Class Ruling CR 2016/90
Date of effect: 1 July 2016

What this ruling is about: 1. This Ruling sets out the Commissioner's opinion on the way in which the relevant provisions identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates. Relevant provisions 2. The relevant provisions dealt with in this Ruling are: All subsequent legislative references in this Ruling are to the ITAA 1997 unless otherwise stated. Class of entities 3. The class of entities to which this Ruling applies is employees of Centuria Capital Limited (Centuria) who: In this Ruling, a person belonging to this class of entities is referred to as a Participant. 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 8 to 24 of this Ruling. 6. 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 employees of Centuria Capital Limited (Centuria) who: In this Ruling, a person belonging to this class of entities is referred to as a Participant. | 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 8 to 24 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 Ruling applies from 1 July 2016 to 30 June 2019. The Ruling continues to apply after 30 June 2019 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). 8. The following description of the scheme is based on information provided by the applicant. Note: information that has been provided on a commercial-in-confidence basis will not be disclosed or released under Freedom of Information legislation. 9. Centuria Capital Limited (Centuria) is an Australian resident company for tax purposes. The ordinary shares of Centuria were listed on the Australian Securities Exchange (ASX) in 2002 under the code 'CNI'. 10. Prior to the Restructure described in paragraph 11, Centuria was a specialist investment manager with two key investment Divisions: | The Restructure: 11. To bring Centuria Group's structure into line with other listed fund managers, Centuria undertook a restructure to form a stapled security structure (Restructure). 12. The Restructure involved the following steps which were undertaken in sequence: 13. The Restructure was approved by Centuria shareholders at an extraordinary general meeting on 10 October 2016 and was implemented on 17 October 2016 (Implementation Date). | Impact of Restructure on Executive Incentive Plan: 14. Prior to the Restructure, Centuria operated the Centuria Capital Limited Executive Incentive Plan (Plan) which was established as part of its executive remuneration strategy in 2013. 15. Under the Plan, a Participant could be granted a Right (for nil consideration) that upon vesting could be settled in a Centuria share or cash of equivalent value at the discretion of Centuria. 16. A number of Rights held by Participants prior to the Restructure were granted before 1 July 2015 (the FY 2015 Rights). 17. A number of Rights held by Participants prior to the Restructure were granted on or after 1 July 2015 (the FY 2016 Rights). 18. At the time of the Restructure, the FY 2015 Rights and FY 2016 Rights were outstanding. 19. Subject to relevant vesting conditions being satisfied, the FY 2015 Rights will vest in September 2017 and the FY 2016 Rights will vest in September 2018. 20. Each Right granted to a Participant was governed by the Plan rules. 21. As part of the Restructure, the Plan rules were revised to allow the grant of rights to acquire Centuria Stapled Securities to Participants (Centuria Capital Group Executive Incentive Plan Rules or the Amended Plan). 22. The key terms of the Amended Plan are not materially different to those in the Plan. 23. As a result of the Restructure, each Right granted under the Plan was replaced, on a 1:1 basis, with a Right under the Amended Plan (Replacement Right). 24. Each Replacement Right under the Amended Plan is subject to the same terms and conditions as the corresponding Right which it replaced under the Plan (including the relevant Vesting Conditions and Vesting Schedule). | No ESS deferred taxing point: 25. When a Right held by a Participant was replaced with a Replacement Right under the Restructure, the Replacement Right is treated as a continuation of the Right for the purposes of subsection 83A-130(2). 26. No ESS deferred taxing point will arise under section 83A-120 when a Right was replaced with a Replacement Right under the Restructure. | Replacement Right subsequent ESS deferred taxing point: 27. If a Participant's Replacement Right subsequently vests, is settled with a Centuria Stapled Security and an ESS deferred taxing point occurs, the market value of that Replacement Right (as determined by reference to the Centuria Stapled Security) (less any cost base) will be included in the assessable income of the Participant at that time under section 83A-110. | Replacement Right settled with cash: 28. If a Participant's Replacement Right vests and is settled with a cash payment, the cash payment will be included in the assessable income of the Participant in the year in which the cash payment is received under section 6-5. | CGT consequences: 29. Any capital gain or capital loss that results from a Right being replaced with a Replacement Right is disregarded under subsection 130-80(1). Commissioner of Taxation 23 November 2016 | Replacement Rights: 30. Division 83A applies to shares, rights and stapled securities acquired under an employee share scheme on or after 1 July 2009. 31. Section 83A-335 provides that Division 83A applies to stapled securities in the same way as it applies to shares in a company if at least one of the ownership interests that are stapled together to form the stapled security is a share in the company. A right to acquire such a stapled security is treated as a right to acquire a share. 32. Under Division 83A, an ESS interest in a company is defined under subsection 83A-10(1) as either a beneficial interest in a share in the company or a beneficial interest in a right to acquire a beneficial interest in a share in the company. 33. If upon vesting Replacement Rights are settled in securities, the Replacement Rights will have been indeterminate rights as described in section 83A-340. The Replacement Rights will be treated as ESS interests for the purposes of Division 83A and Subdivision 83A-C will apply to those Replacement Rights. | No ESS deferred taxing point: 34. Under section 83A-110, an amount will be included in the assessable income of a Participant in respect of their ESS interest in the income year in which the ESS deferred taxing point occurs. 35. The ESS deferred taxing point for a right is worked out under section 83A-120. 36. Section 83A-120 provides that the ESS deferred taxing point for a Right is the earliest of the time specified in subsection 83A-120(4) to (7): 37. However, if the Participant disposes of the rights within 30 days of the time which would otherwise be the ESS deferred taxing point, the ESS deferred taxing point would instead be the time of the disposal (subsection 83A-120(3)). 38. Subject to section 83A-130, an ESS deferred taxing point would occur as a result the Restructure because there is a disposal of each Right when it is replaced with a Replacement Right. 39. Section 83A-130 relevantly provides that where as a result of a restructure (including the structure of ownership) of a company (the old company): the replacement ESS interests will, for the purposes of Division 83A, be treated as a continuation of the employee's ESS interests in the old company and their employment with the new company will be regarded as a continuation of the employment that may otherwise have ceased under 83A-330. 40. The Commissioner accepts that the Restructure as described in the scheme description is a restructure for the purposes of section 83A-130 and that as a result of the Restructure: 41. Accordingly, as each Participant continued to be employed by Centuria after the Restructure and no Participant had a beneficial interest in more than 5% (or 10% if acquired on or after 1 July 2015) of the shares in the new company or was in a position to cast or control the casting of more than 5% (or 10% if acquired on or after 1 July 2015) of the maximum number of votes that might be cast at a general meeting of the new company: there was no ESS deferred taxing point under section 83A-120. | Replacement Right subsequent ESS deferred taxing point: 42. If a subsequent ESS deferred taxing point occurs to a Participant's Replacement Right that subsequently vests and is settled with a Centuria Stapled Security, the market value of that Replacement Right (as determined by reference to the Centuria Stapled Security) (less any cost base) will be included in the assessable income of the Participant at that time under section 83A-110. | Replacement Right settled with cash: 43. If a Participant's Replacement Right vests and is settled with a cash payment, Division 83A will have no application (section 83A-340) and the cash payment will be included in the assessable income of the Participant in the year in which the cash payment is received under section 6-5. | CGT consequences: 44. Subsection 130-80(1) applied to disregard any capital gain or capital loss arising as a result of the Restructure as each of the requirements in the provision were satisfied. Specifically: 45. Therefore, no capital gain or capital loss will arise for a Participant as a result of the Restructure. 46. 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: No ESS deferred taxing point: 25. When a Right held by a Participant was replaced with a Replacement Right under the Restructure, the Replacement Right is treated as a continuation of the Right for the purposes of subsection 83A-130(2). 26. No ESS deferred taxing point will arise under section 83A-120 when a Right was replaced with a Replacement Right under the Restructure. | Replacement Right subsequent ESS deferred taxing point: 27. If a Participant's Replacement Right subsequently vests, is settled with a Centuria Stapled Security and an ESS deferred taxing point occurs, the market value of that Replacement Right (as determined by reference to the Centuria Stapled Security) (less any cost base) will be included in the assessable income of the Participant at that time under section 83A-110. | Replacement Right settled with cash: 28. If a Participant's Replacement Right vests and is settled with a cash payment, the cash payment will be included in the assessable income of the Participant in the year in which the cash payment is received under section 6-5. | CGT consequences: 29. Any capital gain or capital loss that results from a Right being replaced with a Replacement Right is disregarded under subsection 130-80(1). Commissioner of Taxation 23 November 2016


Appendix: Replacement Rights: 30. Division 83A applies to shares, rights and stapled securities acquired under an employee share scheme on or after 1 July 2009. 31. Section 83A-335 provides that Division 83A applies to stapled securities in the same way as it applies to shares in a company if at least one of the ownership interests that are stapled together to form the stapled security is a share in the company. A right to acquire such a stapled security is treated as a right to acquire a share. 32. Under Division 83A, an ESS interest in a company is defined under subsection 83A-10(1) as either a beneficial interest in a share in the company or a beneficial interest in a right to acquire a beneficial interest in a share in the company. 33. If upon vesting Replacement Rights are settled in securities, the Replacement Rights will have been indeterminate rights as described in section 83A-340. The Replacement Rights will be treated as ESS interests for the purposes of Division 83A and Subdivision 83A-C will apply to those Replacement Rights. | No ESS deferred taxing point: 34. Under section 83A-110, an amount will be included in the assessable income of a Participant in respect of their ESS interest in the income year in which the ESS deferred taxing point occurs. 35. The ESS deferred taxing point for a right is worked out under section 83A-120. 36. Section 83A-120 provides that the ESS deferred taxing point for a Right is the earliest of the time specified in subsection 83A-120(4) to (7): 37. However, if the Participant disposes of the rights within 30 days of the time which would otherwise be the ESS deferred taxing point, the ESS deferred taxing point would instead be the time of the disposal (subsection 83A-120(3)). 38. Subject to section 83A-130, an ESS deferred taxing point would occur as a result the Restructure because there is a disposal of each Right when it is replaced with a Replacement Right. 39. Section 83A-130 relevantly provides that where as a result of a restructure (including the structure of ownership) of a company (the old company): the replacement ESS interests will, for the purposes of Division 83A, be treated as a continuation of the employee's ESS interests in the old company and their employment with the new company will be regarded as a continuation of the employment that may otherwise have ceased under 83A-330. 40. The Commissioner accepts that the Restructure as described in the scheme description is a restructure for the purposes of section 83A-130 and that as a result of the Restructure: 41. Accordingly, as each Participant continued to be employed by Centuria after the Restructure and no Participant had a beneficial interest in more than 5% (or 10% if acquired on or after 1 July 2015) of the shares in the new company or was in a position to cast or control the casting of more than 5% (or 10% if acquired on or after 1 July 2015) of the maximum number of votes that might be cast at a general meeting of the new company: there was no ESS deferred taxing point under section 83A-120. | Replacement Right subsequent ESS deferred taxing point: 42. If a subsequent ESS deferred taxing point occurs to a Participant's Replacement Right that subsequently vests and is settled with a Centuria Stapled Security, the market value of that Replacement Right (as determined by reference to the Centuria Stapled Security) (less any cost base) will be included in the assessable income of the Participant at that time under section 83A-110. | Replacement Right settled with cash: 43. If a Participant's Replacement Right vests and is settled with a cash payment, Division 83A will have no application (section 83A-340) and the cash payment will be included in the assessable income of the Participant in the year in which the cash payment is received under section 6-5. | CGT consequences: 44. Subsection 130-80(1) applied to disregard any capital gain or capital loss arising as a result of the Restructure as each of the requirements in the provision were satisfied. Specifically: 45. Therefore, no capital gain or capital loss will arise for a Participant as a result of the Restructure.


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. | Replacement Rights settled with cash | Appendix 2 - Detailed contents list


Related rulings: TR 2006/10
Legislative references: ITAA 1936 6(1) ITAA 1997 6-5 ITAA 1997 Div 83A ITAA 1997 Subdiv 83A-C ITAA 1997 83A-10(1) ITAA 1997 83A-110 ITAA 1997 83A-120 ITAA 1997 83A-120 ITAA 1997 83A-120(3) ITAA 1997 83A-120(4) ITAA 1997 83A-120(5) ITAA 1997 83A-120(6) ITAA 1997 83A-120(7) ITAA 1997 83A-130 ITAA 1997 83A-130(2) ITAA 1997 83A-335 ITAA 1997 83A-340 ITAA 1997 130-80 ITAA 1997 130-80(1) ITAA 1997 Div 230 ITAA 1997 995-1(1) TAA 1953