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Edited version of your written advice
Authorisation Number: 1051206846756
Date of advice: 30 March 2017
Ruling
Subject: Company Amalgamation
Question 1
Will the amalgamation give rise to a 'disposal' of assets by the amalgamating company (X Sub Co) for the purposes of Part X of the Income Tax Assessment Act 1936 (ITAA 1936)?
Answer
Yes
Question 2
Are goodwill, trading stock (other than those listed in paragraphs (a) and (b) of the definition for 'tainted asset' in section 317 of the ITAA 1936), receivables (other than those listed in paragraphs (a) and (b) of the definition for 'tainted asset' in section 317 of the ITAA 1997) and fixed assets (such as office equipment) (other than those included in paragraph (b) of the definition for 'tainted asset' in section 317 of the ITAA 1936) 'tainted assets' for the purposes of Part X of the ITAA 1936?
Answer
No
Question 3
Are shares held by X Sub Co in X subsidiaries “tainted assets” for the purposes of Part X of the ITAA 1936?
Answer
Yes
Question 4
Will Oz Head Co be able to claim roll-over relief under subdivision 126-B of the Income Tax Assessment Act 1997 (ITAA 1997) (as modified by section 419 of the ITAA 1936) in respect of the tainted assets held on capital account by X Sub Co which are transferred as part of the amalgamation?
Answer
Yes
Question 5
Will Oz Head Co be able to claim roll-over relief under subdivision 126-B of the ITAA 1997 (as modified by section 419 of the ITAA 1936) in respect of the tainted assets held on revenue account by X Sub Co which are transferred as part of the amalgamation?
Answer
Yes
Question 6
Will capital proceeds of nil be received by X Parent Co under Division 116 of the ITAA 1997 as a result of CGT event C2 happening on the cancellation of the shares in X Sub Co?
Answer
Yes
This ruling applies for the following periods:
Years ending XX/XX/XXXX to XX/XX/XXXX
The scheme commences on:
The date shown on the certificate of amalgamation
Relevant facts and circumstances
1. Oz Head Co is a company incorporated in Australia and is the head company of Oz Head Co's Tax Consolidated Group (TCG).
2. Oz Head Co TCG owns a number of wholly owned foreign subsidiaries in X.
3. The X corporate group is headed by X Parent Co which in turn owns X% of X Sub Co. X Sub Co in turn owns a number of X subsidiaries.
4. X Parent Co and X Sub Co are Controlled Foreign Companies (CFCs) within the meaning of Part X of the ITAA 1936 and the Oz Head Co TCG is an attributable taxpayer in relation to those CFCs.
5. X Parent Co and X Sub Co are companies resident of X (a listed country for the purposes of Part X of the ITAA 1936).
6. The boards of X Parent Co and X Sub Co each resolve to undertake a short form amalgamation pursuant to section 222 of Part 13 of the Companies Act 1993 (X).
7. Pursuant to the short form amalgamation, X Sub Co will amalgamate into X Parent Co. Shares in X Sub Co will be cancelled without payment or other consideration as required by section 222 of Part 13 of the Companies Act 1993 (X).
8. X Sub Co holds CGT assets (such as the shares in various wholly owned X subsidiaries) on capital account and CGT assets (such as X currency) on revenue account. The X amalgamation in the Companies Act 1993 provisions provide that the amalgamated company (X Parent Co) will succeed to all the property, rights, powers, privileges, liabilities and obligations of the amalgamating company (X Sub Co).
9. On amalgamation, CGT assets held by X Sub Co will become the property of X Parent Co; becoming effective by operation of section 225 of Part 13 of the Companies Act 1993 (X).
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 116-20
Income Tax Assessment Act 1997 Section 116-30
Income Tax Assessment Act 1997 Subdivision 126-B
Income Tax Assessment Act 1936 Section 317 'disposal'
Income Tax Assessment Act 1936 Section 317 'tainted asset'
Income Tax Assessment Act 1936 Section 419
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