Class Ruling CR 2015/73
Date of effect: 1 July 2014

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 provision(s) 2. The relevant provisions dealt with in this Rulings are: All legislative references in the Ruling are to the ITAA 1997 unless otherwise stated. Class of entities 3. The class of entities to which this Ruling applies is the holders of shares in Campaign Monitor Holdings Pty Ltd (Campaign Monitor) who: 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 22 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 the holders of shares in Campaign Monitor Holdings Pty Ltd (Campaign Monitor) who: | 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 22 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 2014 to 30 June 2016. The Ruling continues to apply after 30 June 2016 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. The following documents, or relevant parts of them, form part of and are to be read with the description: | Campaign Monitor Holdings Pty Limited: 9. Campaign Monitor Holdings Pty Limited (Campaign Monitor) was the head company of the tax consolidated group in Australia, with four subsidiary members. 10. Campaign Monitor and its related companies (CM Group) as described in the Implementation Dee d, design and provide software products and support services to assist companies, designers and agencies create and manage email marketing. | Restructure: 11. To facilitate global expansion and allow for greater flexibility to raise foreign capital, it was decided to introduce a new ultimate holding company, established in the United Kingdom. 12. The new ultimate holding company, Campaign Monitor Holdings (UK) Limited (UK Holdco), was interposed under a corporate restructure (Restructure). 13. As part of the Restructure, the head company of another consolidated group, Campaign Monitor Australia No. 1 Pty Ltd (New AusCo. 1), acquires shares in Campaign Monitor via its subsidiary Campaign Monitor Australia No. 2 Pty Ltd (New AusCo. 2). New AusCo.1 is an indirect wholly owned subsidiary of UK Holdco. 14. The Restructure involves the following: 15. The market value of the shares that shareholders receive in UK Holdco are substantially the same as the market value of the shares that they held in Campaign Monitor. The shares in UK Holdco also carry the same kind of rights and obligations as those attached to the shares in Campaign Monitor. 16. New AusCo. 2 is the acquiring entity of the Campaign Monitor shares. 17. The steps involved in the arrangement are outlined in clause 3 of the Implementation Deed. The steps are as follow: 18. The scheme outlined in the Implementation Deed was effected on 31 March 2015. | Other: 19. Following the implementation of the Restructure, UK Holdco has the same owners of its equity as Campaign Monitor had formerly, and each of the previous shareholders and option holders of Campaign Monitor has the same economic interest in UK Holdco as they had in Campaign Monitor as well. 20. There was no transfer of Australian assets, including intellectual property as a result of the Restructure. 21. No third party investors are acquiring equity in Campaign Monitor as part of the Restructure. 22. Campaign Monitor shareholders are common stakeholders for the purposes of section 124-783. | CGT event A1 - disposal of Campaign Monitor shares to New AusCo. 2: 23. CGT Event A1 happens when a Campaign Monitor shareholder disposes of their Campaign Monitor shares to New AusCo. 2 (subsection 104-10(1)). 24. The time of CGT event A1 is when the change of ownership occurred on 31 March 2015 (paragraph 104-10(3))(b)). 25. A Campaign Monitor shareholder makes a capital gain from CGT event A1 happening if the capital proceeds from the disposal of the Campaign Monitor share exceed its cost base. A Campaign Monitor shareholder makes a capital loss if the capital proceeds from the disposal of the share are less than its reduced cost base (subsection 104-10(4)). 26. Under subsection 116-20(1), the capital proceeds from CGT event A1 happening to a Campaign Monitor share is the market value of the property (shares in UK Holdco) received or entitled to receive in respect of the disposal of that share. The market value of UK Holdco shares is worked out as at the time CGT event A1 happens. | Availability of scrip for scrip rollover: 27. A Campaign Monitor Australian resident shareholder who makes a capital gain from their shares will be eligible to choose scrip for scrip rollover under Subdivision 124-M (sections 124-780 and 124-785). | Consequences of choosing Subdivision 124-M roll-over: 28. If scrip for scrip rollover is chosen, the capital gain made from the transfer of the shares to New AusCo. 2 is disregarded under subsection 124-785(1). 29. Because all Campaign Monitor shareholders are common stakeholders, if rollover is chosen, section 124-782 will apply. 30. Where section 124-782 applies to a Campaign Monitor shareholder, that shareholder and New AusCo. 2 must jointly choose to obtain the roll-over. Furthermore, that shareholder must inform New AusCo. 2 in writing of the cost base of their Campaign Monitor shares worked out just before the disposal of those shares to New AusCo. 2 (paragraph 124-780(3)(e)). 31. As the shares are exchanged on a one for one basis, the first element of the cost base and reduced cost base of each UK Holdco share acquired by a shareholder under the Restructure is worked out by reasonably attributing to it the cost base (or the part of it) of their share in Campaign Monitor for which it was exchanged and for which they obtained the rollover (subsections 124-785(2) and 124-785(4)). | Consequences if Subdivision 124-M roll-over is not chosen, or cannot be chosen: 32. A shareholder who does not choose Subdivision 124-M roll-over, or cannot choose the roll-over, must take into account any capital gain or capital loss from the disposal of their shares in Campaign Monitor in working out their net capital gain or net capital loss for the income year (sections 102-5 and 102-10). 33. For these shareholders, the first element of the cost base and reduced cost base of each UK Holdco share is equal to the market value of the shares in Campaign Monitor that they disposed of, worked out as at the time of the acquisition of the UK Hold Co shares, divided by the number of shares they are issued in UK Holdco (subsections 110-25(2) and 110-55(2)). 34. The UK Holdco shares, which are an equity interest under Division 974, are acquired by a shareholder when the shares are issued or allotted (Item 2 of the table in section 109-10). Commissioner of Taxation 23 September 2015 35. Scrip for scrip rollover under Subdivision 124-M allows a shareholder to disregard a capital gain made from a share that is disposed of as part of an arrangement, if the shareholder receives a replacement share in exchange. It also provides special rules for calculating the cost base and reduced cost base of the replacement share. 36. Subdivision 124-M contains a number of conditions that determine whether scrip for scrip roll-over is available under an arrangement. The main conditions and exceptions that are relevant to the circumstances of the Restructure of Campaign Monitor are: 37. The scheme satisfies these requirements for the roll-over under Subdivision 124-M. 38. Particularly, where the parties are not dealing at arm's length, as in this case, the additional conditions in subsection 124-780(5) are also satisfied. The market value of the shares that shareholders received in UK Holdco are substantially the same as the market value of the shares that they held in Campaign Monitor. The shares in UK Holdco also carry the same kind of rights and obligations as those attached to the shares in Campaign Monitor. 39. 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: CGT event A1 - disposal of Campaign Monitor shares to New AusCo. 2: 23. CGT Event A1 happens when a Campaign Monitor shareholder disposes of their Campaign Monitor shares to New AusCo. 2 (subsection 104-10(1)). 24. The time of CGT event A1 is when the change of ownership occurred on 31 March 2015 (paragraph 104-10(3))(b)). 25. A Campaign Monitor shareholder makes a capital gain from CGT event A1 happening if the capital proceeds from the disposal of the Campaign Monitor share exceed its cost base. A Campaign Monitor shareholder makes a capital loss if the capital proceeds from the disposal of the share are less than its reduced cost base (subsection 104-10(4)). 26. Under subsection 116-20(1), the capital proceeds from CGT event A1 happening to a Campaign Monitor share is the market value of the property (shares in UK Holdco) received or entitled to receive in respect of the disposal of that share. The market value of UK Holdco shares is worked out as at the time CGT event A1 happens. | Availability of scrip for scrip rollover: 27. A Campaign Monitor Australian resident shareholder who makes a capital gain from their shares will be eligible to choose scrip for scrip rollover under Subdivision 124-M (sections 124-780 and 124-785). | Consequences of choosing Subdivision 124-M roll-over: 28. If scrip for scrip rollover is chosen, the capital gain made from the transfer of the shares to New AusCo. 2 is disregarded under subsection 124-785(1). 29. Because all Campaign Monitor shareholders are common stakeholders, if rollover is chosen, section 124-782 will apply. 30. Where section 124-782 applies to a Campaign Monitor shareholder, that shareholder and New AusCo. 2 must jointly choose to obtain the roll-over. Furthermore, that shareholder must inform New AusCo. 2 in writing of the cost base of their Campaign Monitor shares worked out just before the disposal of those shares to New AusCo. 2 (paragraph 124-780(3)(e)). 31. As the shares are exchanged on a one for one basis, the first element of the cost base and reduced cost base of each UK Holdco share acquired by a shareholder under the Restructure is worked out by reasonably attributing to it the cost base (or the part of it) of their share in Campaign Monitor for which it was exchanged and for which they obtained the rollover (subsections 124-785(2) and 124-785(4)). | Consequences if Subdivision 124-M roll-over is not chosen, or cannot be chosen: 32. A shareholder who does not choose Subdivision 124-M roll-over, or cannot choose the roll-over, must take into account any capital gain or capital loss from the disposal of their shares in Campaign Monitor in working out their net capital gain or net capital loss for the income year (sections 102-5 and 102-10). 33. For these shareholders, the first element of the cost base and reduced cost base of each UK Holdco share is equal to the market value of the shares in Campaign Monitor that they disposed of, worked out as at the time of the acquisition of the UK Hold Co shares, divided by the number of shares they are issued in UK Holdco (subsections 110-25(2) and 110-55(2)). 34. The UK Holdco shares, which are an equity interest under Division 974, are acquired by a shareholder when the shares are issued or allotted (Item 2 of the table in section 109-10). Commissioner of Taxation 23 September 2015


Appendix: 35. Scrip for scrip rollover under Subdivision 124-M allows a shareholder to disregard a capital gain made from a share that is disposed of as part of an arrangement, if the shareholder receives a replacement share in exchange. It also provides special rules for calculating the cost base and reduced cost base of the replacement share. 36. Subdivision 124-M contains a number of conditions that determine whether scrip for scrip roll-over is available under an arrangement. The main conditions and exceptions that are relevant to the circumstances of the Restructure of Campaign Monitor are: 37. The scheme satisfies these requirements for the roll-over under Subdivision 124-M. 38. Particularly, where the parties are not dealing at arm's length, as in this case, the additional conditions in subsection 124-780(5) are also satisfied. The market value of the shares that shareholders received in UK Holdco are substantially the same as the market value of the shares that they held in Campaign Monitor. The shares in UK Holdco also carry the same kind of rights and obligations as those attached to the shares in Campaign Monitor.


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. | Appendix 2 - Detailed contents list


Related rulings: TR 2006/10
Legislative references: ITAA 1936 ITAA 1936 6(1) ITAA 1997 ITAA 1997 102-5 ITAA 1997 102-10 ITAA 1997 104-10(1) ITAA 1997 104-10(3)(b) ITAA 1997 104-10(4) ITAA 1997 109-10 ITAA 1997 110-25(2) ITAA 1997 110-55(2) ITAA 1997 116-20(1) ITAA 1997 Subdiv 124-M ITAA 1997 124-780 ITAA 1997 124-780(3) ITAA 1997 124-780(2) ITAA 1997 124-780(2A) ITAA 1997 124-780(3)(e) ITAA 1997 124-780(5) ITAA 1997 124-782 ITAA 1997 124-783 ITAA 1997 124-785 ITAA 1997 124-785(1) ITAA 1997 124-785(2) ITAA 1997 124-785(4) ITAA 1997 Div 230 ITAA 1997 Div 974
Subject references: arrangement capital gains tax CGT roll-over relief common stakeholders scrip for scrip roll-over