Class Ruling CR 2016/75
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 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: Class of entities 3. The class of entities to which this Ruling applies is the holders of units in Caledonia Small Caps Trust ( Small Caps ) who: Qualifications 4. The Commissioner makes this ruling based on the precise arrangement 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 19 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 units in Caledonia Small Caps Trust ( Small Caps ) who: | Qualifications: 4. The Commissioner makes this ruling based on the precise arrangement 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 19 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 2018. 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: 9. Alfred Street Nominees Pty Limited ( Trustee ) is an Australian resident company that acts as the trustee of, and Caledonia (Private) Investments Pty Ltd ( Caledonia ) is the investment manager for, the following trusts: 10. The Replicate Trusts were created in a previous restructure in February 2015. 11. The current structure comprises the eight separate trusts over two effectively identical pools of assets. Caledonia proposes to reorganise the current structure ' in order to achieve greater simplicity of operations, client communications and management of the investment portfolios of the Trusts ', which ' should generate operational cost savings to the unitholders in the form of a reduced operating cost Management Expense Ratio '. 12. The proposed reorganisation will be implemented in the financial ended 30 June 2017. | Proposed reorganisation: 13. Under the proposed reorganisation, the investments held by Small Caps, Private and CAT ( Target Trusts ) will be transferred to Global. All unitholders in each Target Trust will receive units in the Global in the relative proportion to their existing unitholding in each Target Trust. 14. A similar reorganisation will be undertaken with respect to the Replicate Trusts. 15. In carrying out the reorganisation, the following steps will be undertaken: 16. Following the Reorganisation, all of the P1s and P2s will be extinguished by Global. All new investors will subscribe for units in Global and all new investments will be made by Global. | Other facts in this scheme: 17. For the purposes of Ruling 1, Ruling 2, Ruling 4 and Ruling 6, it is taken as facts that: 18. For the purposes of Ruling 2, it is taken as a fact that: 19. For the purposes of Ruling 6, it is taken as facts that for 12 months following the restructure:

Ruling: 20. The conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 will be met in respect of the acquisition of the newly issued units in Global in consideration for the redemption of the unitholders' units in Small Caps, provided that, in respect of the application of section 124-781: and provided that, with regard to the exceptions outlined in section 124-795: | Ruling 2: Unitholder's cost base where roll-over occurs: 21. To the extent that the conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 are met in respect of the exchange of units in Small Caps for units in Global, the first element of the unitholders' cost base and reduced cost base of each unit acquired in Global will be calculated in accordance with the application of section 124-785 of the ITAA 1997. | Ruling 3: Unitholder's cost base where no roll-over: 22. To the extent that the conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 are not met in respect of the exchange of units in Small Caps for units in Global, the first element of the unitholders' cost base and reduced cost base of each unit in Global will be equal to the market value of the units redeemed at the time of the acquisition of Global units in accordance with the application of section 110-25 and section 110-55 (respectively) of the ITAA 1997. | Ruling 4: Time of acquisition where roll-over occurs: 23. To the extent that the conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 are met in respect of the exchange of units in Small Caps for units in Global, the unitholders will be deemed to have acquired their interests in Global at the time they acquired the relevant units in Small Caps in accordance with the application of subsection 115-30(1) of the ITAA 1997, for the purposes of the various provisions to which subsection 115-30(1) applies. | Ruling 5: Time of acquisition where no roll-over: 24. To the extent that the conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 are not met in respect of the exchange of units in Small Caps for units in Global, the unitholders will be deemed to have acquired their interests in Global for the purposes of the capital gains tax discount concession at the time the units in Global were issued to them in accordance with the application of subsection 109-10 of the ITAA 1997. | Ruling 6: Discount capital gains: 25. Subsection 115-50(2) of the ITAA 1997 will apply in respect of unitholders who dispose of their units in Global within 12 months of the Restructure, thereby preventing the application of section 115-45 of the ITAA 1997, provided that: Commissioner of Taxation 19 October 2016 Ruling 1: The conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 will be met in respect of the acquisition of the newly issued units in Global in consideration for the redemption of the unitholders' units in Small Caps. 26. In order to be eligible for scrip for scrip roll-over under Subdivision 124-M, the conditions prescribed in section 124-781 must be met, and the exclusions to the application of the roll-over provisions in section 124-795 must not apply. 27. The conditions for a scrip for scrip roll-over in section 124-781 are prescribed as follows: 28. The requirements in subsection 124-781(1) have been met in this case. The conditions prescribed under each of the paragraphs and their application to the facts of this case is considered below. | Paragraph 124-781(1)(a): 29. An 'exchange' occurs in this case given that unitholders of Small Caps (the 'original interest holder') exchange their units (the 'original interest') for units ('replacement interest') in Global (the 'acquiring entity' and 'replacement entity'). 30. This exchange is proposed to be conducted in accordance with the process in Step 1 of the reorganisation under which the following occurs: | Paragraph 124-781(1)(b): 31. 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 Small Caps and of Global immediately before, during and immediately after the arrangement that is the subject of this Ruling. | Paragraph 124-781(1)(c): 32. ' Arrangement ' is defined in section 995-1 as ' any arrangement, agreement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable (or intended to be enforceable) by legal proceedings. ' 33. Paragraph 11.23 of the Explanatory Memorandum to the New Business Tax System (Miscellaneous) Bill (No. 2) 2000 provides that: 34. Steps 1 to 4 are intended to be implemented contemporaneously in respect of all the Target Trusts. The reorganisation is conceived of as a whole with a strategy that proposes various transactions affecting all the Target Trusts. 35. Consequently, with the exception of section 124-784A, the ' arrangement ' for the purposes of Subdivision 124-M is the single proposal under Step 1 to Step 4 above as it applies to all the Target Trusts. 36. The arrangement satisfies subsection 124-781(2) for the following reasons: | Paragraph 124-781(1)(d): 37. This paragraph requires the conditions in subsection 124-781(3) and subsection 124-781(4) to be satisfied. 38. The conditions in subsection 124-781(3) are satisfied for the following reasons: Significant stakeholder 39. Subsection 124-783(1) provides: 40. A significant stake is defined in subsection 124-783(7) as follows: 41. In this case, it is taken as facts for the purposes of this ruling that no Small Caps unitholder will have a right to receive 30% or more of any distribution of income or capital in Global just after the arrangement is completed. 42. On this basis, the requirements of a ' significant stakeholder ' in subsection 124-783 will not be met, and consequently the unitholder will not be considered to be a ' significant stakeholder ' under the terms of Subdivision 124-M. Common stakeholder 43. Subsection 124-783(3) provides: 44. Subsection 124-783(10) defines 'common stake' as follows 45. It is taken as facts for the purposes of this Ruling that: 46. As a consequence the ' common stake ' test in subsection 124-783(10) will not be satisfied. It follows that the condition in subsection 124-783(3) will not be met and no original interest holder will be a ' common stakeholder '. 47. Further, subsection 124-783(5) provides that an original interest holder will not be a common stakeholder ' if either the original entity or the replacement entity had at least 300 members (for a company) or 300 beneficiaries (for a trust) just before the arrangement started '. 48. Global as the replacement entity currently has more than 300 beneficiaries and it is taken as a fact that it will continue to have more than 300 beneficiaries just before the start of the arrangement. 49. In this regard, note that section 124-810 does not apply in this case. Section 124-810 treats a widely-held trust as if it does not have at least 300 beneficiaries if certain conditions are met. Global will not fall within the scope of section 124-810 as it is taken as a fact that, just before the start of the arrangement: The conditions in in subsections 124-781(3) and 124-781(4) 50. Paragraph 124-781(3)(d) provides that if section 124-782 applies to the original interest holder, the holder must inform the trustee ' in writing of the cost base of its original interest as at the time just before a CGT event happened in relation to it '. 51. As section 124-782 does not apply, paragraph 124-781(3)(d) has no application to this case. 52. Subsection 124-781(4) will apply if the unitholders in Small Caps and the Trustee (as trustee for Global) do not deal with each other at arms' length and neither Small Caps nor Global had at least 300 beneficiaries before the arrangement starts. Subsection 124-781(4) does not apply in this case because: | Exceptions to the application of the roll-over provisions: 53. Section 124-795 specifies a list of circumstances in which a roll-over under Subdivision 124-M is not available. The circumstances in this case do not fall within the scope of any of the listed exclusions in section 124-795 for the following reasons: Ruling 2: To the extent that the conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 are met in respect of the exchange of units in Small Caps for units in Global, the first element of the unitholders' cost base and reduced cost base of each unit acquired in Global will be calculated in accordance with the application of section 124-785 of the ITAA 1997 54. The cost base of units acquired by a unitholder as a result of the exchange described in section 124-781 is determined under section 124-785, which provides as follows: 55. In the present case: Ruling 3: To the extent that the conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 are not met in respect of the exchange of units in Small Caps for units in Global, the first element of the unitholders' cost base and reduced cost base of each unit in Global will be equal to the market value of the units redeemed at the time of the acquisition of Global units in accordance with the application of section 110-25 and section 110-55 (respectively) of the ITAA 1997. 56. If the roll-over provisions under Subdivision 124-M do not apply, the redemption of units in Small Caps will result in CGT event C2 happening. CGT event C2 applies where an asset is redeemed (paragraph 104-25(1)(a)). 57. In satisfaction of the redemption, the unitholders are issued units in Global. 58. Units in Global are ' CGT assets ' under the terms of section 108-5, being ' any kind of property ' as expressed in subsection 108-5(1). 59. The first element of the cost base of a unit will be determined under the general cost base provisions and reduced cost base provisions in section 110-25 and section 110-55 respectively. The first element of the reduced cost base of an asset is the same as that for the cost base: subsection 110-55(2). 60. Subsection 110-25(2) provides that the first element of the cost base is the total of the money paid or required to be paid in respect of acquiring the asset, and: 61. In the present case: Ruling 4: To the extent that the conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 are met in respect of the exchange of units in Small Caps for units in Global, the unitholders will be deemed to have acquired their interests in Global at the time they acquired the relevant units in Small Caps in accordance with the application of subsection 115-30(1) of the ITAA 1997, for the purposes of the various provisions to which subsection 115-30(1) applies. 62. Subsection 115-30(1) prescribes rules concerning the time of acquisition of certain CGT assets for the purposes of the following provisions in Division 115: 63. Item 2 in the table to subsection 115-30(1) applies to: 64. In regard to item 2: 65. If a CGT asset falls within the scope of item 2, the acquirer is treated as having acquired the CGT asset: 66. The original asset in this case is the Small Caps units which were redeemed in exchange for the acquisition of the Global units. It follows that a unitholder will be taken to acquire a unit in Global at the time they had acquired the corresponding (redeemed) unit in Small Caps. Ruling 5: To the extent that the conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 are not met in respect of the exchange of units in Small Caps for units in Global, the unitholders will be deemed to have acquired their interests in Global for the purposes of the capital gains tax discount concession at the time the units in Global were issued to them in accordance with the application of section 109-10 of the ITAA 1997 67. Section 109-10 prescribes rules for circumstances in which, and the time at which, a CGT asset is acquired otherwise than as a result of a CGT event happening. One such circumstance, specified in item 3 in the table to section 109-10, is where: 68. In such a case, the time of acquisition of the units is: 69. Under the terms of the proposed reorganisation: 70. It follows that, if the conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 are not met by a unitholder in respect of the exchange of units in Small Caps for units in Global (for example, if the unitholder does not choose to obtain a CGT roll-over under paragraph 124-781(3)(c)), the time at which a unitholder is taken to acquire the units in Global is the date on which those units are issued to it. 71. This rule applies also for the purposes of the capital gains discount concession. Ruling 6: Subsection 115-50(2) of the ITAA 1997 will apply in respect of unitholders who dispose of their units in Global within 12 months of the Restructure, thereby preventing the application of section 115-45 of the ITAA 1997. 72. A capital gain arising from a CGT event happening in relation to a unitholder's unit in a trust will not be considered a ' discount capital gain ' if it falls within the scope of section 115-45, which - very broadly speaking - focuses on the trust's ownership of CGT assets acquired less than 12 months prior to the event. 73. Section 115-45 will however not apply if the conditions in subsection 115-50(2) are satisfied. 74. Subsection 115-50(2) provides as follows: 75. On the facts of the present case, and on the assumptions mentioned below, the conditions subsection 115-50(2) will be satisfied for the following reasons: 76. 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


Appendix: Ruling 1: The conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 will be met in respect of the acquisition of the newly issued units in Global in consideration for the redemption of the unitholders' units in Small Caps. 26. In order to be eligible for scrip for scrip roll-over under Subdivision 124-M, the conditions prescribed in section 124-781 must be met, and the exclusions to the application of the roll-over provisions in section 124-795 must not apply. 27. The conditions for a scrip for scrip roll-over in section 124-781 are prescribed as follows: 28. The requirements in subsection 124-781(1) have been met in this case. The conditions prescribed under each of the paragraphs and their application to the facts of this case is considered below. | Paragraph 124-781(1)(a): 29. An 'exchange' occurs in this case given that unitholders of Small Caps (the 'original interest holder') exchange their units (the 'original interest') for units ('replacement interest') in Global (the 'acquiring entity' and 'replacement entity'). 30. This exchange is proposed to be conducted in accordance with the process in Step 1 of the reorganisation under which the following occurs: | Paragraph 124-781(1)(b): 31. 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 Small Caps and of Global immediately before, during and immediately after the arrangement that is the subject of this Ruling. | Paragraph 124-781(1)(c): 32. ' Arrangement ' is defined in section 995-1 as ' any arrangement, agreement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable (or intended to be enforceable) by legal proceedings. ' 33. Paragraph 11.23 of the Explanatory Memorandum to the New Business Tax System (Miscellaneous) Bill (No. 2) 2000 provides that: 34. Steps 1 to 4 are intended to be implemented contemporaneously in respect of all the Target Trusts. The reorganisation is conceived of as a whole with a strategy that proposes various transactions affecting all the Target Trusts. 35. Consequently, with the exception of section 124-784A, the ' arrangement ' for the purposes of Subdivision 124-M is the single proposal under Step 1 to Step 4 above as it applies to all the Target Trusts. 36. The arrangement satisfies subsection 124-781(2) for the following reasons: | Paragraph 124-781(1)(d): 37. This paragraph requires the conditions in subsection 124-781(3) and subsection 124-781(4) to be satisfied. 38. The conditions in subsection 124-781(3) are satisfied for the following reasons: Significant stakeholder 39. Subsection 124-783(1) provides: 40. A significant stake is defined in subsection 124-783(7) as follows: 41. In this case, it is taken as facts for the purposes of this ruling that no Small Caps unitholder will have a right to receive 30% or more of any distribution of income or capital in Global just after the arrangement is completed. 42. On this basis, the requirements of a ' significant stakeholder ' in subsection 124-783 will not be met, and consequently the unitholder will not be considered to be a ' significant stakeholder ' under the terms of Subdivision 124-M. Common stakeholder 43. Subsection 124-783(3) provides: 44. Subsection 124-783(10) defines 'common stake' as follows 45. It is taken as facts for the purposes of this Ruling that: 46. As a consequence the ' common stake ' test in subsection 124-783(10) will not be satisfied. It follows that the condition in subsection 124-783(3) will not be met and no original interest holder will be a ' common stakeholder '. 47. Further, subsection 124-783(5) provides that an original interest holder will not be a common stakeholder ' if either the original entity or the replacement entity had at least 300 members (for a company) or 300 beneficiaries (for a trust) just before the arrangement started '. 48. Global as the replacement entity currently has more than 300 beneficiaries and it is taken as a fact that it will continue to have more than 300 beneficiaries just before the start of the arrangement. 49. In this regard, note that section 124-810 does not apply in this case. Section 124-810 treats a widely-held trust as if it does not have at least 300 beneficiaries if certain conditions are met. Global will not fall within the scope of section 124-810 as it is taken as a fact that, just before the start of the arrangement: The conditions in in subsections 124-781(3) and 124-781(4) 50. Paragraph 124-781(3)(d) provides that if section 124-782 applies to the original interest holder, the holder must inform the trustee ' in writing of the cost base of its original interest as at the time just before a CGT event happened in relation to it '. 51. As section 124-782 does not apply, paragraph 124-781(3)(d) has no application to this case. 52. Subsection 124-781(4) will apply if the unitholders in Small Caps and the Trustee (as trustee for Global) do not deal with each other at arms' length and neither Small Caps nor Global had at least 300 beneficiaries before the arrangement starts. Subsection 124-781(4) does not apply in this case because: | Exceptions to the application of the roll-over provisions: 53. Section 124-795 specifies a list of circumstances in which a roll-over under Subdivision 124-M is not available. The circumstances in this case do not fall within the scope of any of the listed exclusions in section 124-795 for the following reasons: Ruling 2: To the extent that the conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 are met in respect of the exchange of units in Small Caps for units in Global, the first element of the unitholders' cost base and reduced cost base of each unit acquired in Global will be calculated in accordance with the application of section 124-785 of the ITAA 1997 54. The cost base of units acquired by a unitholder as a result of the exchange described in section 124-781 is determined under section 124-785, which provides as follows: 55. In the present case: Ruling 3: To the extent that the conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 are not met in respect of the exchange of units in Small Caps for units in Global, the first element of the unitholders' cost base and reduced cost base of each unit in Global will be equal to the market value of the units redeemed at the time of the acquisition of Global units in accordance with the application of section 110-25 and section 110-55 (respectively) of the ITAA 1997. 56. If the roll-over provisions under Subdivision 124-M do not apply, the redemption of units in Small Caps will result in CGT event C2 happening. CGT event C2 applies where an asset is redeemed (paragraph 104-25(1)(a)). 57. In satisfaction of the redemption, the unitholders are issued units in Global. 58. Units in Global are ' CGT assets ' under the terms of section 108-5, being ' any kind of property ' as expressed in subsection 108-5(1). 59. The first element of the cost base of a unit will be determined under the general cost base provisions and reduced cost base provisions in section 110-25 and section 110-55 respectively. The first element of the reduced cost base of an asset is the same as that for the cost base: subsection 110-55(2). 60. Subsection 110-25(2) provides that the first element of the cost base is the total of the money paid or required to be paid in respect of acquiring the asset, and: 61. In the present case: Ruling 4: To the extent that the conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 are met in respect of the exchange of units in Small Caps for units in Global, the unitholders will be deemed to have acquired their interests in Global at the time they acquired the relevant units in Small Caps in accordance with the application of subsection 115-30(1) of the ITAA 1997, for the purposes of the various provisions to which subsection 115-30(1) applies. 62. Subsection 115-30(1) prescribes rules concerning the time of acquisition of certain CGT assets for the purposes of the following provisions in Division 115: 63. Item 2 in the table to subsection 115-30(1) applies to: 64. In regard to item 2: 65. If a CGT asset falls within the scope of item 2, the acquirer is treated as having acquired the CGT asset: 66. The original asset in this case is the Small Caps units which were redeemed in exchange for the acquisition of the Global units. It follows that a unitholder will be taken to acquire a unit in Global at the time they had acquired the corresponding (redeemed) unit in Small Caps. Ruling 5: To the extent that the conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 are not met in respect of the exchange of units in Small Caps for units in Global, the unitholders will be deemed to have acquired their interests in Global for the purposes of the capital gains tax discount concession at the time the units in Global were issued to them in accordance with the application of section 109-10 of the ITAA 1997 67. Section 109-10 prescribes rules for circumstances in which, and the time at which, a CGT asset is acquired otherwise than as a result of a CGT event happening. One such circumstance, specified in item 3 in the table to section 109-10, is where: 68. In such a case, the time of acquisition of the units is: 69. Under the terms of the proposed reorganisation: 70. It follows that, if the conditions for scrip for scrip roll-over under Subdivision 124-M of the ITAA 1997 are not met by a unitholder in respect of the exchange of units in Small Caps for units in Global (for example, if the unitholder does not choose to obtain a CGT roll-over under paragraph 124-781(3)(c)), the time at which a unitholder is taken to acquire the units in Global is the date on which those units are issued to it. 71. This rule applies also for the purposes of the capital gains discount concession. Ruling 6: Subsection 115-50(2) of the ITAA 1997 will apply in respect of unitholders who dispose of their units in Global within 12 months of the Restructure, thereby preventing the application of section 115-45 of the ITAA 1997. 72. A capital gain arising from a CGT event happening in relation to a unitholder's unit in a trust will not be considered a ' discount capital gain ' if it falls within the scope of section 115-45, which - very broadly speaking - focuses on the trust's ownership of CGT assets acquired less than 12 months prior to the event. 73. Section 115-45 will however not apply if the conditions in subsection 115-50(2) are satisfied. 74. Subsection 115-50(2) provides as follows: 75. On the facts of the present case, and on the assumptions mentioned below, the conditions subsection 115-50(2) will be satisfied for the following reasons:


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. | Global will be issued with a nominal number of units in the Target Trusts. These units will be issued at the application prices. The units will be issued to ensure the trust estate relationship is maintained for the Target Trusts at all times during the reorganisation. | The Managers of CAT and Private, and the Trustee of Small Caps apply for units in Global on behalf of their unitholders and will compulsorily redeem all units ( Redeemed Units ) held by their unitholders other than those held by Global. The redemptions are satisfied by Global issuing units to the Target unitholders in proportion to the relative aggregate redemption price of the Redeemed Units in each Trust. No unitholder vote is required for the reorganisation to be implemented. It is not proposed that any contract be entered into between the Trustee and the unitholders giving effect to the issue of these units to the unitholders. All unitholders will participate in this arrangement on substantially the same terms. | As Private initially holds approximately 60% of the units in Small Caps and 63% of the units in the Small Caps 2, it will be issued units in Global and Global 2 respectively. | In consideration for the issue of its units to the investors, Global Trust will be issued further units in the Target Trusts. | The Target Trusts will then be wound up. This will occur as a 'two-step-redemption'. Initially, each of the Target Trusts will transfer their investments at market value to Global in consideration for two promissory notes (P1 & P2). Broadly, the face value of P2 will equate to the aggregate 'cost base' of the underlying investments. The face value of P1 will equate to the aggregate net capital gain and net revenue gain of the underlying investments. | The units that Private holds in Global will be redeemed for aggregate redemption prices. The respective cost bases and any capital gain/loss arising from redemption will be included in P1 and P2 to be provided to Private by Global. The units that Private holds in Global 2 will not be redeemed. The units will be transferred to Global as an investment of Private in accordance with the mechanism outlined above. | Each of the Target Trusts will then make a distribution to Global. This distribution will consist of the aggregate net capital gains and net revenue gains realised on the transfer (and redemption in the case of Global units held by Private) of their investments by way of the endorsement and delivery of P1. | The units held by Global in each of the Target Trusts will be redeemed. Global will receive as redemption proceeds the respective P2 from each of the Target Trusts. | What constitutes a single arrangement is a question of fact. Relevant factors in determining whether what takes place is part of a single arrangement would include, but not be limited to, whether there is more than one offer or transaction, whether aspects of an overall transaction occur contemporaneously, and the intention of the parties in all the circumstances as evidenced by objective facts. | An entity has a significant stake in a trust at a time if the entity, or the entity and the entity's associates between them, had at that time the right to receive 30% or more of any distribution to beneficiaries of the trust of income or capital of the trust. | A capital gain you make from your original interest is disregarded. | You work out the first element of the cost base of each CGT asset you received as a result of the exchange by reasonably attributing to it the cost base (or the part of it) of your original interest for which it was exchanged and for which you obtained the roll-over. | In applying subsection (2), you reduce the cost base of your original interest (just before you stop owning it) by so much of that cost base as is attributable to an ineligible part (see section 124-790). | The first element of the reduced cost base is worked out similarly. | ' the market value of any other property you gave, or are required to give, in respect of acquiring it (worked out as at the time of the acquisition) '. | A CGT asset that the acquirer acquired as a replacement asset for a replacement-asset roll-over (other than a roll-over covered by paragraph 115-34(1)(c)) | (Note: the application of subsection 115-30 as an acquisition rule to replacement asset roll-overs is confirmed in the legislative guide contained in section 109-55: see item 8C) | A trustee of a unit trust issues units in the trust to you. | When contract is entered into or, if none, when units issued. | Ruling 1: Scrip for scrip roll-over for unitholders | The conditions in subsections 124-781(3) and 124-781(4) | Appendix 2 - Detailed contents list


Related rulings: TR 2006/10
Legislative references: ITAA 1936 ITAA 1936 272-5(3)(b) ITAA 1997 ITAA 1997 104-25(1)(a) ITAA 1997 109-10 ITAA 1997 109-55 ITAA 1997 110-25 ITAA 1997 110-25(2) ITAA 1997 110-55 ITAA 1997 110-55(2) ITAA 1997 115-30(1) ITAA 1997 115-45 ITAA 1997 115-50 ITAA 1997 115-50(2) ITAA 1997 115-50(4) ITAA 1997 115-50(5) ITAA 1997 115-50(6) ITAA 1997 115-50(7) ITAA 1997 Subdiv 124-M ITAA 1997 124-781 ITAA 1997 124-781(1) ITAA 1997 124-781(1)(a) ITAA 1997 124-781(1)(b) ITAA 1997 124-781(1)(c) ITAA 1997 124-781(1)(d) ITAA 1997 124-781(2) ITAA 1997 124-781(2)(a) ITAA 1997 124-781(2)(b) ITAA 1997 124-781(2)(c) ITAA 1997 124-781(3) ITAA 1997 124-781(3)(a) ITAA 1997 124-781(3)(b) ITAA 1997 124-781(3)(c) ITAA 1997 124-781(3)(d) ITAA 1997 124-781(4) ITAA 1997 124-783 ITAA 1997 124-783(1) ITAA 1997 124-783(3) ITAA 1997 124-783(7) ITAA 1997 124-783(10) ITAA 1997 124-785 ITAA 1997 124-785(1) ITAA 1997 124-785(2) ITAA 1997 124-785(3) ITAA 1997 124-785(4) ITAA 1997 124-795 ITAA 1997 124-795(1) ITAA 1997 124-795(2)(a) ITAA 1997 124-795(2)(b) ITAA 1997 124-795(3) ITAA 1997 124-795(4) ITAA 1997 124-810 ITAA 1997 124-810(4) ITAA 1997 124-810(5)
Other references: Explanatory Memorandum to the New Business Tax System (Miscellaneous) Bill (No. 2) 2000