ATO Interpretative Decision
ATO ID 2001/755
Income Tax
Capital gains tax - scrip for scrip roll-over - takeover of C & W Optus by SingTelFOI status: may be released
This version is no longer current. Please follow this link to view the current version. |
-
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
When did CGT event A1, in section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997), happen in relation to the exchange of the taxpayer's C & W Optus shares for SingTel shares?
Decision
CGT event A1 happened on 22 August 2001 when the contract for the disposal of the shares was made (subsection 104-10(3) of the ITAA 1997). Although the taxpayer completed and mailed the offer acceptance form in May 2001, the contract was subject to a condition precedent that the Treasurer raise no objections to the takeover. This condition was not satisfied until 22 August 2001.
Facts
The taxpayer acquired C & W Optus shares in the initial public offering.
SingTel Australia made an offer to acquire those C & W Optus shares and provided a number of options. The taxpayer accepted offer CWO-202 to receive $2.25 plus 0.8 SingTel shares for each C & W Optus share.
The taxpayer mailed the acceptance form in May 2001.
The takeover offer was subject to a condition precedent that the Treasurer raise no objections to the takeover under foreign investment policy. This condition was satisfied on 22 August 2001 when the Treasurer issued Press Release No. 60.
Reasons for Decision
Class Ruling CR2001/17 indicates at paragraph 15(b) that only a partial scrip for scrip roll-over is available for shareholders who accept consideration option CWO-202 ($A2.25 plus 0.8 SingTel shares for every C & W Optus share). Roll-over is not available to the extent that a C & W Optus shareholder received cash (ineligible proceeds): subsection 124-790(1).
A capital gain relating to the ineligible proceeds is made in the income year that a CGT event happened to the C & W Optus shares. For shareholders who accepted this option CGT event A1 is the most relevant CGT event because it required the shareholders to dispose of their C & W Optus shares to SingTel.
CGT event A1 happens when you enter into a contract for the disposal of an asset. If the contract is subject to a condition precedent, the contract is not made until the condition precedent is satisfied.
The SingTel offer was subject to a condition precedent that a notice in writing be issued by or on behalf of the Australian Treasurer stating that the Treasurer consents, or that the Treasurer does not have any objections, under the Australian Government's foreign investment policy, to the acquisition by SingTel Australia of all of the Optus shares the subject of the offer.
On 22 August 2001 the Treasurer released Press Release No. 60 stating that he had no objections under foreign investment policy to the proposed takeover of C & W Optus by SingTel.
CGT event A1 happened on 22 August 2001 even though the taxpayer had mailed an acceptance of the offer to SingTel in May 2001.
Date of decision: 6 November 2001Year of income: Year ending 30 June 2002
Legislative References:
Income Tax Assessment Act 1997
section 104-10
subsection 104-10(3)
subsection 124-790(1)
Related Public Rulings (including Determinations)
Class Ruling CR 2001/17
Keywords
Capital gains tax
Scrip for scrip rollover
Partial rollover
CGT capital proceeds
CGT event A1- disposal of a CGT asset
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 6 November 2001 | Original statement |
| 5 March 2010 | Archived |