Inserts for
Tax Laws Amendment (2012 Miscellaneous Measures No. 1) Bill 2012: Removing tax impediments to certain business restructures

EXPOSURE DRAFT

Commencement information	
Column 1	Column 2	Column 3	
Provision(s)	Commencement	Date/Details	
1.  			
2.  Schedule ??	The day this Act receives the Royal Assent.		
3.  			
4  Amendment of assessments
		Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment if:
	(a)	the assessment was made before the commencement of Schedule ?? (about removing tax impediments to certain business restructures) to this Act; and
	(b)	the amendment is made for the purpose of giving effect to items 14 and 19, and subitem 16(4), of that Schedule; and
	(c)	the amendment is made within 2 years after the day that Schedule commences.
Schedule ??—Removing tax impediments to certain business restructures
Part 1—Amendments
Income Tax Assessment Act 1997
1  At the end of section 124‑355
Add:
	(6)	There are additional consequences if some or all of your shares involved in the roll‑over are your trading stock or revenue assets: see section 124‑390.
2  Subsection 124‑360(1) (note)
Omit “Note”, substitute “Note 1”.
3  At the end of subsection 124‑360(1)
Add:
Note 2:	Section 118‑25 (which gives a CGT exemption for trading stock) does not prevent you from choosing to obtain the roll‑over.
4  Subsection 124‑370(1) (note)
Omit “Note”, substitute “Note 1”.
5  At the end of subsection 124‑370(1)
Add:
Note 2:	Section 118‑25 (which gives a CGT exemption for trading stock) does not prevent you from choosing to obtain the roll‑over.
6  Section 124‑390
Repeal the section, substitute:
124‑390  Deferral of profit or loss on shares
	(1)	The additional consequences in this section apply if:
	(a)	under this Subdivision:
	(i)	you are taken to have chosen to obtain the roll‑over; or
	(ii)	you otherwise choose to obtain the roll‑over; and
	(b)	if subparagraph (a)(ii) applies to you, you choose for these additional consequences to apply; and
	(c)	some or all of your *shares in the original company were of a character described in the following table:
	(i)	at the time immediately before you disposed of them as described in paragraph 124‑360(1)(c); or
	(ii)	at the time immediately before the original company redeemed or cancelled them as described in paragraph 124‑370(1)(d); and
	(d)	the shares in the interposed company that you acquired in return for those shares have the same character.

Corresponding shares must have the same character for the additional consequences in this section to apply	
Item	Character	
1	your *trading stock	
2	*revenue assets	
Note:	Apply this section twice if some of your corresponding shares are trading stock and others are revenue assets.
Trading stock
	(2)	The amount included in your assessable income because of the disposal, redemption or cancellation of each of your *shares described in paragraph (1)(c) that was your *trading stock at the time mentioned in that paragraph is equal to:
	(a)	if the share had been your trading stock ever since the start of the income year that included that time—the total of:
	(i)	its *value as trading stock at the start of the income year; and
	(ii)	the amount (if any) by which its cost had increased since the start of the income year; or
	(b)	otherwise—its cost at that time.
	(3)	For each of the *shares that you acquired as described in paragraph (1)(d) that is your *trading stock, you are taken to have paid:

	(4)	For the purposes of Division 70 (about trading stock), you, the original company and the interposed company are taken to have dealt with each other in the ordinary course of *business and at *arm’s length for each of the transactions referred to in paragraph 124‑360(1)(c) or 124‑370(1)(d) or (e).
Revenue assets
	(5)	For each of your *shares that:
	(a)	is described in paragraph (1)(c); and
	(b)	was a *revenue asset immediately before its disposal, redemption or cancellation;
your gross proceeds for that disposal, redemption or cancellation are taken to be the amount you would have needed to have received in order to have a nil profit and nil loss for that disposal, redemption or cancellation.
	(6)	For the purpose of calculating any profit or loss on a future disposal of, cessation of ownership, or other realisation of a *share that:
	(a)	you acquired as described in paragraph (1)(d); and
	(b)	is a *revenue asset;
you are taken to paid the following for your acquisition of that share:

7  At the end of section 124‑440
Add:
	(6)	There are additional consequences if some or all of your units and shares involved in the roll‑over are your trading stock or revenue assets: see section 124‑475.
8  Section 124‑445 (note)
Omit “Note”, substitute “Note 1”.
9  At the end of section 124‑445
Add:
Note 2:	Section 118‑25 (which gives a CGT exemption for trading stock) does not prevent you from choosing to obtain the roll‑over.
10  Subsection 124‑455(1) (note)
Omit “Note”, substitute “Note 1”.
11  At the end of subsection 124‑455(1)
Add:
Note 2:	Section 118‑25 (which gives a CGT exemption for trading stock) does not prevent you from choosing to obtain the roll‑over.
12  At the end of Subdivision 124‑H
Add:
Additional consequences for member if units are trading stock or revenue assets
124‑475  Deferral of profit or loss on units
	(1)	The additional consequences in this section apply if:
	(a)	under this Subdivision, you choose to obtain the roll‑over; and
	(b)	you choose for these additional consequences to apply; and
	(c)	some or all of your units in the unit trust were of a character described in the following table:
	(i)	at the time immediately before you disposed of them as described in paragraph 124‑445(c); or
	(ii)	at the time immediately before the trustee redeemed or cancelled them as described in paragraph 124‑455(1)(d); and
	(d)	the shares in the company that you acquired in return for those units have the same character.

Corresponding units and shares must have the same character for the additional consequences in this section to apply	
Item	Character	
1	your *trading stock	
2	*revenue assets	
Note:	Apply this section twice if some of your corresponding units and shares are trading stock and others are revenue assets.
Trading stock
	(2)	The amount included in your assessable income because of the disposal, redemption or cancellation of each of your units described in paragraph (1)(c) that was your *trading stock at the time mentioned in that paragraph is equal to:
	(a)	if the unit had been your trading stock ever since the start of the income year that included that time—the total of:
	(i)	its *value as trading stock at the start of the income year; and
	(ii)	the amount (if any) by which its cost had increased since the start of the income year; or
	(b)	otherwise—its cost at that time.
	(3)	For each of the *shares that you acquired as described in paragraph (1)(d) that is your *trading stock, you are taken to have paid:

	(4)	For the purposes of Division 70 (about trading stock), you, the trustee of the unit trust and the company are taken to have dealt with each other in the ordinary course of *business and at *arm’s length for each of the transactions referred to in paragraph 124‑445(c) or 124‑455(1)(d) or (e).
Revenue assets
	(5)	For each of your units that:
	(a)	is described in paragraph (1)(c); and
	(b)	was a *revenue asset immediately before its disposal, redemption or cancellation;
your gross proceeds for that disposal, redemption or cancellation are taken to be the amount you would have needed to have received in order to have a nil profit and nil loss for that disposal, redemption or cancellation.
	(6)	For the purpose of calculating any profit or loss on a future disposal of, cessation of ownership, or other realisation of a *share that:
	(a)	you acquired as described in paragraph (1)(d); and
	(b)	is a *revenue asset;
you are taken to paid the following for your acquisition of that share:

13  Paragraph 124‑860(4)(b)
Repeal the paragraph, substitute:
	(b)	has no *CGT assets, other than any or all of the following:
	(i)	small amounts of cash or debt;
	(ii)	its rights under an *arrangement, if (collectively) those rights only facilitate the transfer of assets to the transferee from the transferor; and
14  Paragraph 126‑225(1)(b)
Repeal the paragraph, substitute:
	(b)	if subparagraph (a)(ii) applies—the receiving trust has no CGT assets just before the transfer time, other than any or all of the following:
	(i)	small amounts of cash or debt;
	(ii)	its rights under an *arrangement, if (collectively) those rights only facilitate the transfer of assets to it from the transferring trust; and

Part 2—Application and transitional provisions
15  Definitions
In this Part:
2011 Budget time means 7.30 pm, by legal time in the Australian Capital Territory, on 10 May 2011.
2012 Budget time means 7.30 pm, by legal time in the Australian Capital Territory, on 8 May 2012.
16  Application of amendments
(1)	The amendments made by items 1 to 6 apply in relation to shares disposed of, redeemed or cancelled at or after the 2012 Budget time.
(2)	The amendments made by items 7 to 12 apply in relation to units disposed of, redeemed or cancelled at or after the 2012 Budget time.
(3)	The amendment made by item 13 applies in relation to CGT events happening at or after the 2011 Budget time.
(4)	The amendment made by item 14 applies in relation to CGT events happening on or after 1 November 2008.
17  Transitional provision—Subdivision 124‑G roll‑overs between 2011 and 2012 Budget times
(1)	This item applies if section 124‑390 of the Income Tax Assessment Act 1997 (as in force before the commencement of item 6 of this Schedule) applies to you in relation to a roll‑over involving shares that:
	(a)	were disposed of, redeemed or cancelled during the period:
	(i)	starting at the 2011 Budget time; and
	(ii)	ending just before the 2012 Budget time; and
	(b)	were your trading stock, or revenue assets, at the time immediately before that disposal, redemption or cancellation.
(2)	That section applies to you in relation to that roll‑over as if the following were substituted for subsections (4) and (5) of that section:
	(3A)	For the purposes of Division 70 (about trading stock), you, the original company and the interposed company are taken to have dealt with each other in the ordinary course of *business and at *arm’s length for each of the transactions referred to in paragraph 124‑360(1)(c) or 124‑370(1)(d) or (e).
Revenue assets
	(4)	For each of your *shares in the original company that is a *revenue asset at that time, your gross proceeds for its disposal, redemption or cancellation are taken to be the amount you would have needed to have received in order to have a nil profit and nil loss for that disposal, redemption or cancellation.
	(5)	For the purpose of calculating any profit or loss on a future disposal of, cessation of ownership, or other realisation of a *share in the interposed company that you acquired in return for those of your shares in the original company that were *revenue assets at that time, you are taken to paid the following for your acquisition of that share:

18  Transitional provision—Subdivision 124‑H roll‑overs between 2011 and 2012 Budget times
(1)	The additional consequences in this item apply if:
	(a)	under Subdivision 124‑H of the Income Tax Assessment Act 1997, you choose to obtain a roll‑over in relation to units disposed of, redeemed or cancelled during the period:
	(i)	starting at the 2011 Budget time; and
	(ii)	ending just before the 2012 Budget time; and
	(b)	you choose for these additional consequences to apply; and
	(c)	some or all of those units were your trading stock or revenue assets:
	(i)	at the time immediately before you disposed of them as described in paragraph 124‑445(c) of that Act; or
	(ii)	at the time immediately before the trustee redeemed or cancelled them as described in paragraph 124‑455(1)(d) of that Act.
Note:	Apply this item twice if some of your units were trading stock and others were revenue assets.
Trading stock
(2)	The amount included in your assessable income because of the disposal, redemption or cancellation of each of your units in the unit trust that was your trading stock at the time mentioned in paragraph (1)(c) is equal to:
	(a)	if the unit had been your trading stock ever since the start of the income year that included that time—the total of:
	(i)	its value as trading stock at the start of the income year; and
	(ii)	the amount (if any) by which its cost had increased since the start of the income year; or
	(b)	otherwise—its cost at that time.
(3)	For each of the shares in the company that you acquired in return for those of your units in the unit trust that were your trading stock at that time, you are taken to have paid:

(4)	For the purposes of Division 70 (about trading stock) of that Act, you, the trustee of the unit trust and the company are taken to have dealt with each other in the ordinary course of business and at arm’s length for each of the transactions referred to in paragraph 124‑445(c) or 124‑455(1)(d) or (e) of that Act.
Revenue assets
(5)	For each of your units in the unit trust that was a revenue asset at the time mentioned in paragraph (1)(c), your gross proceeds for its disposal, redemption or cancellation are taken to be the amount you would have needed to have received in order to have a nil profit and nil loss for that disposal, redemption or cancellation.
(6)	For the purpose of calculating any profit or loss on a future disposal of, cessation of ownership, or other realisation of a share in the company that you acquired in return for those of your units in the unit trust that were revenue assets at that time, you are taken to paid the following for your acquisition of that share:

19  Transitional provision—transfer of assets between certain trusts
(1)	This item applies if:
	(a)	a roll‑over under Subdivision 126‑G of the Income Tax Assessment Act 1997 is chosen after the commencement of this Schedule; and
	(b)	the transfer time (within the meaning of paragraph 126‑225(1)(a) of that Act) for the roll‑over happens during an income year ending before the commencement of this Schedule.
(2)	Subsection 126‑260(1) of that Act applies to the trustee of the transferring trust as if the reference in that subsection to “within 3 months after the end of the transfer year” were a reference to “within 3 months after the time the roll‑over is chosen”.