Private ruling: Scrip for scrip roll-over
Date of advice: 18 August 2022
Published: November 2022
Ruling period: 1 July 20XX to 30 June 20XX

Ruling: Q1: Did CGT event A1 in section 104-10 ofthe Income Tax Assessment Act 1997 (ITAA 1997) happen on the disposal of shares? | A1: Yes. | Q2: Can you choose to obtain partial scrip for scrip roll-over under section 124-790 of the ITAA 1997? | A2: Yes. | Q3: If you choose to obtain a partial roll-over: (a) can the cost base and reduced cost base of the part of each share for which you are ineligible to obtain the roll-over under subsection 124-790(2) of the ITAA 1997 be worked out in accordance with a certain formula; and (b) can the first element of the cost base and reduced cost base of the part of each share for which you are eligible to obtain the roll-over be worked out in accordance with a certain formula? | A3: Yes. | Q4: If you choose to obtain scrip for scrip roll-over, will you be taken to have acquired the replacement shares on the acquisition date of the corresponding original shares pursuant to item 2 of the table in subsection 115-30(1) of the ITAA 1997? | A4: Yes.

Relevant facts and circumstances: The taxpayer disposed of shares in Company A and received shares in Company B and money. The number of replacement shares received by the taxpayer was determined based on a formula.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 subsection 115-30(1) | Income Tax Assessment Act 1997 section 124-780 | Income Tax Assessment Act 1997 section 124-790

Reasons for decision: Summary: Shares in a company are CGT assets. Therefore, CGT event A1 (section 104-10 of the ITAA 1997) happened when the taxpayer disposed of their shares in Company A. The taxpayer can choose to obtain partial scrip for scrip roll-over under sections 124-780 and 124-790 of the ITAA 1997 because the taxpayer received something other than replacement shares. The Commissioner accepts the formulae proposed by the taxpayer for working out: • the cost base and reduced cost base of the part of each share for which the taxpayer is ineligible to obtain the roll-over under subsection 124-790(2) of the ITAA 1997; and • the first element of the cost base and reduced cost base of the part of each share for which the taxpayer is eligible to obtain the roll-over. If the taxpayer chooses to obtain scrip for scrip roll-over, the acquisition date of the Company B shares will be taken to be the same as the acquisition date of the corresponding Company A shares pursuant to item 2 of the table in subsection 115-30(1) of the ITAA 1997.