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Edited version of private advice
Authorisation Number: 1052021812386
Date of advice: 18 August 2022
Ruling
Subject: Scrip for scrip roll-over
Question 1
Did CGT event A1 in section 104-10 ofthe Income Tax Assessment Act 1997 (ITAA 1997) happen on the disposal of shares?
Answer
Yes.
Question 2
Can you choose to obtain partial scrip for scrip roll-over under section 124-790 of the ITAA 1997?
Answer
Yes.
Question 3
If you choose to obtain a partial roll-over:
(a) can the cost base and reduced cost base of the part of each share for which you are ineligible to obtain the roll-over under subsection 124-790(2) of the ITAA 1997 be worked out in accordance with a certain formula; and
(b) can the first element of the cost base and reduced cost base of the part of each share for which you are eligible to obtain the roll-over be worked out in accordance with a certain formula?
Answer
Yes.
Question 4
If you choose to obtain scrip for scrip roll-over, will you be taken to have acquired the replacement shares on the acquisition date of the corresponding original shares pursuant to item 2 of the table in subsection 115-30(1) of the ITAA 1997?
Answer
Yes.
This ruling applies for the following period:
1 July 20XX to 30 June 20XX
Relevant facts and circumstances
The taxpayer disposed of shares in Company A and received shares in Company B and money.
The number of replacement shares received by the taxpayer was determined based on a formula.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-10
Income Tax Assessment Act 1997 subsection 115-30(1)
Income Tax Assessment Act 1997 section 124-780
Income Tax Assessment Act 1997 section 124-790
Reasons for decision
Shares in a company are CGT assets. Therefore, CGT event A1 (section 104-10 of the ITAA 1997) happened when the taxpayer disposed of their shares in Company A.
The taxpayer can choose to obtain partial scrip for scrip roll-over under sections 124-780 and 124-790 of the ITAA 1997 because the taxpayer received something other than replacement shares.
The Commissioner accepts the formulae proposed by the taxpayer for working out:
• the cost base and reduced cost base of the part of each share for which the taxpayer is ineligible to obtain the roll-over under subsection 124-790(2) of the ITAA 1997; and
• the first element of the cost base and reduced cost base of the part of each share for which the taxpayer is eligible to obtain the roll-over.
If the taxpayer chooses to obtain scrip for scrip roll-over, the acquisition date of the Company B shares will be taken to be the same as the acquisition date of the corresponding Company A shares pursuant to item 2 of the table in subsection 115-30(1) of the ITAA 1997.