Class Ruling CR 2011/61
Date of effect: 1 July 2010

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 considered in this Ruling are: All subsequent legislative references in this Ruling are to the ITAA 1997 unless otherwise indicated. Class of entities 3. The class of entities to which this Ruling applies are the shareholders of Goldman Sachs & Partners Australia Group Holdings Pty Ltd (GSPA) who hold P Class Shares in GSPA and: and who engage in one or more of the following transactions: Qualifications 4. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. 5. 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 31 of this Ruling. 6. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 7. This work is copyright. Apart from any use as permitted under the Copyright Act 1968 , no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to:

Class of entities or scheme: 3. The class of entities to which this Ruling applies are the shareholders of Goldman Sachs & Partners Australia Group Holdings Pty Ltd (GSPA) who hold P Class Shares in GSPA and: and who engage in one or more of the following transactions: | Qualifications: 4. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. 5. 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 31 of this Ruling. 6. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 7. This work is copyright. Apart from any use as permitted under the Copyright Act 1968 , no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to: 8. This Ruling applies from 1 July 2010 to 30 June 2012. The Ruling continues to apply after 30 June 2012 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 by the applicant. The following documents, or relevant parts of them form part of and are to be read with the description: | GSPA: 10. GSPA is an Australian resident company that conducts an investment banking business, primarily in Australia and New Zealand and is limited by shares. GSPA is registered as a company under the Corporations Act 2001 and it is the head company of a tax consolidated group. 11. GSPA has only ordinary shares on issue, and it does not have on issue any options over any of its ordinary shares. 12. GSPA's share capital structure consists of M Class Shares and P Class Shares, both of which are classified as ordinary shares under the Constitution. The M Class Shares which consist of 45% of the ordinary share capital of GSPA are owned by the GS Group. The remaining 55% are P Class Shares and are owned by current and former GSPA employees and their associated entities and the CST. 13. In some cases, the ownership of P Class Shares is held by associated entities of those current and former employees and by a company as nominee for the underlying P Class Beneficial Owners (the Nominee Company). | The GS Group: 14. The GS Group is incorporated in Delaware, USA and is listed on the New York Stock Exchange. Like GSPA, the GS Group also conducts an investment banking business but on a global scale. | The Offer: 15. On 7 April 2011, GSPA and the GS Group signed a Merger Implementation Agreement under which it was proposed that the GS Group (or the Permitted Nominee) would acquire the remaining 55% of GSPA. The proposed acquisition would be implemented in accordance with an offer made by the GS Group under the GSPA Constitution (the Offer). 16. The GSPA Constitution requires that the Offer be on identical terms (as defined in the Constitution) for all P Class Shareholders. It permits the making of the Offer by the GS Group where the P Class Shareholders pass an ordinary resolution permitting the Offer to be made. If the Offer is accepted by P Class Shareholders with 75% or more of the voting power attached to P Class Shares, the remaining P Class Shareholders will have their shares compulsorily acquired by the GS Group in accordance with the Offer, pursuant to the GSPA Constitution. 17. The Offer Document was issued by the GS Group. The Offer opened for acceptance on 13 May 2011 and subsequently closed on 27 May 2011. The completion date of the Offer is 1 July 2011 (Scheme Completion Date). 18. Under the Offer, the participating P Class Shareholders who dispose of their P Class Shares to the Purchaser will receive: 19. The number of shares of Elected or Consideration Common Stock that can be allocated to a P Class Shareholder is calculated in accordance with the formula provided in the Offer Document. A P Class Shareholder is entitled to receive cash in respect of any fractional entitlements resulting from this calculation. 20. The cash amount payable to a P Class Shareholder is the Total Cash Amount which comprises of: 21. The Total Cash Amount payable under the Offer may be adjusted after the Scheme Completion Date. 22. GS Group Common Stock received under the Offer will be held in a custody account in the name of the relevant P Class Shareholder (or if the relevant P Class Shareholder so directs, their P Class Beneficial Owner) to be released at future points in time. 23. The Offer was subject to regulatory approvals from the Foreign Investment Review Board (FIRB) and various other regulatory bodies. | The Company Share Trust (CST) Share Offer: 24. The CST is a discretionary trust established by a trust deed to hold P Class Shares. 25. The CST held approximately 1% of the total shares in GSPA as at the date of the Offer Document. The CST offered to sell all of its P Class Shares to the remaining P Class Shareholders in proportion to their shareholding as at the record date for the CST Share Offer (CST Share Offer). 26. The CST Share Offer document sets out the details of the offer including the purchase price (CST Sale Price), the number of shares that could be acquired and the timing and manner of payment if the CST Share Offer was accepted. 27. The CST Share Offer was due for completion 3 days before the Scheme Completion Date and was independent of the Offer. 28. A P Class Shareholder who accepted the CST Share Offer would be able to participate in the Offer in respect of those P Class Shares acquired from the CST. | The payment of Dividend by GSPA: 29. GSPA declared a dividend on 24 March 2011 and paid the dividend on 31 March 2011 (the Dividend). The record date for the Dividend was 24 March 2011. 30. The Dividend was part of GSPA's normal dividend payment processes, that is, a fully franked dividend paid to all shareholders of GSPA. 31. The Dividend was debited against GSPA's retained earnings and funded from GSPA's existing cash reserves. Neither the GS Group, nor its associates, has funded the Dividend. | CGT event A1: 32. CGT event A1 happens when a P Class Shareholder disposes of their P Class Shares to the Purchaser (subsections 104-10(1) and (2)). 33. For P Class Shareholders who accepted the Offer, CGT event A1 happens on the later of the day that the P Class Shareholder accepted the Offer and when the condition relating to FIRB approval was satisfied (paragraph 104-10(3)(a)). CGT event A1 will not happen unless the condition relating to FIRB approval is satisfied. 34. A P Class Shareholder will make a capital gain from CGT event A1 happening if the capital proceeds from the disposal of a P Class Share exceed its cost base. The capital gain is equal to the amount of the excess. A P Class Shareholder will make a capital loss if those capital proceeds are less than the P Class Share's reduced cost base (subsection 104-10(4)). The capital loss is equal to the amount of the difference. 35. Where a P Class Share is held by the Nominee Company on behalf of a P Class Beneficial Owner, the CGT consequences set out in this Ruling will apply to the P Class Beneficial Owner rather than the Nominee Company. | Capital proceeds: 36. The capital proceeds from CGT event A1, as at the time of the CGT event, will consist of the Total Cash Amount and the market value of any property received in the form of GS Group Common Stock (subsection 116-20(1)). | Custody arrangement: 37. There are no CGT consequences when GS Common Stock is deposited in and withdrawn from a custody account under the terms of the Offer (paragraph 104-10(7)(a)). | Repayment of capital proceeds: 38. The capital proceeds from CGT event A1 happening will be reduced if any Consideration Common Stock is returned or forfeited by a P Class Shareholder under the terms of the Offer. The capital proceeds will be reduced by the market value of the Consideration Common Stock returned or forfeited calculated at the time of the CGT event A1 (section 116-50). | Scrip for scrip roll-over: 39. A P Class Shareholder who makes a capital gain from the disposal of their P Class Shares in return for GS Group Common Stock may, subject to paragraph 41 of this Ruling, choose roll-over under Subdivision 124-M (section 124-780). 40. If a P Class Shareholder makes a capital loss from the disposal of their P Class Shares, they cannot choose scrip for scrip roll-over under Subdivision 124-M (subsection 124-780(3)). 41. If the capital gain would be disregarded otherwise than by reason of a roll-over, the scrip for scrip roll-over cannot be chosen (subsection 124-795(2)). 42. If roll-over under Subdivision 124-M is chosen, that part of the capital gain that is referable to the receipt of the GS Group Common Stock when CGT event A1 happens is disregarded (subsections 124-785(1)). | Capital gain referable to cash: 43. The capital gain will not be disregarded to the extent that the P Class Shareholder will receive cash for the disposal of their P Class Share as the Total Cash Amount is considered ineligible proceeds under subsection 124-790(1). 44. The part of the capital gain on a P Class Share that is referable to the Total Cash Amount is the ineligible proceeds less the part of the cost base of the P Class Share reasonably attributable to the Total Cash Amount. In working out the part of the cost base of a P Class Share that is reasonably attributable to the Total Cash Amount, the Commissioner accepts the following formula: | Discount capital gain: 45. If a P Class Shareholder makes a capital gain and roll-over under Subdivision 124-M is not chosen, or cannot be chosen, they may be eligible to treat the gain as a discount capital gain provided that the P Class Shareholder satisfies the requirements of Subdivision 115-A. | Cost base of GS Group Common Stock: 46. Where scrip for scrip roll-over is chosen, the first element of the cost base and reduced cost base of each GS Group Common Stock is equal to the part of the cost base of the P Class Shares exchanged for the relevant GS Group Common Stock (that is, the part of the cost base of the P Class Shares that does not relate to the cash consideration received) (subsections 124-785(2) and 124-785(4)). 47. Where roll-over under Subdivision 124-M is not chosen, the first element of the cost base and reduced cost base of each GS Group Common Stock is equal to the market value of the P Class Shares referable to the acquisition of the GS Group Common Stock as at the time of that acquisition (subsections 110-25(2), 110-55(2) and 112-30(1)). | Acquisition date of GS Group Common Stock: 48. The acquisition date of the GS Group Common Stock is the later of the date when the P Class Shareholder accepted the Offer and when the condition relating to FIRB approval was satisfied (Item 2 of the table in section 109-10). 49. For the purpose of determining whether a capital gain made from any later disposal of GS Group Common Stock is eligible to be treated as a discount capital gain, a P Class Shareholder who chooses scrip for scrip roll-over is taken to have acquired their GS Group Common Stock when they acquired the corresponding P Class Shares (Item 2 of the table in subsection 115-30(1)). | CGT - First element of the cost base: 50. A P Class Shareholder who acquired a CST Share under the CST Share Offer will have the CST Sale Price as the first element of the cost base under subsection 110-25(2). | Assessability of the Dividend: 51. The Dividend constitutes a 'dividend' as defined in subsection 6(1) of the ITAA 1936. 52. A GSPA shareholder who received the Dividend is required to include the Dividend as assessable income under subparagraph 44(1)(a)(i) of the ITAA 1936. | Gross up and tax offset: 53. A P Class Shareholder who received the Dividend directly will, under section 207-20: subject to being a qualified person. | Refundable tax offset: 54. A P Class Shareholder who is entitled to a tax offset under subsection 207-20(2), in respect of the franking credit received, will also be subject to the refundable tax offset rules in Division 67, unless specifically excluded under section 67-25. | Qualified persons: 55. The payment of the Dividend will not constitute a related payment for the purposes of former section 160APHN of the ITAA 1936. 56. Accordingly, each GSPA shareholder who has not previously had to satisfy the holding period rule will need to hold their GSPA shares 'at risk' for a continuous period of at least 45 days in the primary qualification period in order to be a qualified person. 57. A P Class Shareholder who accepted the Offer will no longer be considered to hold their P Class Shares 'at risk' for the purposes of former Division 1A of the ITAA 1936 once the Offer becomes unconditional. A P Class Shareholder who did not accept the Offer, but is required to transfer their shares after 75% acceptance is achieved pursuant to the GSPA Constitution, will no longer hold their shares 'at risk' from the date the P Class Directors, acting under power of attorney, signed the acceptance form on their behalf and the Offer becomes unconditional. 58. P Class Shareholders who have held their P Class Shares 'at risk' for a continuous period of 45 days during the period from when they acquired their P Class Shares to 9 May 2011 will be qualified persons with respect to the Dividend. As the Offer did not open until 13 May 2011, the Offer will not affect whether a P Class Shareholder holds their P Class Shares 'at risk' as there is more than 45 days between when the Dividend was paid and the opening of the Offer. | The anti-avoidance provisions: 59. The Commissioner will not make a determination under paragraph 204-30(3)(c) to deny the whole, or any part, of the imputation benefit received in relation to the Dividend. 60. The Commissioner will not make a determination under paragraph 177EA(5)(b) of the ITAA 1936 to deny the whole, or any part, of the imputation benefit received in relation to the Dividend. 61. Sections 177E of the ITAA 1936 and 207-145 of the ITAA 1997 will not apply in respect of the Offer. Commissioner of Taxation 22 June 2011 | Scrip for scrip roll-over: 62. The tax consequences that arise concerning the Offer are outlined in the Ruling part of this document. 63. The significant tax consequence is the availability of scrip for scrip roll-over under Subdivision 124-M. Scrip for scrip roll-over enables a shareholder to disregard a capital gain from a share that is disposed of as part of a corporate takeover or merger if the shareholder receives a replacement share in the exchange. It also provides special rules for calculating the cost base and reduced cost base of the replacement share. 64. Subdivision 124-M contains a number of conditions for, and exceptions to, a shareholder being eligible to choose scrip for scrip roll-over. The main conditions and exceptions that are relevant to the Offer are: 65. Under the Offer, the conditions for roll-over under Subdivision 124-M are satisfied. | CGT event A1 happening: 66. CGT event A1 in section 104-10 will happen if there is a change in the ownership of an asset from one entity to another. This event happens when a contract to dispose of the asset is entered into, or if there is no contract, when the change of ownership occurs (subsection 104-10(3)). 67. The Offer is subject to FIRB approval being granted. Under clause 8.1(b) of the Offer Document, this is a condition precedent to the formation of the contract. 68. Where a P Class Shareholder accepts the Offer, CGT event A1 happens at the later of: | No CGT event happening: 69. Under the terms of the Offer, a P Class Shareholder is required to deposit their GS Group Common Stock into custody accounts. These accounts are in the name of the P Class Shareholder or, if the relevant P Class Shareholder so directs, their P Class Beneficial Owner. The P Class Shareholder or P Class Beneficial Owner (as applicable) receives dividends and is entitled to vote in relation to the GS Group Common Stock held in those accounts. There are no CGT consequences when the GS Group Common Stock is placed in the custody accounts, or when it is withdrawn from those accounts. | Capital proceeds: 70. The capital proceeds received by a P Class Shareholder are the money and the value of any property received or entitled to be received in respect of the event happening (subsection 116-20(1)). 71. A P Class Shareholder that accepts the Offer is entitled to receive the consideration outlined in paragraph 18 of this Ruling. This includes both cash and GS Group Common Stock. A P Class Shareholder can elect to receive additional GS Group Common Stock rather than cash. 72. As the capital proceeds include property, being GS Group Common Stock, the market value of this property is included in the capital proceeds received by a P Class Shareholder. As GS Group Common Stock is listed on the New York Stock Exchange, the market value of GS Group Common Stock should be determined by reference to the last closing price of the stock on or before the date that CGT event A1 occurs in Australia, translated into Australian dollars at the daily foreign exchange rate for US dollars on that date. 73. The phrase 'in respect of the event happening' in subsection 116-20(1) requires that the relationship between the event and the receipt of the money and property, or entitlement to receive the money and property, must be more than coincidental. An amount is not 'capital proceeds' of an event merely because it is received in association with the event. 74. In this case, the payment of the Dividend has occurred independently of the Offer. The Directors of GSPA made a determination, before the Offer was made, that a Dividend would be payable. The Dividend was to be paid regardless of whether or not the Offer was made. 75. The Dividend was funded entirely from existing cash reserves of GSPA and the Purchaser did not provide any financial support to fund the Dividend. 76. In these circumstances, the Dividend will not form part of the capital proceeds which a P Class Shareholder will receive in respect of CGT event A1 happening. | Repayment of capital proceeds & other adjustments after Completion: 77. Where a P Class Shareholder is required to return and forfeit GS Group Common Stock under the terms of the Offer, section 116-50 will operate to reduce the capital proceeds received in respect of the disposal of the P Class Shares. The capital proceeds will then be equal to the Total Cash Amount and the market value of any GS Group Common Stock that is not forfeited. The cost base of GS Group Common Stock and the capital gain on the ineligible proceeds will also need to be recalculated. 78. Any purchase price adjustments that occur under the terms of the Offer may result in the P Class Shareholder being required to recalculate the capital gain in respect of the disposal of the P Class Shares. 79. Any recalculation of the capital gain in respect of the P Class Shares may require the P Class Shareholder to amend their tax return for the year in which CGT event A1 happens. | CGT - First element of the cost base: 80. Section 110-25 provides that the first element of the cost base of a CGT asset is the total of the money paid to acquire a CGT asset and the market value of any property given to acquire the CGT asset. Prima facie , the cost base of CST Shares acquired by a buyer P Class Shareholder will be the CST Sale Price. 81. As the price for the P Class Shares was determined by reference to a third party offer for the shares, the parties were dealing at arm's length in relation to the transaction. Therefore, the first element of the cost base will not be modified under section 112-20. | Assessability of the Dividend: 82. The term 'dividend' is defined in subsection 6(1) of the ITAA 1936 and includes any distribution made by a company to any of its shareholders, but does not include distributions debited against a share capital account or certain redeemable preference share redemptions. The payment of the Dividend on 31 March 2011 was a distribution of profits by GSPA to its shareholders sourced from retained earnings and was a 'dividend' as defined. 83. Subparagraph 44(1)(a)(i) of the ITAA 1936 includes in the assessable income of an Australian resident shareholder in a company: dividends (other than non-share dividends) that are paid to the shareholder by the company out of profits derived by it from any source. 84. As the Dividend was paid to GSPA shareholders out of profits derived by GSPA, a GSPA shareholder who is a resident of Australia (as defined in subsection 6(1) of the ITAA 1936) is required to include the Dividend in their assessable income. | Gross up and tax offset: 85. Section 207-20 provides: 86. Therefore, subject to satisfying the qualified person rule, where the Dividend is received by a GSPA shareholder, the GSPA shareholder will: 87. If the GSPA shareholder is a corporate tax entity (not acting in a trustee capacity), a franking credit will also arise in the entity's franking account. 88. Where the Dividend is received by a GSPA shareholder (not being a corporate tax entity) that is a trustee of a trust (not being a complying superannuation fund) or a partnership, subsection 207-35(1) applies, subject to the trustee or partnership being a qualified person. Subsection 207-35(1) provides: 89. Therefore, subject to satisfying the qualified person rule, a GSPA shareholder that is a trust or partnership will be required to include the amount of the franking credit attached to the Dividend in its assessable income under subsection 207-35(1). | Refundable tax offset: 90. A shareholder who is entitled to a tax offset under subsection 207-20(2), in respect of the franking credit received, will also be subject to the refundable tax offset rules in Division 67, unless specifically excluded under section 67-25. 91. Pursuant to section 67-25, there are a range of taxpayers who are specifically excluded from the operation of the refundable tax offset rules. This range of excluded entities includes: 92. Accordingly, a P Class Shareholder will be subject to the refundable tax offset rules unless they are one of the specifically excluded entities under section 67-25. For example a corporate tax entity (including a company, a corporate limited partnership, a corporate unit trust and a public trading trust) will, subject to the exceptions outlined under section 67-25, be excluded from the operation of the refundable tax offset rules. | Qualified persons: 93. Former Division 1A of the ITAA 1936 contains the measures referred to as the holding period rule and the related payment rule. Former Division 1A provides the statutory tests that must be satisfied for a taxpayer to be a 'qualified person' with respect to a franked distribution they have received and thus be entitled to a tax offset for the franking credit attached to the distribution. 94. The test as to what constitutes a 'qualified person' is set out in former subsection 160APHO(1) of the ITAA 1936 as follows: 95. Former subsection 160APHO(2) of the ITAA 1936, referred to in the preceding paragraph, sets out the holding period requirement. Broadly, if a taxpayer is not under an obligation to make a related payment in relation to a dividend or distribution, the taxpayer will have to satisfy the holding period requirement within the primary qualification period. If a taxpayer is under an obligation to make a related payment in relation to a dividend or distribution, the taxpayer will have to satisfy the holding period requirement within the secondary qualification period. | Related payment rule: 96. Former section 160APHN of the ITAA 1936 provides non-definitive examples of what constitutes the making of a related payment for the purposes of former Division 1A of the ITAA 1936. Former subsection 160APHN(2) of the ITAA 1936 provides: 97. Former subsection 160APHN(3) of the ITAA 1936 states: 98. Former subsection 160APHN(4) of the ITAA 1936 states: 99. In the current circumstances, the payment of the Dividend was not a term of the Offer. The Dividend was declared as part of GSPA's normal dividend process and was paid to all shareholders of GSPA out of the existing cash reserves of GSPA. Payment of the Dividend was not conditional upon P Class Shareholders voting in favour of receiving an offer, nor on the Offer itself. Accordingly, the P Class Shareholders are not taken to have made a related payment in respect of the Dividend for the purposes of former Division 1A of the ITAA 1936. | Primary qualification period: 100. As the P Class Shareholders are not taken to have made a related payment in respect of the Dividend, the relevant holding period is the primary qualification period pursuant to former paragraph 160APHO(1)(a) of the ITAA 1936. 101. The primary qualification period is defined in former section 160APHD of the ITAA 1936 as follows: 102. The concept of 'ex-dividend' is defined by former subsection 160APHE(1) of the ITAA 1936 as follows: 103. GSPA determined eligibility for the Dividend on the Dividend Record Date of 24 March 2011. This was the last day on which acquisition by a person of a GSPA share entitled the person to receive the Dividend as per former section 160APHE of the ITAA 1936. Accordingly, the ex-dividend date for the purposes of former subsection 160APHE(1) was 25 March 2011. 104. Pursuant to section 160APHD of the ITAA 1936 the primary qualification period runs from when the GSPA shareholder acquired the shares to the 45th day after the day on which the shares became ex-dividend. The qualification period therefore ends on 9 May 2011. However, pursuant to former subsection 160APHO(3) of the ITAA 1936, any days on which a taxpayer has materially diminished risks of loss or opportunities for gain in respect of the GSPA shares are to be excluded from this calculation. 105. A GSPA shareholder who accepted the Offer will no longer be considered to hold their GSPA shares 'at risk' for the purposes of former Division 1A of the ITAA 1936 once the Offer becomes unconditional. GSPA shareholders who did not accept the Offer, but are required to transfer their shares pursuant to the GSPA Constitution after 75% acceptance of the Offer is achieved, will no longer hold their shares 'at risk' from the date the P Class Directors, acting under power of attorney, signed the acceptance form on their behalf and the Offer becomes unconditional. Therefore, as the Offer did not open until 13 May 2011, the Offer will not affect whether a P Class Shareholder holds their shares 'at risk'. | Section 204-30: 106. Section 204-30 applies where an entity streams the payment of dividends, or the payment of dividends and the giving of other benefits, in such a way that: 107. Relevantly, if section 204-30 applies the Commissioner is vested with a discretion under subsection 204-30(3) to make a determination in writing that: 108. For section 204-30 to apply, members to whom a distribution is streamed must derive a greater benefit from franking credits than the members who consequently do not receive franking credits, or do not receive the same amount of franking credits as they would have had the streaming not occurred. 109. Pursuant to the payment of the Dividend, all GSPA shareholders received an imputation benefit as a result of the Dividend: that is both the resident shareholders in the form of a tax offset (paragraph 204-30(6)(a)) and the non-resident shareholders in the form of an exemption from dividend withholding tax (paragraph 204-30(6)(e)). 110. However, the Dividend was paid to all GSPA shareholders, including the GS Group, and was fully franked with Australian franking credits. Therefore, GSPA did not direct the flow of distributions in such a manner as to stream the imputation benefits such that one class of members derived a greater benefit from the franking credits attached to the Dividend, while the other members received lesser or no imputation benefits. 111. As the conditions in subsection 204-30(1) will not be met, the Commissioner will not make a determination under paragraph 204-30(3)(c) to deny the whole, or any part, of the imputation benefits received in relation to the Dividend. | Section 177EA: 112. Section 177EA of the ITAA 1936 is a general anti-avoidance provision that applies to a wide range of schemes seeking to obtain a tax advantage in relation to imputation benefits. Subsection 177EA(3) of the ITAA 1936 provides that section 177EA applies if: 113. If section 177EA applies, the Commissioner may make a determination under subsection 177EA(5) of the ITAA 1936 that either a franking debit arises to the company in respect of each dividend paid to the relevant taxpayer or, in the alternative, that only some or no franking credit benefits arise in respect of a dividend paid to the relevant taxpayer. 114. GSPA is a corporate tax entity. The disposal of the P Class Shares pursuant to the Offer is a scheme for the disposition of membership interests. The Dividend was a frankable distribution that was paid to GSPA shareholders prior to the Offer. 115. In the present case, the conditions of paragraphs 177EA(3)(a) to (d) of the ITAA 1936 are satisfied. Accordingly, the issue is whether, having regard to the relevant circumstances of the scheme, it would be concluded that, on the part of GSPA or its shareholders, there is a purpose, more than merely an incidental purpose, of conferring an imputation benefit under the scheme. 116. In arriving at a conclusion, the Commissioner has had regard to the relevant circumstances of the scheme which include, but are not limited to, the circumstances set out in subsection 177EA(17) of the ITAA 1936. The relevant circumstances listed there encompass a range of circumstances which taken individually or collectively could indicate the requisite purpose. Due to the diverse nature of these circumstances, some may not be present at any one time in any one scheme. 117. The relevant circumstances of the scheme indicate that there is no requisite purpose. The Dividend was fully franked, which is a continuation of GSPA's normal dividend policy to pay fully franked dividends. GPSA only has ordinary shares on issue and the Dividend was paid to all GSPA shareholders (including the GS Group) in proportion to the number of shares that the GSPA shareholder held on the Dividend Record Date. The amount of the dividend was largely consistent with dividends previously paid out by GSPA and allowed GSPA shareholders to share in the retained profits of GSPA. 118. In considering the manner, form and substance of the payment of the Dividend and the Offer, the scheme was not entered into for the purpose of enabling participating members to obtain an imputation benefit. Having regard to the relevant circumstances of the scheme, the Commissioner has come to the view that the requisite purpose is not present and accordingly the Commissioner will not make a determination under paragraph 177EA(5)(b) of the ITAA 1936 to deny the whole, or any part, of the imputation benefits received in relation to the Dividend. | Section 177E: 119. Section 177E of the ITAA 1936 is an anti-avoidance provision that is designed to prevent tax benefits being obtained as part of a dividend stripping scheme or a scheme with substantially the same effect as a dividend stripping scheme. 120. The term 'dividend stripping' has no precise legal meaning. In its traditional form, a dividend stripping operation occurs when shares in a company with retained profits are acquired, usually by a share trader who pays the existing shareholders a capital sum reflecting the value of the retained profits. The new shareholders then liberate those profits through the payment of a dividend post acquisition. Generally, the new shareholders who derive dividend income from the company would not be liable to tax upon those dividends. 121. Therefore, a scheme by way of, or in the nature of, dividend stripping, or one that has substantially the effect of a scheme by way of, or in the nature of, dividend stripping, would be one that has the effect of delivering a shareholder's entitlement to a dividend in a tax advantaged manner. 122. Prior to the Offer, GSPA paid an assessable Dividend, which indicates that the scheme is not being entered into for the purposes of distributing dividends in a tax advantaged manner. Further, the scheme is being entered into for genuine commercial purposes which indicates that the requisite dominant purpose of tax avoidance is not present. Therefore, the Commissioner has come to the view that the scheme is not a dividend stripping scheme. | Section 207-145: 123. Consistent with the discussion on section 177E of the ITAA 1936 that there was no dividend stripping scheme or a scheme in the nature of a dividend stripping scheme, paragraph 207-145(1)(d) will not be relevant to the scheme. 124. The Commissioner will not make a determination under paragraph 204-30(3)(c) to deny the whole, or any part, of the imputation benefit received in relation to the Dividend. 125. The following is a detailed contents list for this Ruling: Not previously issued as a draft

Ruling: CGT event A1: 32. CGT event A1 happens when a P Class Shareholder disposes of their P Class Shares to the Purchaser (subsections 104-10(1) and (2)). 33. For P Class Shareholders who accepted the Offer, CGT event A1 happens on the later of the day that the P Class Shareholder accepted the Offer and when the condition relating to FIRB approval was satisfied (paragraph 104-10(3)(a)). CGT event A1 will not happen unless the condition relating to FIRB approval is satisfied. 34. A P Class Shareholder will make a capital gain from CGT event A1 happening if the capital proceeds from the disposal of a P Class Share exceed its cost base. The capital gain is equal to the amount of the excess. A P Class Shareholder will make a capital loss if those capital proceeds are less than the P Class Share's reduced cost base (subsection 104-10(4)). The capital loss is equal to the amount of the difference. 35. Where a P Class Share is held by the Nominee Company on behalf of a P Class Beneficial Owner, the CGT consequences set out in this Ruling will apply to the P Class Beneficial Owner rather than the Nominee Company. | Capital proceeds: 36. The capital proceeds from CGT event A1, as at the time of the CGT event, will consist of the Total Cash Amount and the market value of any property received in the form of GS Group Common Stock (subsection 116-20(1)). | Custody arrangement: 37. There are no CGT consequences when GS Common Stock is deposited in and withdrawn from a custody account under the terms of the Offer (paragraph 104-10(7)(a)). | Repayment of capital proceeds: 38. The capital proceeds from CGT event A1 happening will be reduced if any Consideration Common Stock is returned or forfeited by a P Class Shareholder under the terms of the Offer. The capital proceeds will be reduced by the market value of the Consideration Common Stock returned or forfeited calculated at the time of the CGT event A1 (section 116-50). | Scrip for scrip roll-over: 39. A P Class Shareholder who makes a capital gain from the disposal of their P Class Shares in return for GS Group Common Stock may, subject to paragraph 41 of this Ruling, choose roll-over under Subdivision 124-M (section 124-780). 40. If a P Class Shareholder makes a capital loss from the disposal of their P Class Shares, they cannot choose scrip for scrip roll-over under Subdivision 124-M (subsection 124-780(3)). 41. If the capital gain would be disregarded otherwise than by reason of a roll-over, the scrip for scrip roll-over cannot be chosen (subsection 124-795(2)). 42. If roll-over under Subdivision 124-M is chosen, that part of the capital gain that is referable to the receipt of the GS Group Common Stock when CGT event A1 happens is disregarded (subsections 124-785(1)). | Capital gain referable to cash: 43. The capital gain will not be disregarded to the extent that the P Class Shareholder will receive cash for the disposal of their P Class Share as the Total Cash Amount is considered ineligible proceeds under subsection 124-790(1). 44. The part of the capital gain on a P Class Share that is referable to the Total Cash Amount is the ineligible proceeds less the part of the cost base of the P Class Share reasonably attributable to the Total Cash Amount. In working out the part of the cost base of a P Class Share that is reasonably attributable to the Total Cash Amount, the Commissioner accepts the following formula: | Discount capital gain: 45. If a P Class Shareholder makes a capital gain and roll-over under Subdivision 124-M is not chosen, or cannot be chosen, they may be eligible to treat the gain as a discount capital gain provided that the P Class Shareholder satisfies the requirements of Subdivision 115-A. | Cost base of GS Group Common Stock: 46. Where scrip for scrip roll-over is chosen, the first element of the cost base and reduced cost base of each GS Group Common Stock is equal to the part of the cost base of the P Class Shares exchanged for the relevant GS Group Common Stock (that is, the part of the cost base of the P Class Shares that does not relate to the cash consideration received) (subsections 124-785(2) and 124-785(4)). 47. Where roll-over under Subdivision 124-M is not chosen, the first element of the cost base and reduced cost base of each GS Group Common Stock is equal to the market value of the P Class Shares referable to the acquisition of the GS Group Common Stock as at the time of that acquisition (subsections 110-25(2), 110-55(2) and 112-30(1)). | Acquisition date of GS Group Common Stock: 48. The acquisition date of the GS Group Common Stock is the later of the date when the P Class Shareholder accepted the Offer and when the condition relating to FIRB approval was satisfied (Item 2 of the table in section 109-10). 49. For the purpose of determining whether a capital gain made from any later disposal of GS Group Common Stock is eligible to be treated as a discount capital gain, a P Class Shareholder who chooses scrip for scrip roll-over is taken to have acquired their GS Group Common Stock when they acquired the corresponding P Class Shares (Item 2 of the table in subsection 115-30(1)). | CGT - First element of the cost base: 50. A P Class Shareholder who acquired a CST Share under the CST Share Offer will have the CST Sale Price as the first element of the cost base under subsection 110-25(2). | Assessability of the Dividend: 51. The Dividend constitutes a 'dividend' as defined in subsection 6(1) of the ITAA 1936. 52. A GSPA shareholder who received the Dividend is required to include the Dividend as assessable income under subparagraph 44(1)(a)(i) of the ITAA 1936. | Gross up and tax offset: 53. A P Class Shareholder who received the Dividend directly will, under section 207-20: subject to being a qualified person. | Refundable tax offset: 54. A P Class Shareholder who is entitled to a tax offset under subsection 207-20(2), in respect of the franking credit received, will also be subject to the refundable tax offset rules in Division 67, unless specifically excluded under section 67-25. | Qualified persons: 55. The payment of the Dividend will not constitute a related payment for the purposes of former section 160APHN of the ITAA 1936. 56. Accordingly, each GSPA shareholder who has not previously had to satisfy the holding period rule will need to hold their GSPA shares 'at risk' for a continuous period of at least 45 days in the primary qualification period in order to be a qualified person. 57. A P Class Shareholder who accepted the Offer will no longer be considered to hold their P Class Shares 'at risk' for the purposes of former Division 1A of the ITAA 1936 once the Offer becomes unconditional. A P Class Shareholder who did not accept the Offer, but is required to transfer their shares after 75% acceptance is achieved pursuant to the GSPA Constitution, will no longer hold their shares 'at risk' from the date the P Class Directors, acting under power of attorney, signed the acceptance form on their behalf and the Offer becomes unconditional. 58. P Class Shareholders who have held their P Class Shares 'at risk' for a continuous period of 45 days during the period from when they acquired their P Class Shares to 9 May 2011 will be qualified persons with respect to the Dividend. As the Offer did not open until 13 May 2011, the Offer will not affect whether a P Class Shareholder holds their P Class Shares 'at risk' as there is more than 45 days between when the Dividend was paid and the opening of the Offer. | The anti-avoidance provisions: 59. The Commissioner will not make a determination under paragraph 204-30(3)(c) to deny the whole, or any part, of the imputation benefit received in relation to the Dividend. 60. The Commissioner will not make a determination under paragraph 177EA(5)(b) of the ITAA 1936 to deny the whole, or any part, of the imputation benefit received in relation to the Dividend. 61. Sections 177E of the ITAA 1936 and 207-145 of the ITAA 1997 will not apply in respect of the Offer. Commissioner of Taxation 22 June 2011


Appendix: Scrip for scrip roll-over: 62. The tax consequences that arise concerning the Offer are outlined in the Ruling part of this document. 63. The significant tax consequence is the availability of scrip for scrip roll-over under Subdivision 124-M. Scrip for scrip roll-over enables a shareholder to disregard a capital gain from a share that is disposed of as part of a corporate takeover or merger if the shareholder receives a replacement share in the exchange. It also provides special rules for calculating the cost base and reduced cost base of the replacement share. 64. Subdivision 124-M contains a number of conditions for, and exceptions to, a shareholder being eligible to choose scrip for scrip roll-over. The main conditions and exceptions that are relevant to the Offer are: 65. Under the Offer, the conditions for roll-over under Subdivision 124-M are satisfied. | CGT event A1 happening: 66. CGT event A1 in section 104-10 will happen if there is a change in the ownership of an asset from one entity to another. This event happens when a contract to dispose of the asset is entered into, or if there is no contract, when the change of ownership occurs (subsection 104-10(3)). 67. The Offer is subject to FIRB approval being granted. Under clause 8.1(b) of the Offer Document, this is a condition precedent to the formation of the contract. 68. Where a P Class Shareholder accepts the Offer, CGT event A1 happens at the later of: | No CGT event happening: 69. Under the terms of the Offer, a P Class Shareholder is required to deposit their GS Group Common Stock into custody accounts. These accounts are in the name of the P Class Shareholder or, if the relevant P Class Shareholder so directs, their P Class Beneficial Owner. The P Class Shareholder or P Class Beneficial Owner (as applicable) receives dividends and is entitled to vote in relation to the GS Group Common Stock held in those accounts. There are no CGT consequences when the GS Group Common Stock is placed in the custody accounts, or when it is withdrawn from those accounts. | Capital proceeds: 70. The capital proceeds received by a P Class Shareholder are the money and the value of any property received or entitled to be received in respect of the event happening (subsection 116-20(1)). 71. A P Class Shareholder that accepts the Offer is entitled to receive the consideration outlined in paragraph 18 of this Ruling. This includes both cash and GS Group Common Stock. A P Class Shareholder can elect to receive additional GS Group Common Stock rather than cash. 72. As the capital proceeds include property, being GS Group Common Stock, the market value of this property is included in the capital proceeds received by a P Class Shareholder. As GS Group Common Stock is listed on the New York Stock Exchange, the market value of GS Group Common Stock should be determined by reference to the last closing price of the stock on or before the date that CGT event A1 occurs in Australia, translated into Australian dollars at the daily foreign exchange rate for US dollars on that date. 73. The phrase 'in respect of the event happening' in subsection 116-20(1) requires that the relationship between the event and the receipt of the money and property, or entitlement to receive the money and property, must be more than coincidental. An amount is not 'capital proceeds' of an event merely because it is received in association with the event. 74. In this case, the payment of the Dividend has occurred independently of the Offer. The Directors of GSPA made a determination, before the Offer was made, that a Dividend would be payable. The Dividend was to be paid regardless of whether or not the Offer was made. 75. The Dividend was funded entirely from existing cash reserves of GSPA and the Purchaser did not provide any financial support to fund the Dividend. 76. In these circumstances, the Dividend will not form part of the capital proceeds which a P Class Shareholder will receive in respect of CGT event A1 happening. | Repayment of capital proceeds & other adjustments after Completion: 77. Where a P Class Shareholder is required to return and forfeit GS Group Common Stock under the terms of the Offer, section 116-50 will operate to reduce the capital proceeds received in respect of the disposal of the P Class Shares. The capital proceeds will then be equal to the Total Cash Amount and the market value of any GS Group Common Stock that is not forfeited. The cost base of GS Group Common Stock and the capital gain on the ineligible proceeds will also need to be recalculated. 78. Any purchase price adjustments that occur under the terms of the Offer may result in the P Class Shareholder being required to recalculate the capital gain in respect of the disposal of the P Class Shares. 79. Any recalculation of the capital gain in respect of the P Class Shares may require the P Class Shareholder to amend their tax return for the year in which CGT event A1 happens. | CGT - First element of the cost base: 80. Section 110-25 provides that the first element of the cost base of a CGT asset is the total of the money paid to acquire a CGT asset and the market value of any property given to acquire the CGT asset. Prima facie , the cost base of CST Shares acquired by a buyer P Class Shareholder will be the CST Sale Price. 81. As the price for the P Class Shares was determined by reference to a third party offer for the shares, the parties were dealing at arm's length in relation to the transaction. Therefore, the first element of the cost base will not be modified under section 112-20. | Assessability of the Dividend: 82. The term 'dividend' is defined in subsection 6(1) of the ITAA 1936 and includes any distribution made by a company to any of its shareholders, but does not include distributions debited against a share capital account or certain redeemable preference share redemptions. The payment of the Dividend on 31 March 2011 was a distribution of profits by GSPA to its shareholders sourced from retained earnings and was a 'dividend' as defined. 83. Subparagraph 44(1)(a)(i) of the ITAA 1936 includes in the assessable income of an Australian resident shareholder in a company: dividends (other than non-share dividends) that are paid to the shareholder by the company out of profits derived by it from any source. 84. As the Dividend was paid to GSPA shareholders out of profits derived by GSPA, a GSPA shareholder who is a resident of Australia (as defined in subsection 6(1) of the ITAA 1936) is required to include the Dividend in their assessable income. | Gross up and tax offset: 85. Section 207-20 provides: 86. Therefore, subject to satisfying the qualified person rule, where the Dividend is received by a GSPA shareholder, the GSPA shareholder will: 87. If the GSPA shareholder is a corporate tax entity (not acting in a trustee capacity), a franking credit will also arise in the entity's franking account. 88. Where the Dividend is received by a GSPA shareholder (not being a corporate tax entity) that is a trustee of a trust (not being a complying superannuation fund) or a partnership, subsection 207-35(1) applies, subject to the trustee or partnership being a qualified person. Subsection 207-35(1) provides: 89. Therefore, subject to satisfying the qualified person rule, a GSPA shareholder that is a trust or partnership will be required to include the amount of the franking credit attached to the Dividend in its assessable income under subsection 207-35(1). | Refundable tax offset: 90. A shareholder who is entitled to a tax offset under subsection 207-20(2), in respect of the franking credit received, will also be subject to the refundable tax offset rules in Division 67, unless specifically excluded under section 67-25. 91. Pursuant to section 67-25, there are a range of taxpayers who are specifically excluded from the operation of the refundable tax offset rules. This range of excluded entities includes: 92. Accordingly, a P Class Shareholder will be subject to the refundable tax offset rules unless they are one of the specifically excluded entities under section 67-25. For example a corporate tax entity (including a company, a corporate limited partnership, a corporate unit trust and a public trading trust) will, subject to the exceptions outlined under section 67-25, be excluded from the operation of the refundable tax offset rules. | Qualified persons: 93. Former Division 1A of the ITAA 1936 contains the measures referred to as the holding period rule and the related payment rule. Former Division 1A provides the statutory tests that must be satisfied for a taxpayer to be a 'qualified person' with respect to a franked distribution they have received and thus be entitled to a tax offset for the franking credit attached to the distribution. 94. The test as to what constitutes a 'qualified person' is set out in former subsection 160APHO(1) of the ITAA 1936 as follows: 95. Former subsection 160APHO(2) of the ITAA 1936, referred to in the preceding paragraph, sets out the holding period requirement. Broadly, if a taxpayer is not under an obligation to make a related payment in relation to a dividend or distribution, the taxpayer will have to satisfy the holding period requirement within the primary qualification period. If a taxpayer is under an obligation to make a related payment in relation to a dividend or distribution, the taxpayer will have to satisfy the holding period requirement within the secondary qualification period. | Related payment rule: 96. Former section 160APHN of the ITAA 1936 provides non-definitive examples of what constitutes the making of a related payment for the purposes of former Division 1A of the ITAA 1936. Former subsection 160APHN(2) of the ITAA 1936 provides: 97. Former subsection 160APHN(3) of the ITAA 1936 states: 98. Former subsection 160APHN(4) of the ITAA 1936 states: 99. In the current circumstances, the payment of the Dividend was not a term of the Offer. The Dividend was declared as part of GSPA's normal dividend process and was paid to all shareholders of GSPA out of the existing cash reserves of GSPA. Payment of the Dividend was not conditional upon P Class Shareholders voting in favour of receiving an offer, nor on the Offer itself. Accordingly, the P Class Shareholders are not taken to have made a related payment in respect of the Dividend for the purposes of former Division 1A of the ITAA 1936. | Primary qualification period: 100. As the P Class Shareholders are not taken to have made a related payment in respect of the Dividend, the relevant holding period is the primary qualification period pursuant to former paragraph 160APHO(1)(a) of the ITAA 1936. 101. The primary qualification period is defined in former section 160APHD of the ITAA 1936 as follows: 102. The concept of 'ex-dividend' is defined by former subsection 160APHE(1) of the ITAA 1936 as follows: 103. GSPA determined eligibility for the Dividend on the Dividend Record Date of 24 March 2011. This was the last day on which acquisition by a person of a GSPA share entitled the person to receive the Dividend as per former section 160APHE of the ITAA 1936. Accordingly, the ex-dividend date for the purposes of former subsection 160APHE(1) was 25 March 2011. 104. Pursuant to section 160APHD of the ITAA 1936 the primary qualification period runs from when the GSPA shareholder acquired the shares to the 45th day after the day on which the shares became ex-dividend. The qualification period therefore ends on 9 May 2011. However, pursuant to former subsection 160APHO(3) of the ITAA 1936, any days on which a taxpayer has materially diminished risks of loss or opportunities for gain in respect of the GSPA shares are to be excluded from this calculation. 105. A GSPA shareholder who accepted the Offer will no longer be considered to hold their GSPA shares 'at risk' for the purposes of former Division 1A of the ITAA 1936 once the Offer becomes unconditional. GSPA shareholders who did not accept the Offer, but are required to transfer their shares pursuant to the GSPA Constitution after 75% acceptance of the Offer is achieved, will no longer hold their shares 'at risk' from the date the P Class Directors, acting under power of attorney, signed the acceptance form on their behalf and the Offer becomes unconditional. Therefore, as the Offer did not open until 13 May 2011, the Offer will not affect whether a P Class Shareholder holds their shares 'at risk'. | Section 204-30: 106. Section 204-30 applies where an entity streams the payment of dividends, or the payment of dividends and the giving of other benefits, in such a way that: 107. Relevantly, if section 204-30 applies the Commissioner is vested with a discretion under subsection 204-30(3) to make a determination in writing that: 108. For section 204-30 to apply, members to whom a distribution is streamed must derive a greater benefit from franking credits than the members who consequently do not receive franking credits, or do not receive the same amount of franking credits as they would have had the streaming not occurred. 109. Pursuant to the payment of the Dividend, all GSPA shareholders received an imputation benefit as a result of the Dividend: that is both the resident shareholders in the form of a tax offset (paragraph 204-30(6)(a)) and the non-resident shareholders in the form of an exemption from dividend withholding tax (paragraph 204-30(6)(e)). 110. However, the Dividend was paid to all GSPA shareholders, including the GS Group, and was fully franked with Australian franking credits. Therefore, GSPA did not direct the flow of distributions in such a manner as to stream the imputation benefits such that one class of members derived a greater benefit from the franking credits attached to the Dividend, while the other members received lesser or no imputation benefits. 111. As the conditions in subsection 204-30(1) will not be met, the Commissioner will not make a determination under paragraph 204-30(3)(c) to deny the whole, or any part, of the imputation benefits received in relation to the Dividend. | Section 177EA: 112. Section 177EA of the ITAA 1936 is a general anti-avoidance provision that applies to a wide range of schemes seeking to obtain a tax advantage in relation to imputation benefits. Subsection 177EA(3) of the ITAA 1936 provides that section 177EA applies if: 113. If section 177EA applies, the Commissioner may make a determination under subsection 177EA(5) of the ITAA 1936 that either a franking debit arises to the company in respect of each dividend paid to the relevant taxpayer or, in the alternative, that only some or no franking credit benefits arise in respect of a dividend paid to the relevant taxpayer. 114. GSPA is a corporate tax entity. The disposal of the P Class Shares pursuant to the Offer is a scheme for the disposition of membership interests. The Dividend was a frankable distribution that was paid to GSPA shareholders prior to the Offer. 115. In the present case, the conditions of paragraphs 177EA(3)(a) to (d) of the ITAA 1936 are satisfied. Accordingly, the issue is whether, having regard to the relevant circumstances of the scheme, it would be concluded that, on the part of GSPA or its shareholders, there is a purpose, more than merely an incidental purpose, of conferring an imputation benefit under the scheme. 116. In arriving at a conclusion, the Commissioner has had regard to the relevant circumstances of the scheme which include, but are not limited to, the circumstances set out in subsection 177EA(17) of the ITAA 1936. The relevant circumstances listed there encompass a range of circumstances which taken individually or collectively could indicate the requisite purpose. Due to the diverse nature of these circumstances, some may not be present at any one time in any one scheme. 117. The relevant circumstances of the scheme indicate that there is no requisite purpose. The Dividend was fully franked, which is a continuation of GSPA's normal dividend policy to pay fully franked dividends. GPSA only has ordinary shares on issue and the Dividend was paid to all GSPA shareholders (including the GS Group) in proportion to the number of shares that the GSPA shareholder held on the Dividend Record Date. The amount of the dividend was largely consistent with dividends previously paid out by GSPA and allowed GSPA shareholders to share in the retained profits of GSPA. 118. In considering the manner, form and substance of the payment of the Dividend and the Offer, the scheme was not entered into for the purpose of enabling participating members to obtain an imputation benefit. Having regard to the relevant circumstances of the scheme, the Commissioner has come to the view that the requisite purpose is not present and accordingly the Commissioner will not make a determination under paragraph 177EA(5)(b) of the ITAA 1936 to deny the whole, or any part, of the imputation benefits received in relation to the Dividend. | Section 177E: 119. Section 177E of the ITAA 1936 is an anti-avoidance provision that is designed to prevent tax benefits being obtained as part of a dividend stripping scheme or a scheme with substantially the same effect as a dividend stripping scheme. 120. The term 'dividend stripping' has no precise legal meaning. In its traditional form, a dividend stripping operation occurs when shares in a company with retained profits are acquired, usually by a share trader who pays the existing shareholders a capital sum reflecting the value of the retained profits. The new shareholders then liberate those profits through the payment of a dividend post acquisition. Generally, the new shareholders who derive dividend income from the company would not be liable to tax upon those dividends. 121. Therefore, a scheme by way of, or in the nature of, dividend stripping, or one that has substantially the effect of a scheme by way of, or in the nature of, dividend stripping, would be one that has the effect of delivering a shareholder's entitlement to a dividend in a tax advantaged manner. 122. Prior to the Offer, GSPA paid an assessable Dividend, which indicates that the scheme is not being entered into for the purposes of distributing dividends in a tax advantaged manner. Further, the scheme is being entered into for genuine commercial purposes which indicates that the requisite dominant purpose of tax avoidance is not present. Therefore, the Commissioner has come to the view that the scheme is not a dividend stripping scheme. | Section 207-145: 123. Consistent with the discussion on section 177E of the ITAA 1936 that there was no dividend stripping scheme or a scheme in the nature of a dividend stripping scheme, paragraph 207-145(1)(d) will not be relevant to the scheme. 124. The Commissioner will not make a determination under paragraph 204-30(3)(c) to deny the whole, or any part, of the imputation benefit received in relation to the Dividend.


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. | Cost base of P Class Share reasonably attributable to Total Cash Amount | Cost base of the P Class Share at the time of the CGT event | Total Cash Amount (Total Cash Amount + Market value of GS Group Common Stock) | the assessable income of the partnership or trust for that income year includes the amount of the *franking credit on the distribution. | When taxpayer is qualified person | Effect of passing benefit of dividend or distribution | Actions which may have effect of passing benefit | Circumstances required for effect of passing of benefit | 'primary qualification period', in relation to a taxpayer in relation to shares or an interest in shares, means the period beginning on the day after the day on which the taxpayer acquired the shares or interest and ending: | Shares or interests in shares | Capital gains tax (CGT) consequences of disposing of a P Class Share under the Offer | Repayment of capital proceeds and other adjustments after Completion | Appendix 2 - Detailed contents list


Related rulings: TR 2006/10
Legislative references: ITAA 1936 ITAA 1936 6(1) ITAA 1936 44(1) ITAA 1936 44(1)(a)(i) ITAA 1936 98 ITAA 1936 99A ITAA 1936 Pt IIIAA Div 1A ITAA 1936 160APHD ITAA 1936 160APHE ITAA 1936 160APHE(1) ITAA 1936 160APHN ITAA 1936 160APHN(2) ITAA 1936 160APHN(3) ITAA 1936 160APHN(4) ITAA 1936 160APHO ITAA 1936 160APHO(1) ITAA 1936 160APHO(1)(a) ITAA 1936 160APHO(2) ITAA 1936 160APHO(3) ITAA 1936 177E ITAA 1936 177EA ITAA 1936 177EA(3) ITAA 1936 177EA(3)(a) ITAA 1936 177EA(3)(b) ITAA 1936 177EA(3)(c) ITAA 1936 177EA(3)(d) ITAA 1936 177EA(5) ITAA 1936 177EA(5)(b) ITAA 1936 177EA(17) ITAA 1997 ITAA 1997 Div 67 ITAA 1997 67-25 ITAA 1997 67-25(1A) ITAA 1997 67-25(1B) ITAA 1997 67-25(1C) ITAA 1997 67-25(1D) ITAA 1997 67-25(1DA) ITAA 1997 104-10 ITAA 1997 104-10(1) ITAA 1997 104-10(3) ITAA 1997 104-10(3)(a) ITAA 1997 104-10(4) ITAA 1997 104-10(7)(a) ITAA 1997 109-10 ITAA 1997 110-25 ITAA 1997 110-25(2) ITAA 1997 110-55 ITAA 1997 110-55(2) ITAA 1997 112-20 ITAA 1997 112-30 ITAA 1997 112-30(1) ITAA 1997 Subdiv 115-A ITAA 1997 115-30(1) ITAA 1997 116-20 ITAA 1997 116-20(1) ITAA 1997 116-50 ITAA 1997 Subdiv 124-M ITAA 1997 124-780 ITAA 1997 124-780(3) ITAA 1997 124-785(1) ITAA 1997 124-785(2) ITAA 1997 124-785(4) ITAA 1997 124-790 ITAA 1997 124-790(1) ITAA 1997 124-795(2) ITAA 1997 204-30 ITAA 1997 204-30(1) ITAA 1997 204-30(1)(a) ITAA 1997 204-30(1)(b) ITAA 1997 204-30(1)(c) ITAA 1997 204-30(3) ITAA 1997 204-30(3)(a) ITAA 1997 204-30(3)(c) ITAA 1997 204-30(6)(a) ITAA 1997 204-30(6)(e) ITAA 1997 207-20 ITAA 1997 207-20(2) ITAA 1997 207-35(1) ITAA 1997 207-145 ITAA 1997 207-145(1)(d) Corporations Act 2001 TAA 1953 Copyright Act 1968
Subject references: arrangement CGT capital proceeds CGT cost base dividend streaming arrangement dividend stripping frankable dividends franking credits holding period rule imputation system ordinary shares qualified person related payment rule