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Edited version of private advice
Authorisation Number: 1052288797508
Date of advice: 9 August 2024
Ruling
Subject: Capital gains tax
Question
Did CGT event A1 happen to you upon implementation of the Scheme of Arrangement?
Answer
Yes.
CGT event A1 happens if there is a change in the ownership of a CGT asset (section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997)). The event happens when you enter into a contract to dispose of the asset or if you have not entered into a contract, when the change of ownership occurs (subsection 104-10(3) of the ITAA 1997).
The disposal of your shares under a court approved Scheme of Arrangement results in a disposal of shares, but not because you entered into a contract for disposal. Therefore, CGT event A1 happened on the scheme implementation date when there was a change of ownership in a Company A share from you to Company B under the Scheme of Arrangement (subsections 104-10(1) and (2) and paragraph 104-10(3)(b) of the ITAA 1997).
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commenced on:
XX XX 20XX
Relevant facts and circumstances
You held shares in a company (Company A).
Company A was acquired by another company (Company B).
The scheme was implemented on XX XX 20XX at which time your shares were acquired by Company B.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-10 (3)