300 members or beneficiaries: see section 124-810 .

Common stake

124-783(9)  
If the original entity and the replacement entity are companies, an entity, or 2 or more entities, have a common stake in the original entity just before the *arrangement started and in the replacement entity just after the arrangement was completed if the entity or entities, and their *associates, between them:


(a) had 80% or more of:


(i) the voting rights in the original entity just before the arrangement started; and

(ii) the voting rights in the replacement entity just after the arrangement was completed; or


(b) had the right to receive 80% or more of:


(i) any *dividends that the original entity may pay just before the arrangement started; and

(ii) any dividends that the replacement entity may pay just after the arrangement was completed; or


(c) had the right to receive 80% or more of:


(i) any distribution of capital of the original entity just before the arrangement started; and

(ii) any distribution of capital of the replacement entity just after the arrangement was completed.

124-783(10)  
If the original entity and the replacement entity are trusts, an entity, or 2 or more entities, have a common stake in the original entity just before the *arrangement started and in the replacement entity just after the arrangement was completed if the entity or entities, and their *associates, between them:


(a) had, just before the arrangement started, the right to receive 80% or more of any distribution to beneficiaries of the original entity of income or capital of the original entity; and


(b) had, just after the arrangement was completed, the right to receive 80% or more of any distribution to beneficiaries of the replacement entity of income or capital of that entity.


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