Income Tax Assessment Act 1997



Division 125 - Demerger relief  

Subdivision 125-B - Consequences for owners of interests  

Operative provisions

SECTION 125-55   When a roll-over is available for a demerger  

You can choose to obtain a roll-over if:

(a) you own an *ownership interest in a company or trust (your original interest ); and

(b) the company or trust is the *head entity of a *demerger group; and

(c) a *demerger happens to the demerger group; and

(d) under the demerger, a *CGT event happens to your original interest and you *acquire a new or replacement interest (your new interest ) in the *demerged entity.

Note 1:

Section 125-80 sets out what the roll-over is.

Note 2:

You have to make cost base adjustments even if there is no CGT event: see section 125-90 .


Peter owns shares (his original interests) in Company A, a public company. Company B is a wholly owned subsidiary of Company A. Company A announces a demerger utilising a proportionate capital reduction and the disposal of all its shares in Company B to its 320,000 shareholders. Following the demerger all of the shareholders in Company A, including Peter, will own all of the shares in Company B (their new interests).

You cannot choose to obtain a roll-over under this Subdivision for an original interest if:

(a) you are a foreign resident; and

(b) the new interest you *acquire under the *demerger in exchange for that original interest is not *taxable Australian property just after you acquire it.


For taxable Australian property , see section 855-15 .


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