Income Tax Assessment Act 1997



Division 124 - Replacement-asset roll-overs  

Subdivision 124-M - Scrip for scrip roll-over  

Operative provisions

SECTION 124-783A   Rights that affect stakes  

An entity has a significant stake in another entity if:

(a) the first entity has one or more *stake options in the other entity; and

(b) the first entity would have such a stake (under section 124-783 ) if the first entity acquired *stake interests in the other entity under any of those stake options.


Paragraph (b) is satisfied if there are any circumstances (e.g. the first entity exercises some but not all of the stake options) in which the first entity would have a significant stake in the other entity, even if in other circumstances the first entity would not have such a stake.

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:

(a) the entities:

(i) had one or more *stake options in the original entity before the arrangement started; or

(ii) have one or more stake options in the replacement entity; and

(b) the entities would have such stakes (under section 124-783 ) if:

(i) the entities had acquired *stake interests in the original entity under any of the stake options mentioned in subparagraph (a)(i); or

(ii) the entities acquired stake interests in the replacement entity under some or all of the stake options mentioned in subparagraph (a)(ii).

Something is a stake option an entity has in another entity if it gives the first entity, or its *associates, a right to acquire the following ( stake interests ):

(a) if the other entity is a company:

(i) voting rights in the company; or

(ii) the right to receive any part of any *dividends that the company may pay; or

(iii) the right to receive any part of any distribution of capital of the company;

(b) if the other entity is a trust - the right to receive any part of any distribution to beneficiaries of the trust of income or capital of the trust;

and the acquisition could occur before the end of 5 years after the *arrangement was completed.

Example 1:

An option.

Example 2:

A share that gives a voting right that is temporarily supressed.

For the purposes of subsection (1), treat the reference in subparagraph (3)(a)(i) to voting rights as being a reference to *shares carrying voting rights.

This section does not limit subsections 124-783(6) to (10) .


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