Demerger relief rules: What constitutes a restructuring?
Source: Taxation In Australia Journal Article
Published Date: 1 Oct 2020
With the release of TD 2020/6 and the accompanying public advice and guidance compendium, TD 2020/6EC, the A TO has finalised its position regarding the meaning of the word restructuring for the purposes of s 125-70(1) ITAA97 in the demerger relief rules. As expected, the ATO has maintained the views previously expressed in TD 2019/D1, which have been criticised for not reflecting the policy objectives of the demerger relief rules. The ATO does not accept that its interpretation of the demerger relief rules has become more restrictive, yet considers the new guidance should provide more transparency, consistency and clarity around the ATO's views of demerger relief. Absent a legislative fix, the authors expect that TD 2020/6 will make it more difficult to obtain demerger relief in all but the most plain and vanilla demerger transactions in the future, impeding transaction structures that would otherwise facilitate commercial objectives such as capital raisings.
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Details
- Published By: Alistair Haskett, Cameron Blackwood ATI
- Published On:1 Oct 2020
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