Class Ruling CR 2013/60
Date of effect: 1 July 2012

What this ruling is about: 1. This Ruling sets out the Commissioner's opinion on the way in which the relevant provision(s) identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates. Relevant provision(s) 2. The relevant provisions dealt with in this Ruling are: All legislative references are to the ITAA 1997 unless otherwise stated. Class of entities 3. The class of entities to which this Ruling applies is all persons who: 4. In this Ruling, the entities belonging to this class are referred to as 'participants'. Qualifications 5. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. 6. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 9 to 22 of this Ruling. 7. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then:

Class of entities or scheme: 3. The class of entities to which this Ruling applies is all persons who: 4. In this Ruling, the entities belonging to this class are referred to as 'participants'. | Qualifications: 5. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. 6. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 9 to 22 of this Ruling. 7. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 8. This Ruling applies from 1 July 2012 to 30 June 2014. The Ruling continues to apply after 30 June 2014 to all entities within the specified class who entered into the specified scheme during the term of the Ruling. However, this Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10). 9. The following description of the scheme is based on information provided to the Commissioner. The following documents or relevant parts of them form part of and are to be read with the description: Note : certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. | Bathurst Resources Limited (BRL): 10. BRL and its 100% owned New Zealand resident subsidiaries carry on the business of coal mining in New Zealand. 11. BRL is a public company limited by shares that was incorporated on 30 May 2007 and is a resident of Australia for income tax purposes. 12. All of the shares in BRL are ordinary shares and are listed on both the Australian Securities Exchange (ASX) and NZX Main Board (NZSX). 13. In addition to options, BRL has issued the following performance rights to certain employees and management personnel of BRL (the participants) in accordance with its Long Term Incentive Plan (LTIP): 14. Prior to 27 June 2013 (the Record Date) for the Proposed Restructure, an additional 1,388,889 performance rights were issued (on 13 June 2013). This issue was subject to shareholder approval. 15. The performance rights are issued by BRL for no consideration, i.e. issued at a discount. 16. Under the LTIP, the BRL Performance Rights are offered to Eligible Executives', being an executive of BRL or any other person that the board of BRL determines should be allowed to participate in the LTIP, provided that person is an employee of BRL and takes part in the management of the BRL Group. 17. The earliest vesting date for the BRL Performance Rights expected to be on issue at the Record Date was 30 June 2013. | The proposed restructure: 18. On 2 April 2013, BRL announced to both the ASX and NZSX, the intention to proceed with a reorganisation of BRL's corporate structure, subject to Federal Court, shareholder and regulatory approvals. 19. The reorganisation (the Proposed Restructure) will broadly involve the following steps: 20. Under the Proposed Restructure, each participant will enter into a binding agreement with BRL to exchange their BRL Performance Rights for the same number of NZ NewCo Performance Rights. The terms of the NZ NewCo Performance Rights will be substantially similar to the terms of the BRL Performance Rights. The binding agreements will supersede the 'change of control event' accelerated vesting provision in the LTIP. 21. The reorganisation is subject to both shareholder and court approval, and will be undertaken by way of a court-approved scheme of arrangement (the scheme of arrangement) under section 411 of the Corporations Act 2001 (Cth ). 22. The scheme of arrangement requires both shareholder and court approval. For the shareholders, approval was obtained by the requisite majority of ordinary shareholders, and by at least 75% in value of the votes cast, at the scheme meeting held on 13 June 2013. 23. A BRL Performance Right held by a participant prior to the Proposed Restructure is an Employee Share Scheme (ESS) interest for the purposes of Division 83A (section 83A-10). 24. Where a participant's BRL Performance Right is replaced with a NZ NewCo Performance Right under the Proposed Restructure, the NZ NewCo Performance Right will be treated as a continuation of the ESS interest (BRL Performance Right) they replaced for the purposes of section 83A-130. | Performance Rights acquired on or after 1 July 2009: 25. As the NZ NewCo Performance Right will be treated as a continuation of the ESS interests, neither the vesting of nor subsequent disposal of BRL Performance Rights in exchange for NZ NewCo Performance Rights will be an ESS deferred taxing point (sections 83A-120 and 83A-130). | Capital gains and losses: 26. Any capital gains or capital losses that arise as a result of the exchange of BRL Performance Rights for NZ NewCo Performance Rights under the Proposed Restructure will be disregarded in accordance with section 130-80. Commissioner of Taxation 31 July 2013 | Application of Division 83A: 27. Division 83A applies to shares, rights and stapled securities acquired under an employee share scheme on or after 1 July 2009. 28. By virtue of paragraph 83A-5(2)(a) of the Income Tax (Transitional Provisions) Act 1997 (IT(TP)A 1997), Division 83A applies to certain shares, rights and stapled securities acquired before 1 July 2009. 29. The LTIP falls within the meaning of an 'employee share scheme' in subsection 83A-10(2) as: 30. As the NZ NewCo Performance Rights will be granted to the participants on substantially the same terms as the BRL Performance Rights, the NZ NewCo Performance Rights will also be ESS interests. | Section 83A-130: 31. The employee share scheme rules contained in section 83A-130 ensure that employees are not adversely affected by takeovers and restructures, by allowing taxpayers who have deferred tax under an employee share scheme to roll-over an ESS deferred taxing point that would otherwise occur due to a restructure. 32. The Proposed Restructure satisfies the requirements of section 83A-130 because: 33. Accordingly, the NZ NewCo Performance Rights acquired by participants will be, for the purposes of Division 83A, treated as a continuation of BRL Performance Rights, by deeming the three-year holding period to have been met and providing a form of roll-over relief for ESS deferred taxing points. 34. However, if a participant disposes of the beneficial interest in a NZ NewCo share within 30 days of acquiring the NZ NewCo Performance Right, then the ESS deferred taxing point is the time of the disposal of the share in accordance with paragraph 83A-120(3)(b). | Capital gains and losses: 35. When the BRL Performance Rights are released in exchange for the NZ NewCo Performance Rights, CGT event A1 will occur. 36. Subsection 130-80(1) operates to disregard any capital gain or capital loss to the extent that it resulted from that CGT event because: 37. However, there would be no disposal where the participant's replacement NZ NewCo Performance Rights are, for the purposes of section 83A-130, treated as a continuation of rights in NZ NewCo. In such circumstances, the reorganisation alone would not trigger a cessation time and therefore there would be no ESS deferred taxing point. 38. The following is a detailed contents list for this Ruling: © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft

Ruling: 23. A BRL Performance Right held by a participant prior to the Proposed Restructure is an Employee Share Scheme (ESS) interest for the purposes of Division 83A (section 83A-10). 24. Where a participant's BRL Performance Right is replaced with a NZ NewCo Performance Right under the Proposed Restructure, the NZ NewCo Performance Right will be treated as a continuation of the ESS interest (BRL Performance Right) they replaced for the purposes of section 83A-130. | Performance Rights acquired on or after 1 July 2009: 25. As the NZ NewCo Performance Right will be treated as a continuation of the ESS interests, neither the vesting of nor subsequent disposal of BRL Performance Rights in exchange for NZ NewCo Performance Rights will be an ESS deferred taxing point (sections 83A-120 and 83A-130). | Capital gains and losses: 26. Any capital gains or capital losses that arise as a result of the exchange of BRL Performance Rights for NZ NewCo Performance Rights under the Proposed Restructure will be disregarded in accordance with section 130-80. Commissioner of Taxation 31 July 2013


Appendix: Application of Division 83A: 27. Division 83A applies to shares, rights and stapled securities acquired under an employee share scheme on or after 1 July 2009. 28. By virtue of paragraph 83A-5(2)(a) of the Income Tax (Transitional Provisions) Act 1997 (IT(TP)A 1997), Division 83A applies to certain shares, rights and stapled securities acquired before 1 July 2009. 29. The LTIP falls within the meaning of an 'employee share scheme' in subsection 83A-10(2) as: 30. As the NZ NewCo Performance Rights will be granted to the participants on substantially the same terms as the BRL Performance Rights, the NZ NewCo Performance Rights will also be ESS interests. | Section 83A-130: 31. The employee share scheme rules contained in section 83A-130 ensure that employees are not adversely affected by takeovers and restructures, by allowing taxpayers who have deferred tax under an employee share scheme to roll-over an ESS deferred taxing point that would otherwise occur due to a restructure. 32. The Proposed Restructure satisfies the requirements of section 83A-130 because: 33. Accordingly, the NZ NewCo Performance Rights acquired by participants will be, for the purposes of Division 83A, treated as a continuation of BRL Performance Rights, by deeming the three-year holding period to have been met and providing a form of roll-over relief for ESS deferred taxing points. 34. However, if a participant disposes of the beneficial interest in a NZ NewCo share within 30 days of acquiring the NZ NewCo Performance Right, then the ESS deferred taxing point is the time of the disposal of the share in accordance with paragraph 83A-120(3)(b). | Capital gains and losses: 35. When the BRL Performance Rights are released in exchange for the NZ NewCo Performance Rights, CGT event A1 will occur. 36. Subsection 130-80(1) operates to disregard any capital gain or capital loss to the extent that it resulted from that CGT event because: 37. However, there would be no disposal where the participant's replacement NZ NewCo Performance Rights are, for the purposes of section 83A-130, treated as a continuation of rights in NZ NewCo. In such circumstances, the reorganisation alone would not trigger a cessation time and therefore there would be no ESS deferred taxing point.


What this Ruling is about | NOT LEGALLY BINDING SECTION: | A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. | If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. | Number of Performance Rights Issued | Appendix 2 - Detailed contents list


Related rulings: TR 2006/10
Legislative references: ITAA 1936 6(1) IT(TP)A 1997 83A-5(2)(a) ITAA 1997 Div 83A ITAA 1997 83A-10 ITAA 1997 83A-10(1)(b) ITAA 1997 83A-10(2) ITAA 1997 83A-35(8) ITAA 1997 83A-120 ITAA 1997 83A-120(3)(b) ITAA 1997 83A-130 ITAA 1997 83A-130(1)(a)(i) ITAA 1997 83A-130(1)(b) ITAA 1997 83A-130(2) ITAA 1997 83A-130(2)(a) ITAA 1997 83A-130(2)(b) ITAA 1997 83A-130(3) ITAA 1997 83A-130(4) ITAA 1997 83A-130(6) ITAA 1997 83A-130(9)(a) ITAA 1997 83A-130(9)(b) ITAA 1997 130-80 ITAA 1997 130-80(1) ITAA 1997 130-80(1)(a) ITAA 1997 130-80(1)(b) ITAA 1997 130-80(1)(d)(ii) ITAA 1997 130-80(2) ITAA 1997 Div 230 ITAA 1997 995-1 Taxation Administration Act 1953 Copyright Act 1968 Corporations Act 2001 411
Subject references: capital gains tax continuation of ESS interests employee share schemes performance rights restructure roll-over takeover