Class Ruling CR 2008/61
Date of effect: 30 June 2008

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 subsequent legislative references are to the ITAA 1997 unless otherwise stated. Class of entities 3. The class of entities to which this Ruling applies is all Australian resident employees (participating employees) of Centennial Coal Company Limited (Centennial) and its associated companies (the Centennial Coal Group) who participated in the Centennial Coal Company Limited Deferred Employee Share Plan (the Plan) and: 4. The Centennial Coal Group comprises: Qualifications 5. The Commissioner makes this Ruling based on the precise arrangement identified in this Ruling. 6. 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 13 to 18 of this Ruling. 7. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 8. 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 is all Australian resident employees (participating employees) of Centennial Coal Company Limited (Centennial) and its associated companies (the Centennial Coal Group) who participated in the Centennial Coal Company Limited Deferred Employee Share Plan (the Plan) and: 4. The Centennial Coal Group comprises: | Qualifications: 5. The Commissioner makes this Ruling based on the precise arrangement identified in this Ruling. 6. 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 13 to 18 of this Ruling. 7. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 8. 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: 9. This Ruling applies to the income year ended 30 June 2008. However, the Ruling does not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of the Ruling. Furthermore, the Ruling only applies to the extent that: 10. If this Ruling is inconsistent with a later public or private ruling, the relevant class of entities may rely on either ruling which applies to them (item 1 of subsection 357-75(1) of Schedule 1 to the Taxation Administration Act 1953 (TAA)). 11. If this Ruling is inconsistent with an earlier private ruling, the private ruling is taken not to have been made if, when the Class Ruling is made, the following two conditions are met: 12. If the above two conditions do not apply, the relevant class of entities may rely on either ruling which applies to them (item 3 of subsection 357-75(1) of Schedule 1 to the TAA). 13. The scheme that is the subject of the Ruling is described below. This description is based on, and includes reference to, the following documents: 14. The Plan is described in CR 2003/68. Under the Plan, shares are vested in the Plan Trustee and held upon trust on behalf of participants and notionally allocated, as a beneficial interest, to the participating employees. 15. The Trust Deed states that the Plan Trustee must pay all dividends and other distributions received in respect of any Plan shares allocated to a participant to that participant without deductions. 16. The return of capital is described in CR 2007/120. Centennial distributed a return of capital payment of $1.88 per share to each of its shareholders on 29 January 2008, which represented a return of capital to shareholders as at 18 January 2008. 17. The Commissioner explained in paragraph 54 of CR 2007/120 that Capital Gains Tax (CGT) event G1 (section 104-135) will happen when Centennial pays the return of capital in respect of each share that a Centennial shareholder owns at the time of the payment. 18. At the time of the return of capital, there were participating employees in the Plan for whom the cessation time for their shares had not yet occurred. | CGT event G1: 19. CGT event G1 in section 104-135 of the ITAA 1997 did not happen to a participating employee who received the return of capital prior to the cessation time under Division 13A of Part III of the ITAA 1936. | CGT event E4 happened on the return of capital: 20. A participating employee of the Centennial Coal Group has an interest in the Plan and hence an 'interest in the trust' for the purpose of subsection 104-70(1). CGT event E4 happened when a participating employee received the return of capital payment from the Plan Trustee. | CGT discount: 21. A participating employee who acquired their interest in the Plan at least 12 months before CGT event E4 happened is entitled to treat any capital gain as a discount capital gain under section 115-25 provided they satisfy the other requirements of Subdivision 115-A. The discount percentage is 50% as specified in subparagraph 115-100(a)(i). Commissioner of Taxation 8 October 2008 | CGT event G1: 22. CGT event G1 (section 104-135 of the ITAA 1997) happened to the trustee of the Plan in respect of each share where the trustee was registered as a Centennial shareholder on the record date and continued to own the share at the time when the return of capital was paid. CGT event G1 did not happen to a participating employee who received the return of capital prior to the 'cessation time' under Division 13A of Part III of the ITAA 1936. | CGT event E4: 23. CGT event E4 happens if the trustee of a trust makes a payment to you in respect of your unit or your interest in the trust and some or all of the payment is not included in your assessable income (subsection 104-70(1)). 24. An 'interest in a trust' for the purpose of subsection 104-70(1) includes a situation where shares under an employee share trust have been allocated to a participating employee. 25. As the participating employees have an interest in the Plan, being an interest in a trust, CGT event E4 therefore happened when a participating employee received the return of capital payment from the Plan Trustee. 26. The following is a detailed contents list for this Ruling: Not previously issued as a draft

Ruling: CGT event G1: 19. CGT event G1 in section 104-135 of the ITAA 1997 did not happen to a participating employee who received the return of capital prior to the cessation time under Division 13A of Part III of the ITAA 1936. | CGT event E4 happened on the return of capital: 20. A participating employee of the Centennial Coal Group has an interest in the Plan and hence an 'interest in the trust' for the purpose of subsection 104-70(1). CGT event E4 happened when a participating employee received the return of capital payment from the Plan Trustee. | CGT discount: 21. A participating employee who acquired their interest in the Plan at least 12 months before CGT event E4 happened is entitled to treat any capital gain as a discount capital gain under section 115-25 provided they satisfy the other requirements of Subdivision 115-A. The discount percentage is 50% as specified in subparagraph 115-100(a)(i). Commissioner of Taxation 8 October 2008


Appendix: CGT event G1: 22. CGT event G1 (section 104-135 of the ITAA 1997) happened to the trustee of the Plan in respect of each share where the trustee was registered as a Centennial shareholder on the record date and continued to own the share at the time when the return of capital was paid. CGT event G1 did not happen to a participating employee who received the return of capital prior to the 'cessation time' under Division 13A of Part III of the ITAA 1936. | CGT event E4: 23. CGT event E4 happens if the trustee of a trust makes a payment to you in respect of your unit or your interest in the trust and some or all of the payment is not included in your assessable income (subsection 104-70(1)). 24. An 'interest in a trust' for the purpose of subsection 104-70(1) includes a situation where shares under an employee share trust have been allocated to a participating employee. 25. As the participating employees have an interest in the Plan, being an interest in a trust, CGT event E4 therefore happened when a participating employee received the return of capital payment from the Plan Trustee.


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, we must apply the law to you in the way set out in the ruling (or in a way that is more favourable for you if we are satisfied that the ruling is incorrect and disadvantages you, and we are 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: CR 2003/68 CR 2007/120
Legislative references: ITAA 1936 Pt III Div 13A ITAA 1936 139CA ITAA 1936 139E ITAA 1997 104-70 ITAA 1997 104-70(1) ITAA 1997 104-135 ITAA 1997 Subdiv 115-A ITAA 1997 115-25 ITAA 1997 115-100 ITAA 1997 115-100(a)(i) TAA 1953 TAA 1953 Sch 1 357-75(1) Copyright Act 1968
Subject references: capital gains tax CGT events CGT events E1-E9 - trusts employee share scheme & options return of capital on shares