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Edited version of private advice
Authorisation Number: 1051579221505
Date of advice: 5 February 2020
Ruling
Subject: Demerger
Question
Will the head entity of a demerger group be able to disregard any capital gain it makes from CGT event A1 happening in accordance with section 125-155 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes
Relevant facts and circumstances
Company X owned more than 20% of the shares in Company Z.
Company X transferred all of the shares it owned in Company Z to the shareholders of Company X.
Company X was the head entity of a demerger group. Company Z was a demerger subsidiary of Company X.
The transfer of shares was a 'demerger' as defined in section 125-70 of the ITAA 1997.