Private ruling: Demerger
Date of advice: 19 August 2016
Published: September 2016
Ruling period: Income year ended 30 June 2016 | Income year ended 30 June 2017
Date scheme commenced: 1 July 2015

Ruling: Q1: Will any capital gain or capital loss that Head Company Pty Ltd (Head Company) makes from CGT event A1 happening to its shareholding in Subsidiary Pty Ltd (Subsidiary) as a result of the demerger be disregarded pursuant to section 125-155 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes | Q2: Will CGT event G1, pursuant to section 104-135 of the ITAA 1997, happen to the Head Company shares under the demerger and if so, will the Head Company shareholders be entitled to choose roll-over relief pursuant to section 125-55 of the ITAA 1997? | A2: Yes | Q3: Will all, or any part, of the in-specie distribution of Subsidiary shares to the Head Company shareholders that constitutes a dividend, for the purposes of subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936), be a demerger dividend, as defined in subsection 6(1) of the ITAA 1936, and neither assessable income nor exempt income pursuant to subsections 44(3) and 44(4) of the ITAA 1936? | A3: Yes | Q4: Will the Commissioner make a determination under subsection 45B(3) of the ITAA 1936 that section 45BA or 45C of the ITAA 1936 will apply to the whole, or any part, of any demerger benefit or capital benefit provided under the proposed demerger to the Head Company shareholders? | A4: No | Q5: Will section 45 of the ITAA 1936 apply to the whole or any part of the in specie distribution of Subsidiary shares provided to the Head Company shareholders under the demerger? | A5: No | Q6: Will section 45A of the ITAA 1936 apply to the whole or any part of the in specie distribution of Subsidiary shares provided to the Head Company shareholders under the demerger? | A6: No

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. Background Head Company Head Company is an Australian private company. Head Company operates a business which provides two distinct service offerings. Head Company has fully paid ordinary shares on issue which are held by Australian resident taxpayers. All the shareholders of Head Company acquired their shares after 20 September 1985 and hold these shares on capital account for Australian tax purposes. Head Company has historically distributed fully franked dividends including in the most recent five years. Head Company is the head company of a tax consolidated group with its sole member being Subsidiary. Subsidiary Subsidiary is an Australian private company wholly owned by Head Company. Subsidiary has fully paid ordinary shares on issue. In 20XX, a key business assets relating to one of the service offerings provided by Head Company was transferred to Subsidiary. In addition, a number of employees involved in providing this service offering were also transferred to Subsidiary at this time. The demerger Head Company is proposing to distribute all shares in Subsidiary to the Head Company shareholders in proportion to their current shareholding in Head Company. Reasons for the demerger The following commercial reasons have been provided for demerging: • to remove any of the restrictions and inefficiencies that exist as a result of operating these two businesses under the one company; • to allow management and staff to solely focus on that part of the business that is aligned with their skillsets with a view to pursuing, promoting and growing the same. This may include targeting investors and strategic partners that may not be possible if Head Company continued to provide both service offerings; and • to significantly increase the potential to obtain additional clients and revenue that would be unlikely to be obtained under the current business structure. Other matters The Head Company shareholders who are eligible to make a choice to obtain demerger roll-over relief under Division 125 of the ITAA 1997 in respect of the demerger will do so. There is no pre-conceived agreement, plan or intention of the current shareholders to sell their holding in either Head Company or Subsidiary immediately after the demerger. The share capital account of Head Company is not tainted within the meaning of Division 197 of the ITAA 1997.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 6 | Income Tax Assessment Act 1936 section 44 | Income Tax Assessment Act 1936 section 45 | Income Tax Assessment Act 1936 section 45A | Income Tax Assessment Act 1936 section 45B | Income Tax Assessment Act 1936 section 45BA | Income Tax Assessment Act 1936 section 45C | Income Tax Assessment Act 1936 section 177D | Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 104-135 | Income Tax Assessment Act 1997 Division 125 | Income Tax Assessment Act 1997 Subdivision 125-B | Income Tax Assessment Act 1997 section 125-55 | Income Tax Assessment Act 1997 section 125-65 | Income Tax Assessment Act 1997 section 125-70 | Income Tax Assessment Act 1997 section 125-155

Reasons for decision: Summary: Any capital gain or capital loss that Head Company makes from CGT event A1 happening to its shareholding in Subsidiary as a result of the demerger will be disregarded pursuant to section 125-155 of the ITAA 1997. | Detailed Reasoning - Detailed reasoning: Section 125-155 of the ITAA 1997 provides that a demerging entity disregards any capital gain or capital loss arising from certain CGT events (including CGT event A1) happening to its ownership interests in a demerged entity under a demerger. In the present case: • Head Company is the demerging entity, • CGT event A1 will happen when Head Company disposes of its shares in Subsidiary to the Head Company shareholders (per section 104-10 of the ITAA 1997), and • this disposal will happen under a demerger. Therefore, any capital gain or capital loss made by Head Company from CGT event A1 happening on the disposal of its Subsidiary shares under the demerger will be disregarded (section 125-155 of the ITAA 1997). | Summary: CGT event G1 (as described in section 104-135 of the ITAA 1997) will happen to the Head Company shares when the in specie distribution of Subsidiary shares is made. The Head Company shareholders will however be entitled to choose CGT roll-over relief, pursuant to section 125-55 of the ITAA 1997. | Detailed Reasoning - Detailed reasoning: CGT event G1 CGT event G1 (section 104-135 of the ITAA 1997) happens when: • a company makes a payment (which may include providing property) to a shareholder in respect of a share they own in the company; • some or all of the payment (the non-assessable part) is not a dividend nor an amount that is taken to be a dividend under section 47 of the ITAA 1936; and • the payment is not included in the shareholder's assessable income. Under the proposed demerger, Head Company will make a payment to its shareholders in the form of an in-specie distribution of the Subsidiary shares that it holds. Head Company intends to debit a portion of the demerger distribution to its paid up capital. The amount debited to Head Company's paid up capital will not be a dividend and will not be included in the assessable income of Head Company shareholders. Accordingly, CGT event G1 will happen in relation to each Head Company share owned by a Head Company shareholder when Head Company makes the payment of the capital reduction amount which will be satisfied by the in specie distribution of Subsidiary shares. Demerger relief In order for the demerger CGT outcomes contained in Division 125 of the ITAA 1997 to apply to a company or trust, a number of defined terms must be satisfied, including: • demerger group (subsection 125-65(1) of the ITAA 1997); • demerger (subsection 125-70(1) of the ITAA 1997); • demerged entity (paragraph 125-70(6)(a) of the ITAA 1997); and • demerging entity (paragraph 125-70(7)(a) of the ITAA 1997). Demerger Group A demerger group comprises one head entity and at least one demerger subsidiary (subsection 125-65(1) of the ITAA 1997). The demerger group in this case comprises Head Company as the head entity and includes Subsidiary as a demerger subsidiary. Head Company will be the head entity because: • no other member of the demerger group holds ownership interests in Head Company (subsection 125-65(3) of the ITAA 1997); and • there will be no other company or trust capable of being a head entity of a demerger group of which Head Company could be a demerger subsidiary (subsection 125-65(4) of the ITAA 1997). Subsidiary will be a demerger subsidiary of Head Company because Head Company owns ownership interests in Subsidiary that carry more than 20% of the rights to any distribution of income and capital, and the right to exercise more than 20% of the voting power of Subsidiary (subsection 125-65(6) of the ITAA 1997). Demerger Subsection 125-70(1) of the ITAA 1997 describes when a demerger happens. A demerger will happen to the Head Company demerger group because: • there will be a restructuring (paragraph 125-70(1)(a) of the ITAA 1997), and Head Company will dispose of at least 80% of its Subsidiary shares to the owners of Head Company (subparagraph 125-70(1)(b)(i) of the ITAA 1997); • under the restructuring, CGT event G1 will happen to the Head Company shares when Head Company makes the payment of the capital reduction amount which will then be satisfied by the in specie distribution of the Subsidiary shares, and Head Company shareholders will acquire new shares in Subsidiary and nothing else (subparagraph 125-70(1)(c)(i) of the ITAA 1997); • CGT event A1 will happen upon the disposal of shares in Subsidiary. Subsidiary shares will be acquired by Head Company shareholders on the basis of their ownership of shares in Head Company (paragraphs 125-70(1)(d) and subparagraph 125-70(1)(e)(i) of the ITAA 1997); • paragraph 125-70(1)(f) of the ITAA 1997 has been repealed; • neither Head Company nor Subsidiary are superannuation funds (paragraph 125-70(1)(g) of the ITAA 1997); • The Head Company shareholders will acquire Subsidiary shares in the same proportion as they owned Head Company shares just before the demerger (paragraph 125-70(2)(a) of the ITAA 1997); • each of the Head Company shareholders will own shares in Head Company and Subsidiary that (just after the demerger) represent the same proportionate total market value as their Head Company shares represented (just before the demerger) (paragraph 125-70(2)(b) of the ITAA 1997); • under the scheme, there will be no buy-back of shares for the purposes of Division 16K of Part III of the ITAA 1936 (subsection 125-70(4) of the ITAA 1997); and • there will be no rollover available under another provision for any CGT events that happen to the Head Company shares under the restructure (subsection 125-70(5) of the ITAA 1997). Subsidiary is the demerged entity Relevantly, subsection 125-70(6) of the ITAA 1997 defines a demerged entity to be a former member of a demerger group in which ownership interests are acquired by shareholders of the head entity under a demerger. In the present circumstances, Subsidiary is the demerged entity since the Head Company shareholders will receive shares in Subsidiary under a demerger. Head Company is the demerging entity Subsection 125-70(7) of the ITAA 1997 defines a demerging entity to be a member of a demerger group who disposes of at least 80% of its total ownership interests in another member of the demerger group to owners of original interests in the head entity under a demerger. In the present circumstances, Head Company is the demerging entity since it will dispose of 100% of its shares in Subsidiary to the Head Company shareholders under a demerger. Can the Head Company shareholders choose demerger rollover? Subsection 125-55(1) of the ITAA 1997 relevantly provides that demerger rollover may be chosen if: • a shareholder owns a share in a company - the Head Company shareholders will satisfy this requirement; • the company is the head entity of a demerger group - this requirement will be satisfied; • a demerger happens to the demerger group - this requirement will be satisfied; and • under the demerger a CGT event happens to the original interest (Head Company shares) and a new or replacement interest is acquired in the demerged entity - this requirement will be satisfied as CGT event G1 will happen to the Head Company shares when the Head Company shareholders receive Subsidiary shares under the demerger. 1. Head Company shareholders will therefore be eligible to choose rollover under subsection 125-55(1) of the ITAA 1997. | Summary: All or any part of the in specie distribution of the Subsidiary shares to Head Company shareholders that constitutes a dividend, for the purposes of subsection 6(1) of the ITAA 1936, will be a demerger dividend as defined in subsection 6(1) of the ITAA 1936, and therefore will be neither assessable income nor exempt income, pursuant to subsections 44(3) and 44(4) of the ITAA 1936. | Detailed Reasoning - Detailed reasoning: Is a dividend paid under the demerger? Subsection 44(1) of the ITAA 1936 includes in a shareholder's assessable income a dividend, as defined in subsection 6(1) of the ITAA 1936, paid to a shareholder out of company profits. Capital reduction amount The definition of a dividend in subsection 6(1) of the ITAA 1936 excludes amounts debited against an amount standing to the credit of the share capital account of the company (paragraph (d) of the subsection 6(1) of the ITAA 1936 definition of a dividend). As the capital reduction amount will be debited against an amount standing to the credit of the share capital account (as that term is defined in subsection 6(1) of the ITAA 1936) of Head Company it will not be a dividend, as defined in subsection 6(1) of the ITAA 1936. Therefore, the capital reduction amount will not be assessable income of the shareholders of Head Company for the purposes of subsection 44(1) of the ITAA 1936. Dividend The definition of a dividend includes any amount distributed or credited by a company to any of its shareholders. Therefore, the in specie distribution of the Subsidiary shares will, in part, constitute a dividend of the Head Company shareholders. The total amount of the dividend will be the market value of the Subsidiary shares at the time of the demerger excluding the amount debited to the share capital account of Head Company. In general, a dividend satisfied by a distribution of property (such as shares in a subsidiary) will be a dividend paid out of profits derived if, immediately after the distribution of that property, the market value of the assets of the company exceed the total amount (as shown in the company's books of account) of its liabilities and share capital (see paragraph 8 of Taxation Ruling TR 2003/8). However, a demerger dividend is taken not to have been paid out of profits and is neither an assessable income nor an exempt income amount (subsections 44(3) and 44(4) of the ITAA 1936) where: • the dividend is a demerger dividend (as defined in subsection 6(1) of the ITAA 1936); • the head entity does not elect that subsections 44(3) and 44(4) of the ITAA 1936 do not apply to the demerger dividend (subsection 44(2) of the ITAA 1936); and • subsection 44(5) of the ITAA 1936 is satisfied. In the present circumstances, the distribution paid to the Head Company shareholders under the demerger would satisfy the conditions necessary to be a demerger dividend and would therefore be neither assessable income nor exempt income pursuant to subsections 44(3) and 44(4) of the ITAA 1936. | Summary: The Commissioner will not make a determination under subsection 45B(3) of the ITAA 1936 that sections 45BA or section 45C of the ITAA 1936 will apply to the whole, or any part, of any demerger benefit or capital benefit provided under the proposed demerger to the Head Company shareholders. | Detailed Reasoning - Detailed reasoning: Subsection 45B(1) of the ITAA 1936 provides that the purpose of section 45B of the ITAA 1936 is to ensure that relevant amounts are treated as dividends for tax purposes if the capital and profit components of a demerger allocation do not reflect the circumstances of the demerger, or certain payments, allocations or distributions are made in substitution for dividends. Subsection 45B(2) of the ITAA 1936 sets out the conditions that must be met in order for section 45B of the ITAA 1936 to apply. Relevantly, this section applies if: • there is a scheme under which a person is provided with a demerger benefit or capital benefit by a company (paragraph 45B(2)(a) of the ITAA 1936); and • under the scheme, a taxpayer, who may or may not be the person provided with the demerger benefit or the capital benefit, obtains a tax benefit (paragraph 45B(2)(b) of the ITAA 1936); and • having regard to the relevant circumstances of the scheme, it would be concluded that the person, or one of the persons, who entered into the scheme or carried out the scheme or any part of the scheme did so for a purpose, other than an incidental purpose, of enabling a taxpayer to obtain a tax benefit (paragraph 45B(2)(c) of the ITAA 1936). Where the requirements of subsection 45B(2) of the ITAA 1936 are met, subsection 45B(3) of the ITAA 1936 empowers the Commissioner to make a determination under either or both of section 45BA of the ITAA 1936 in relation to a demerger benefit and section 45C of the ITAA 1936 in relation to a capital benefit. The effect of a determination made under paragraph 45B(3)(a) of the ITAA 1936 is that part or all of a demerger benefit will be treated as not being a demerger dividend (subsection 45BA(1) of the ITAA 1936). The effect of a determination made under paragraph 45B(3)(b) of the ITAA 1936 is that part or all of a capital benefit will be an unfranked dividend paid to the relevant taxpayer out of profits (subsections 45C(1) and 45C(2) of the ITAA 1936). Scheme A 'scheme' for the purposes of section 45B of the ITAA 1936 is taken to have the same meaning as provided in subsection 177A(1) of Part IVA of the ITAA 1936. That definition is widely drawn and includes any agreement, arrangement, understanding, promise, undertaking, scheme, plan, or proposal. In particular, a scheme is anything that satisfies any of the terms in the statutory definition. In the present circumstances, the disposal of shares in Subsidiary by Head Company to the Head Company shareholders under the proposed demerger constitutes the relevant scheme for the purposes of section 45B of the ITAA 1936. Demerger benefit and capital benefit The provision of ownership interests to a shareholder under a demerger constitutes the shareholder being provided with a demerger benefit (subsection 45B(4) of the ITAA 1936). Therefore, under the proposed scheme, the market value of the Subsidiary shares provided to the Head Company shareholders constitutes a demerger benefit. The provision of those Subsidiary shares also constitutes a capital benefit to the extent it is not a demerger dividend (paragraph 45B(5)(a) and subsection 45B(6) of the ITAA 1936). As such, the market value of the Subsidiary shares distributed under the demerger less the demerger dividend is a capital benefit provided to the Head Company shareholders. Tax benefit Subsection 45B(9) of the ITAA 1936 provides, inter alia , that a relevant taxpayer 'obtains a tax benefit' if an amount of tax payable by that taxpayer would, apart from the operation of section 45B of the ITAA 1936, be less than the amount that would have been payable if the demerger benefit had been an assessable dividend or the capital benefit had been an assessable dividend. As a result of the demerger, the Head Company shareholders would, apart from the operation of section 45B of the ITAA 1936, receive a demerger dividend equal to the market value of the shares in Subsidiary at the time of the demerger, less the amount debited to share capital, that is neither assessable income nor exempt income. The tax payable by Head Company shareholders on the demerger would therefore be higher if the demerger benefit was an assessable dividend. In addition, any capital gain that would otherwise be realised from CGT event G1 happening upon the payment of the capital reduction amount (the capital benefit) will be disregarded by virtue of the demerger rollover provisions in section 125-80 of the ITAA 1997. The tax payable by Head Company shareholders on the demerger would consequently also be higher if the capital benefit was an assessable dividend. Accordingly, Head Company shareholders will obtain a tax benefit for the purposes of section 45B of the ITAA 1936. More than incidental purpose Given that the proposed demerger is a scheme that provides a tax benefit to the Head Company shareholders, the operation of section 45B of the ITAA 1936 turns on the objective purpose test in paragraph 45B(2)(c) of the ITAA 1936. This paragraph provides that the section will apply if enabling the shareholder to obtain the tax benefit is a more than incidental purpose of the scheme. The requisite purpose is to be determined having regard to the relevant circumstances of the scheme which are listed inclusively in subsection 45B(8) of the ITAA 1936. Each of the circumstances must be considered in order to determine whether or not, individually or collectively, they reveal the existence of the requisite purpose. Relevant circumstances The relevant circumstances include the tax and non-tax (i.e. business and other financial) implications of the scheme, the latter covered largely by the matters in subsection 177D(2) of the ITAA 1936, which are included in subsection 45B(8) of the ITAA 1936 by virtue of paragraph (k). In this case, the nature of the scheme indicates that the more pertinent circumstances are those covered by paragraphs (a), (b), (i), (j) and (k) of subsection 45B(8) of the ITAA 1936. Paragraph 45B(8)(a) of the ITAA 1936 refers to the extent to which the capital benefit or demerger benefit is attributable to capital or profits (realised and unrealised) of the company or an associate, within the meaning of section 318 of the ITAA 1936, of the company. If the composition of the benefit is inconsistent with the substance (that is, the capital and profit it is attributable to) this would tend to a conclusion that the requisite purpose exists. In the current circumstances, it is accepted that the return of capital is attributable to share capital (and the demerger dividend appropriately sourced from realised and unrealised profits). Accordingly this factor does not incline towards a conclusion as to the requisite purpose. Paragraph 45B(8)(b) of the ITAA 1936 refers to the pattern of distributions made by a company or an associate of the company. In this case, Head Company has historically distributed fully franked dividends annually. There is nothing to suggest that the present distribution is in substitution for a dividend and as such this factor does not incline towards a conclusion as to the requisite purpose. Paragraph 45B(8)(i) of the ITAA 1936 directs attention to those cases where the scheme of demerger involves the provision of ownership interests and the later disposal of those interests, or an increase in the value of ownership interests and the later disposal of those interests; recognising that the proceeds on disposal of such ownership interests provide the equivalent of a cash dividend in a more tax-effective form. In this regard, there is no pre-conceived agreement, plan or intention of the current shareholders to sell their holding in either Head Company or Subsidiary immediately after the demerger. Accordingly this factor does not incline for, or against, a conclusion as to the requisite purpose. Paragraph 45B(8)(j) of the ITAA 1936 applies to circumstances where the profits and assets of the demerging entity are attributable to or acquired under transactions with associated entities. In this case, there have been no transactions of this nature between Head Company and Subsidiary apart from transactions associated with the proposed demerger. This factor does not incline for, or against, a conclusion as to the requisite purpose. Paragraph 45B(8)(k) of the ITAA 1936- Part IVA matters Paragraph 45B(8)(k) of the ITAA 1936 requires regard to be had to any of the matters referred to in paragraphs 177D(2)(a) to 177D(2)(h) of the ITAA 1936. The eight matters in subsection 177D(2) of the ITAA 1936 constitute the essential facts and circumstances of a scheme, including the outcomes for the parties to the scheme, by reference to which the tax and non-tax objects of the scheme can be identified and contrasted from an objective point of view. If, on the one hand, reference to the matters in subsection 177D(2) of the ITAA 1936 reveals that the essential object of a demerger is to produce changes and improvements to the business structures of the corporate group, the tax free aspect of the transfer of ownership interests to the head entity's owners is more likely to be an incidental object of the demerger. If, on the other hand, reference to those matters reveals that the transfer of ownership interests from the corporate group to the head entity's shareholders is an essential object of the scheme, the tax-free aspect of the transfer would ordinarily be a substantial object of the demerger. Paragraph 177D(2)(a) of the ITAA 1936 requires an inquiry into the manner in which the scheme was entered into or carried out. Given the commercial reasons for the demerger outlined in the application, it is considered that the essential object of the proposed demerger is to achieve the separation of each business in order for both Head Company and Subsidiary to become stand-alone entities. In light of this, it is considered that the 'manner' of the scheme does not point toward there being a more than incidental purpose of obtaining the tax benefit. Paragraph 177D(2)(b) of the ITAA 1936 refers to the form and substance of the scheme. The form of a scheme is the way it presents and the substance of a scheme is a reference to its essential nature which normally would be determined from the effects of the scheme on the commercial and economic circumstances of the parties involved in the scheme. The applicant has argued that the commercial benefits of the scheme post demerger are significant and include the removal of various restrictions and inefficiencies that exist as a result of operating these two businesses under the one company, allowing management and staff to solely focus on that part of the business that is aligned with their skillsets with a view to pursuing, promoting and growing the same (with a possibility of introducing new equity partners) and a potential increase in clients and associated revenue that would be unlikely under the current structure. Based on a review of the benefits outlined in the ruling application that both businesses expect to achieve, it is considered that the form and substance of the scheme does not point toward there being a more than incidental purpose of obtaining the tax benefit. It is considered that none of the matters in paragraphs (c) to (h) of subsection 177D(2) of the ITAA 1936 inclines towards the requisite purpose. Conclusion Having regard to the relevant circumstances of the proposed scheme, as set out in subsection 45B(8) of the ITAA 1936, it is considered that the proposed demerger is not being undertaken for the more than incidental purpose of obtaining a tax benefit. Accordingly, the Commissioner will not make a determination under subsection 45B(3) of the ITAA 1936 that section 45BA of the ITAA 1936 or section 45C of the ITAA 1936 will apply to the whole, or any part, of any benefit provided to the Head Company shareholders under the proposed arrangement. | Summary: Section 45 of the ITAA 1936 will not apply to the whole or any part of the in specie distribution of Subsidiary shares provided to the Head Company shareholders under the demerger. | Detailed Reasoning - Detailed reasoning: Section 45 of the ITAA 1936 applies where a company streams the provision of shares and the payment of minimally franked dividends to its shareholders in such a way that the shares are received by some shareholders and minimally franked dividends are received by other shareholders. Minimally franked dividends are dividends which are not franked or are franked to less than 10% (subsection 45(3) of the ITAA 1936). The in specie distribution of shares in Subsidiary will be made to all Head Company shareholders in proportion to their ownership interests in Head Company. Therefore, section 45 of the ITAA 1936 will not apply to the whole, or any part of, the Subsidiary shares received by Head Company shareholders. | Summary: Section 45A of the ITAA 1936 will not apply to the whole or any part of the in specie distribution of Subsidiary shares provided to the Head Company shareholders under the demerger. | Detailed Reasoning - Detailed reasoning: Section 45A of the ITAA 1936 applies where capital benefits are streamed to some shareholders (the Advantaged Shareholders), who would derive a greater benefit from the capital benefits than other shareholders (the Disadvantaged Shareholders) and these Disadvantaged Shareholders receive, or are likely to receive, dividends. Although a 'capital benefit', as defined in paragraph 45A(3)(b)) of the ITAA 1936, will be provided to Head Company shareholders as part of the demerger distribution, all shareholders will benefit equally and there is no indication of 'streaming' of capital benefits to some shareholders and dividends to others. Therefore, section 45A of the ITAA 1936 will not apply to the whole or any part of any capital benefits provided to Head Company shareholders and the Commissioner will not make a determination under subsection 45A(2) of the ITAA 1936 that section 45C of the ITAA 1936 applies.