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Financial Sector Legislation Amendment (Restructures) Bill 2007

Schedule 2 Restructure relief: taxation aspects

   

Income Tax Assessment Act 1997

1  After section 124-380

Insert:

124-382   Special rules for ADI restructures

             (1)  This section applies if:

                     (a)  the interposed company is a non-operating holding company within the meaning of the Financial Sector (Business Transfer and Group Restructure) Act 1999 ; and

                     (b)  a restructure instrument under Part 4A of that Act is in force in relation to the interposed company; and

                     (c)  because of the restructure to which the instrument relates, an * ADI becomes a subsidiary (within the meaning of that Act) of the interposed company; and

                     (d)  the original company is:

                              (i)  the ADI; or

                             (ii)  part of an extended licensed entity (within the meaning of the * prudential standards) that includes the ADI.

Certain preference shares disregarded

             (2)  For the purposes of this Subdivision, disregard any * shares in the original company that can be disregarded under subsection 703-37(4).

Certain foreign-owned shares disregarded

             (3)  For the purposes of this Subdivision:

                     (a)  disregard any * shares in the original company covered by subsection (4); and

                     (b)  disregard any shares in the interposed company mentioned in paragraph (4)(d).

             (4)  This section covers * shares in the original company if:

                     (a)  the shares are owned by a foreign holder within the meaning of the Corporations Act 2001 ; and

                     (b)  an agent or nominee is appointed by (or on behalf of) the foreign holder; and

                     (c)  the shares are disposed of to the interposed company, or are cancelled; and

                     (d)  as a result, the agent or nominee acquires shares in the interposed company; and

                     (e)  the agent or nominee disposes of the shares in the interposed company (whether separately or together with other shares covered by paragraph (d)); and

                      (f)  the agent or nominee:

                              (i)  gives the foreign holder an amount equivalent to the * capital proceeds of the disposal (less expenses); or

                             (ii)  if the shares are disposed of together with other shares covered by paragraph (d)—gives the foreign holder an amount equivalent to the foreign holder’s proportion of the * capital proceeds of the disposal (less expenses).

2  At the end of Subdivision 202-C of Division 202

Add:

202-47   Distributions of certain ADI profits following restructure

             (1)  This section applies to an amount paid by a body corporate if:

                     (a)  the body corporate is a non-operating holding company within the meaning of the Financial Sector (Business Transfer and Group Restructure) Act 1999 ; and

                     (b)  a restructure instrument under Part 4A of that Act is in force in relation to the body; and

                     (c)  because of the restructure to which the instrument relates, an * ADI becomes a subsidiary (within the meaning of that Act) of the body; and

                     (d)  the amount is sourced, directly or indirectly, from the profits of the ADI before the restructure instrument came into force; and

                     (e)  the amount would have been a * frankable distribution if it had been distributed by the ADI before the restructure instrument came into force.

             (2)  The amount:

                     (a)  is taken to be a dividend paid by the body, for the purposes of this Act (and so is a * distribution by the body); and

                     (b)  is not taken to be an * unfrankable distribution by the body just because of paragraph 202-45(e) (which makes distributions from * share capital accounts unfrankable).

3  After section 703-35

Insert:

703-37   Disregarding certain preference shares following an ADI restructure

             (1)  The object of this section is to ensure that, following an * ADI restructure to which Part 4A of the Financial Sector (Business Transfer and Group Restructure) Act 1999 applies, a body corporate is not prevented from being a * subsidiary member of a * consolidated group or * consolidatable group just because the body (or another body corporate) has issued, or issues, certain preference * shares.

             (2)  This Part (except Division 719) operates as if a body corporate that meets the requirement of subsection (3) at a particular time were a * wholly-owned subsidiary of another body corporate (the holding body ) at the time.

             (3)  The body corporate (the preference-share issuing body ) must be one that would be a * wholly-owned subsidiary of the holding body at the time if the * shares in the preference share-issuing body that are to be disregarded under subsection (4) did not exist.

             (4)  Disregard a * share in the preference-share issuing body if:

                     (a)  a restructure instrument under Part 4A of the Financial Sector (Business Transfer and Group Restructure) Act 1999 is in force in relation to a non-operating holding company within the meaning of that Act; and

                     (b)  because of the restructure to which the instrument relates, an * ADI becomes a subsidiary (within the meaning of that Act) of the non-operating holding company; and

                     (c)  the preference share-issuing body is:

                              (i)  the ADI; or

                             (ii)  part of an extended licensed entity (within the meaning of the * prudential standards) that includes the ADI; and

                     (d)  the shares are covered by subsection (5).

             (5)  A * share is covered by this subsection if:

                     (a)  the share is a preference share; and

                     (b)  any * return on the share is fixed at the time of issue by reference to the amount subscribed; and

                     (c)  the share is not a * voting share; and

                     (d)  either:

                              (i)  the share is Tier 1 capital (within the meaning of the * prudential standards); or

                             (ii)  the share would be Tier 1 capital (within the meaning of the prudential standards) were it not for a limit, imposed by those standards, on the proportion of Tier 1 capital that can be made up of such shares.

             (6)  Paragraph (5)(a) covers a preference share if it is issued:

                     (a)  by itself; or

                     (b)  in combination with one or more * schemes that are * related schemes in relation to a scheme under which a preference share is issued.

             (7)  If subsection (5) has covered a * share, but would (apart from this subsection) stop covering the share from a particular time, then for a period of 180 days after that time the subsection is taken to continue to cover the share.

4  Application

(1)       The amendment made by item 1 of this Schedule applies in relation to CGT events happening on or after 1 July 2007.

(2)       The amendments made by items 2 and 3 of this Schedule apply in relation to restructure instruments that come into force under the Financial Sector (Business Transfer and Group Restructure) Act 1999 on or after 1 July 2007.