Class Ruling CR 2015/87
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 provision(s) identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates. Relevant provision(s) 2. The relevant provisions dealt with in this Ruling are: All legislative references 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 holders of units in the Benalla Gateway Trust (Benalla Trust) 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 23 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 are the holders of units in the Benalla Gateway Trust (Benalla Trust) 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 23 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 2015. The Ruling continues to apply after 30 June 2015 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 Public Rulings). 8. The following description of the scheme is based on information provided by the applicant (Greenwoods and Herbert Smith Freehills Pty Ltd). 9. The following documents, or relevant parts of them form part of and are to be read with the description: | The Gateway Lifestyle Group: 10. The Gateway Lifestyle Group operates 25 Manufactured Home Parks that are located in New South Wales, Victoria and Queensland. The properties are held by various trusts (or in some cases wholly owned sub-trusts) - including the Benalla Trust. Units in the trusts were owned by different syndicates of wholesale investors. Each landholding trust also had a related operating company or trust. None of the relevant entities were listed on the Australian Securities Exchange (ASX). 11. The Gateway Lifestyle Group undertook a corporate restructure, with the object of combining ownership of all of the residential parks, their specific operating companies and the related Gateway Lifestyle Residential Parks Pty Ltd into one stapled structure listed on the ASX. | The Transaction: 12. On the Implementation Date (15 June 2015), the unit holders of the Benalla Trust received 1.06 units in Residential Parks No. 2 Trust (RPT2) in exchange for transferring each unit they held in the Benalla Trust to the trustee of RPT2. 13. Before the Implementation Date, the unit holders of the Benalla Trust passed a resolution which had the effect of requiring the unit holders to pay an amount of money (the Cash Settlement Adjustment) to the trustee of RPT2. Broadly, the Cash Settlement Adjustment was determined by the difference between the net asset value of the Benalla Trust at the time of the Transaction and the position upon which the unit exchange ratio was based. 14. As a result of the Transaction, the Benalla Trust became wholly owned by the trustee of RPT2, which is a registered managed investment scheme under Chapter 5C of the Corporations Act 2001. 15. A new public company (Gateway Lifestyle Operations Limited (GLOL)) was incorporated with the trustee of RPT2 initially being the sole shareholder of GLOL. 16. Following the exchange of units, all RPT2 unit holders received the number of shares in GLOL corresponding to the number of units they hold, for no further consideration, as an in specie distribution by the trustee of RPT2. 17. Each share in GLOL and each unit in RPT 2 were stapled on a 1:1 basis to form the New Stapled Securities that were listed on the ASX on 11 June 2015. 18. Unit holders who did not elect to retain some or all of their New Stapled Securities had the opportunity to sell them under the Cash Sale Facility (a sale mechanism established by the Gateway Lifestyle Group as part of the Transaction). 19. Each unit holder of the Benalla Trust funded their pro rata share of the Cash Settlement Adjustment (described in paragraph 13 of this Ruling) by selling a number of their New Stapled Securities under the Cash Sale Facility. | Other matters: 20. All of the unit holders of the Benalla Trust were offered the opportunity to participate in the Transaction and the offer was available to all unit holders on the same terms. 21. Both the Benalla Trust and RPT2 were settled after 20 September 1985. 22. At the time of the Transaction there was only one class of units on issue in the Benalla Trust. 23. The Benalla Trust and RPT2 did not have a 'significant stakeholder' or a 'common stakeholder' in relation to the scheme within the meaning of those expressions in section 124-783. | CGT event A1: 24. CGT event A1 happened when the unit holders of the Benalla Trust disposed of their units to the trustee of RPT2 (section 104-10). 25. The time of CGT event A1 is on the Implementation Date (paragraph 104-10(3)(b)). 26. A unit holder made a capital gain from CGT event A1 happening if the capital proceeds from the disposal of a unit exceeded the cost base of that unit (subsection 104-10(4)). 27. A unit holder made a capital loss from CGT event A1 happening if the capital proceeds from the disposal of a unit were less than its reduced cost base (subsection 104-10(4)). 28. The capital proceeds from CGT event A1 happening to a unit in the Benalla Trust is the market value of 1.06 units in RPT2 (subsection 116-20(1)). The market value of a RPT2 unit is worked out as at the time of CGT event A1, which is on the Implementation Date. | Availability of scrip for scrip roll-over if a capital gain is made: 29. Subject to the qualification in the following paragraph, a unit holder who made a capital gain from the disposal of their Benalla Trust unit to the trustee of RPT2 may choose to obtain scrip for scrip roll-over (section 124-781 and section 124-785). 30. Scrip for scrip roll-over cannot be chosen if any capital gain a unit holder might make from their replacement RPT2 units would be disregarded, except because of a roll-over (paragraph 124-795(2)(a)). | Consequences if scrip for scrip roll-over is chosen: 31. The only capital proceeds received by a unit holder of the Benalla Trust were the units in RPT2. Therefore, if a unit holder chooses scrip for scrip roll-over, the capital gain they made upon the disposal of a Benalla Trust unit to the trustee of RPT2 is disregarded (subsection 124-785(1)). | Consequences if scrip for scrip roll-over is not chosen, or cannot be chosen: 32. A unit holder of the Benalla Trust who does not choose roll-over, or cannot choose roll-over, must take into account any capital gain or capital loss from CGT event A1 happening on the disposal of their Benalla Trust units in working out their net capital gain or net capital loss for the income year in which CGT event A1 happens (sections 102-5 and 102-10). 33. A unit holder who made a capital gain where roll-over is not chosen, or cannot be chosen, can treat the capital gain as a 'discount capital gain' provided that the conditions of Subdivision 115-A are met. In particular, the units in the Benalla Trust that were disposed of to the trustee of RPT2 must have been acquired by the unit holder at least 12 months before the Implementation Date. | Cost base and reduced cost base of RPT2 units received: 34. The method for calculating the cost base and reduced cost base of the RPT2 units acquired by a unit holder in exchange for their units in the Benalla Trust depends on whether scrip for scrip roll-over is chosen. | Scrip for scrip roll-over is chosen: 35. Where scrip for scrip roll-over is chosen, the first element of the cost base and reduced cost base of a replacement RPT2 unit received is worked out by reasonably attributing to it the cost base and reduced cost base (including the Cash Settlement Adjustment), respectively, of the Benalla Trust unit for which it was exchanged and for which the roll-over was obtained (subsections 124-785(2) and 124-785(4)). | Scrip for scrip roll-over is not chosen, or cannot be chosen: 36. Where scrip for scrip roll-over is not chosen, or cannot be chosen, the first element of the cost base and reduced cost base of a replacement RPT2 unit received is equal to the market value of the part of each Benalla Trust unit given in respect of acquiring the RPT2 unit (subsections 110-25(2) and 110-55(2)). The market value is worked out as at the time of the acquisition. 37. In addition, the Cash Settlement Adjustment paid in respect of acquiring each RPT2 unit is added to the first element of the cost base and reduced cost base of a RPT2 unit (subsections 110-25(2) and 110-55(2)). | CGT event E4 happens when GLOL shares are distributed to RPT2 unit holders: 38. CGT event E4 happens when the trustee of RPT2 makes a payment to the unit holders of RPT2 (being the shares in GLOL) in respect of their units in RPT2. None of the payment is included in the assessable income of the unit holders (section 104-70). 39. The amount of the payment is the market value of the shares in GLOL (section 103-5). 40. The time of CGT event E4 is just before the end of the income year in which the trustee of RPT2 makes the payment (paragraph 104-70(3)(a)). 41. As the unit holders of RPT2 did not pay money or give property to acquire their shares in GLOL, the first element of the cost base and reduced cost base of the unit holders' shares in GLOL is the market value of those shares, at the time they were acquired by the unit holders (subsection 112-20(1)). 42. A unit holder makes a capital gain if the total amount of the non-assessable payment made by the trustee of RPT2 during the income year in respect of a RPT2 unit exceeds the cost base of the unit (subsection 104-70(4)). 43. If a unit holder makes a capital gain, the cost base and reduced cost base of the RPT2 unit is reduced to nil (subsection 104-70(5)). 44. If the total amount of the non-assessable payment made by the trustee of RPT2 during the income year is not more than the cost base of a RPT2 unit, the cost base and reduced cost base of the unit will be reduced by that total amount (subsection 104-70(6)). Commissioner of Taxation 11 November 2015 45. The tax consequences that arise concerning the scheme that is the subject of this Ruling are outlined in the Ruling part of this document. 46. The main tax consequence that is the subject of this Ruling is the availability of scrip for scrip roll-over under Subdivision 124-M. The roll-over enables the holder of a unit or other interest in a trust to disregard a capital gain from a unit or other interest that is disposed of if the holder receives a replacement interest in another trust in exchange. It also provides special rules for calculating the cost base and reduced cost base of the replacement interest. 47. Subdivision 124-M contains a number of conditions for, and exceptions to, the holder of an interest in a trust being eligible to choose scrip for scrip roll-over. The main requirements that are relevant to the scheme that is the subject of this Ruling are: 48. Having regard to: it is considered that for the purposes of paragraph 124-781(1)(b), there are fixed entitlements to all of the income and capital of the Benalla Trust and RPT2 immediately before, during and immediately after the exchange of units that is the subject of this Ruling. 49. The scheme satisfies the requirements for the roll-over under Subdivision 124-M. 50. 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: 24. CGT event A1 happened when the unit holders of the Benalla Trust disposed of their units to the trustee of RPT2 (section 104-10). 25. The time of CGT event A1 is on the Implementation Date (paragraph 104-10(3)(b)). 26. A unit holder made a capital gain from CGT event A1 happening if the capital proceeds from the disposal of a unit exceeded the cost base of that unit (subsection 104-10(4)). 27. A unit holder made a capital loss from CGT event A1 happening if the capital proceeds from the disposal of a unit were less than its reduced cost base (subsection 104-10(4)). 28. The capital proceeds from CGT event A1 happening to a unit in the Benalla Trust is the market value of 1.06 units in RPT2 (subsection 116-20(1)). The market value of a RPT2 unit is worked out as at the time of CGT event A1, which is on the Implementation Date. | Availability of scrip for scrip roll-over if a capital gain is made: 29. Subject to the qualification in the following paragraph, a unit holder who made a capital gain from the disposal of their Benalla Trust unit to the trustee of RPT2 may choose to obtain scrip for scrip roll-over (section 124-781 and section 124-785). 30. Scrip for scrip roll-over cannot be chosen if any capital gain a unit holder might make from their replacement RPT2 units would be disregarded, except because of a roll-over (paragraph 124-795(2)(a)). | Consequences if scrip for scrip roll-over is chosen: 31. The only capital proceeds received by a unit holder of the Benalla Trust were the units in RPT2. Therefore, if a unit holder chooses scrip for scrip roll-over, the capital gain they made upon the disposal of a Benalla Trust unit to the trustee of RPT2 is disregarded (subsection 124-785(1)). | Consequences if scrip for scrip roll-over is not chosen, or cannot be chosen: 32. A unit holder of the Benalla Trust who does not choose roll-over, or cannot choose roll-over, must take into account any capital gain or capital loss from CGT event A1 happening on the disposal of their Benalla Trust units in working out their net capital gain or net capital loss for the income year in which CGT event A1 happens (sections 102-5 and 102-10). 33. A unit holder who made a capital gain where roll-over is not chosen, or cannot be chosen, can treat the capital gain as a 'discount capital gain' provided that the conditions of Subdivision 115-A are met. In particular, the units in the Benalla Trust that were disposed of to the trustee of RPT2 must have been acquired by the unit holder at least 12 months before the Implementation Date. | Cost base and reduced cost base of RPT2 units received: 34. The method for calculating the cost base and reduced cost base of the RPT2 units acquired by a unit holder in exchange for their units in the Benalla Trust depends on whether scrip for scrip roll-over is chosen. | Scrip for scrip roll-over is chosen: 35. Where scrip for scrip roll-over is chosen, the first element of the cost base and reduced cost base of a replacement RPT2 unit received is worked out by reasonably attributing to it the cost base and reduced cost base (including the Cash Settlement Adjustment), respectively, of the Benalla Trust unit for which it was exchanged and for which the roll-over was obtained (subsections 124-785(2) and 124-785(4)). | Scrip for scrip roll-over is not chosen, or cannot be chosen: 36. Where scrip for scrip roll-over is not chosen, or cannot be chosen, the first element of the cost base and reduced cost base of a replacement RPT2 unit received is equal to the market value of the part of each Benalla Trust unit given in respect of acquiring the RPT2 unit (subsections 110-25(2) and 110-55(2)). The market value is worked out as at the time of the acquisition. 37. In addition, the Cash Settlement Adjustment paid in respect of acquiring each RPT2 unit is added to the first element of the cost base and reduced cost base of a RPT2 unit (subsections 110-25(2) and 110-55(2)). | CGT event E4 happens when GLOL shares are distributed to RPT2 unit holders: 38. CGT event E4 happens when the trustee of RPT2 makes a payment to the unit holders of RPT2 (being the shares in GLOL) in respect of their units in RPT2. None of the payment is included in the assessable income of the unit holders (section 104-70). 39. The amount of the payment is the market value of the shares in GLOL (section 103-5). 40. The time of CGT event E4 is just before the end of the income year in which the trustee of RPT2 makes the payment (paragraph 104-70(3)(a)). 41. As the unit holders of RPT2 did not pay money or give property to acquire their shares in GLOL, the first element of the cost base and reduced cost base of the unit holders' shares in GLOL is the market value of those shares, at the time they were acquired by the unit holders (subsection 112-20(1)). 42. A unit holder makes a capital gain if the total amount of the non-assessable payment made by the trustee of RPT2 during the income year in respect of a RPT2 unit exceeds the cost base of the unit (subsection 104-70(4)). 43. If a unit holder makes a capital gain, the cost base and reduced cost base of the RPT2 unit is reduced to nil (subsection 104-70(5)). 44. If the total amount of the non-assessable payment made by the trustee of RPT2 during the income year is not more than the cost base of a RPT2 unit, the cost base and reduced cost base of the unit will be reduced by that total amount (subsection 104-70(6)). Commissioner of Taxation 11 November 2015


Appendix: 45. The tax consequences that arise concerning the scheme that is the subject of this Ruling are outlined in the Ruling part of this document. 46. The main tax consequence that is the subject of this Ruling is the availability of scrip for scrip roll-over under Subdivision 124-M. The roll-over enables the holder of a unit or other interest in a trust to disregard a capital gain from a unit or other interest that is disposed of if the holder receives a replacement interest in another trust in exchange. It also provides special rules for calculating the cost base and reduced cost base of the replacement interest. 47. Subdivision 124-M contains a number of conditions for, and exceptions to, the holder of an interest in a trust being eligible to choose scrip for scrip roll-over. The main requirements that are relevant to the scheme that is the subject of this Ruling are: 48. Having regard to: it is considered that for the purposes of paragraph 124-781(1)(b), there are fixed entitlements to all of the income and capital of the Benalla Trust and RPT2 immediately before, during and immediately after the exchange of units that is the subject of this Ruling. 49. The scheme satisfies the requirements for the roll-over under Subdivision 124-M.


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 6(1) ITAA 1997 ITAA 1997 102-5 ITAA 1997 102-10 ITAA 1997 103-5 ITAA 1997 Div 104 ITAA 1997 104-10 ITAA 1997 104-10(3)(b) ITAA 1997 104-10(4) ITAA 1997 104-70 ITAA 1997 104-70(3)(a) ITAA 1997 104-70(4) ITAA 1997 104-70(5) ITAA 1997 104-70(6) ITAA 1997 110-25 ITAA 1997 110-25(2) ITAA 1997 110-55 ITAA 1997 110-55(2) ITAA 1997 112-20(1) ITAA 1997 112-30(1) ITAA 1997 Subdiv 115-A ITAA 1997 116-20 ITAA 1997 116-20(1) ITAA 1997 Subdiv 124-M ITAA 1997 124-781 ITAA 1997 124-781(1)(b) 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 124-795(2)(a) ITAA 1997 Div 230 ITAA 1997 977-50 ITAA 1997 995-1(1) Corporations Act 2001 Ch 5C TAA 1953