Class Ruling CR 2008/68
Date of effect: 27 March 2007

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 provision dealt with in this Ruling is: 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 is former members of Swan Taxis Co-operative Limited (STCL), who held STCL shares and were re-issued with new share certificates to reflect the change in corporate structure and name of the former co-operative to Swan Taxis Ltd (STL). 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 9 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 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 former members of Swan Taxis Co-operative Limited (STCL), who held STCL shares and were re-issued with new share certificates to reflect the change in corporate structure and name of the former co-operative to Swan Taxis Ltd (STL). | 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 9 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 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: 8. This Ruling applies from 27 March 2007 to 30 June 2009. The Ruling continues to apply after 30 June 2009 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). 9. 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: 10. STCL, a co-operative regulated by the Companies (Co-operative) Act 1943 (WA) (Co-op Act) operates a taxi dispatch service in Western Australia. STCL proposed to change its corporate structure to an unlisted public company as a result of the introduction by the government of a new legislative scheme for co-operatives on 29 November 2007. 11. An Extraordinary General Meeting (EGM) was held on 27 March 2007 and the following special resolutions were passed by members of STCL: 12. Following the EGM, STCL applied to be registered as a public company limited by shares under the Corporations Act. 13. STL was registered by ASIC as an Australian public company on 16 May 2007. 14. On Conversion, the assets of STCL formed the assets of the unlisted public company STL. The assets of STCL were not diminished by the Conversion. 15. On 16 May 2007, the shareholders of STCL received replacement share certificates evidencing the conversion of STCL to the public company STL. The replacement share certificates were issued to the former shareholders of STCL in the same number and in the same classes as those held in STCL. 16. The Conversion did not result in the cancellation of STCL shares. The STCL shares were reclassified into STL shares, and the Conversion only effected a variation in the rights attaching to the shares. 17. No shareholder in STCL received any additional shares in STL, or shares of a class in STL, that they did not hold prior to the Conversion. Also, no shareholder received any other consideration from the Conversion. 18. At the time of the Conversion STCL had a number of classes of shares on issue: 19. STCL also had Treasury shares on issue that represented shares in itself that STCL acquired from members out of its reserve funds, as permitted by section 174 of the Co-op Act and authorised in Article 16 of STCL's Articles of Association. It is a breach of section 259A of the Corporations Act for a company to acquire shares in itself so this share class has not been included in the Constitution of STL. As these shares were on issue and held by STCL in itself prior to the introduction of section 259A of the Corporations Act, ASIC has accepted as part of the registration process that STL can continue to hold these shares but cannot acquire any further shares in itself. 20. No CGT event outlined in Division 104 happens to the class of entities to which this Ruling applies as a result of their STCL shares being reclassified into STL shares. Commissioner of Taxation 5 November 2008 | Reclassification of STCL shares: 21. The Conversion did not involve the cancellation of STCL shares. 22. Relevantly, the reclassification of each STCL share into STL share and the issuing of new share certificates did not involve the ownership of the STCL shares ending under section 104-25, nor was it a disposal of the STCL shares under section 104-10. Taxation Ruling TR 94/30, at paragraphs 8 and 9, provides that a variation of rights attaching to shares does not result in a full or part disposal of the share. 23. Accordingly, the reclassification of STCL shares into STL shares did not give rise to a CGT event for the former shareholders of STCL. 24. The following is a detailed contents list for this Ruling: Not previously issued as a draft

Ruling: 20. No CGT event outlined in Division 104 happens to the class of entities to which this Ruling applies as a result of their STCL shares being reclassified into STL shares. Commissioner of Taxation 5 November 2008


Appendix: Reclassification of STCL shares: 21. The Conversion did not involve the cancellation of STCL shares. 22. Relevantly, the reclassification of each STCL share into STL share and the issuing of new share certificates did not involve the ownership of the STCL shares ending under section 104-25, nor was it a disposal of the STCL shares under section 104-10. Taxation Ruling TR 94/30, at paragraphs 8 and 9, provides that a variation of rights attaching to shares does not result in a full or part disposal of the share. 23. Accordingly, the reclassification of STCL shares into STL shares did not give rise to a CGT event for the former shareholders of STCL.


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: TR 94/30 TR 2006/10
Legislative references: ITAA 1997 ITAA 1997 Div 104 ITAA 1997 104-10 ITAA 1997 104-25 Corporations Act 2001 Corporations Act 2001 259A Corporations Act 2001 601BC Companies (Co-operative) Act 1943 (WA) Companies (Co-operative) Act 1943 (WA) 174 Companies (Co-operative) Act 1943 (WA) 176A TAA 1953 Copyright Act 1968
Subject references: capital gains CGT events co-operative companies incorporation shareholders shares