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Edited version of private advice
Authorisation Number: 1052029859994
Date of advice: 9 September 2022
Ruling
Subject: Date of acquisition of shares received on demutualisation
Question
For the purposes of subsection 109-5(1) of the Income Tax Assessment Act 1997, is the date of acquisition of the shares the date of demutualisation?
Answer
Yes
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
1 July 2020
Relevant facts and circumstances
You had life insurance with XX with a start date before 20 September 1985.
As a result of the demutualisation of XX you received shares in XXX.
You received the shares as a direct result of your life policies.
Your XXX shares were exchanged for XYZ Shares in the 20XX income year due to the merger of XYZ and XX.
Scrip-for-scrip rollover relief was exercised in regard to the merger.
You sold your XYZ shares in 20XX as an 'off market transfer' for the market value at the time.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 108-5(2)
Income Tax Assessment Act 1997 Subsection 109-5(1)
Reasons for decision
Subsection 109-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997) states that in general, you acquire a CGT asset when you become its owner. The time when you acquire the asset is when you become its owner.
Shares in a company are CGT assets (subsection 108-5(2) of the ITAA 1997).
In your case, when XX demutualised, you were issued shares in XXX because you were a policyholder.
The time you acquired the shares is when you became their owner. Accordingly, you acquired your shares in XXX when XX demutualised.
Your XXX shares were exchanged for XYZ shares in the 20XX income year due to the merger of XYZ and XX.
Scrip-for-scrip rollover relief was exercised in regard to the merger. This means that the acquisition date of the XYZ shares will be the date you acquired the XX shares, and the total cost base of the XYZ shares will be the total cost base of the XX shares.