Tax Laws Amendment (2004 Measures No. 2) Act 2004 (83 of 2004)

Schedule 5   CGT event K6 and demergers

Income Tax Assessment Act 1997

1   After subsection 104-230(9)

Insert:

(9A) Paragraph (9)(a) applies to a case where:

(a) the company referred to in subsection (2) is a *demerged entity; and

(b) *shares in the demerged entity do not satisfy the test referred to in that paragraph; and

(c) the demerger happened not more than 5 years before the other CGT event happened;

as if shares in the demerged entity were listed for quotation in the official list of a stock exchange in Australia or a foreign country at all times when some of the shares in the *head entity of the *demerger group were so listed.

Example: Louise owns shares in a company which has been listed for 3 years. The company is the head entity of a demerger group. As part of a demerger, she receives new interests in a demerged entity. The demerged entity then lists in its own right.

Since the head entity was listed for only 3 years, the demerged entity must remain listed for 2 years before Louise's new interests become eligible for the exception from CGT event K6.

(9B) Paragraph (9)(b) applies to a case where:

(a) the trust referred to in subsection (2) is a *demerged entity and a unit trust; and

(b) units in the demerged entity do not satisfy the test referred to in that paragraph; and

(c) the demerger happened not more than 5 years before the other CGT event happened;

as if units in the demerged entity were listed for quotation in the official list of a stock exchange in Australia or a foreign country, or were ordinarily available to the public for subscription or purchase, at all times when some of the units in the *head entity of the *demerger group were so listed or available.


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