Class Ruling CR 2010/19
Date of effect: 1 July 2009

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 indicated. 3. On 6 January 2010, the Assistant Treasurer announced the Government's intention to introduce legislation to reform the tax law as it relates to the requirements for the scrip for scrip roll-over in respect of takeovers and mergers approved under the Corporations Act 2001 (Corporations Act). The changes as announced will apply to CGT events that happen on or after 6 January 2010 (Assistant Treasurer's Media Release No. 004 New Merger Tax Rules to Make it Easier for Shareholders ). This Ruling does not address the consequences that arise as a result of the scheme under the proposed law reform. Class of entities 4. The class of entities to whom this Ruling applies is registered shareholders of Seven Network Limited (SNL) who: Qualifications 5. The Commissioner makes this Ruling based on the proposed scheme precisely 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 10 to 23 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: 4. The class of entities to whom this Ruling applies is registered shareholders of Seven Network Limited (SNL) who: | Qualifications: 5. The Commissioner makes this Ruling based on the proposed scheme precisely 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 10 to 23 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 from 1 July 2009 to 30 June 2010. The Ruling continues to apply after 30 June 2010 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). 10. The following description of the scheme is based on information provided by the Applicant for this Ruling. The following documents, or relevant parts of them form part of and are to be read with the description: Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. | Overview: 11. The scheme that is the subject of this Ruling involves the merger of SNL with WesTrac Holdings Pty Limited (WesTrac Holdings). | SNL: 12. As at 10 March 2010 SNL had the following shares on issue which were listed on the Australian Securities Exchange (ASX): 13. All SNL Shares and all SNL TELYS3 were acquired on or after 20 September 1985. | Disposal of SNL Shares and SNL TELYS3: 14. On 22 February 2010, SNL and Australian Capital Equity Pty Limited (ACE), the parent company of WesTrac Holdings, jointly announced that they had entered into a Scheme Implementation Deed for a proposed merger of SNL and WesTrac Holdings. 15. The merger involves the following: As a result, SGH will become the holding company of the combined WesTrac and SNL group. 16. The proposed merger is to be implemented by way of two separate schemes of arrangements under Part 5.1 of the Corporations Act between SNL, SNL Shareholders and SNL TELYS3 Shareholders (Scheme of Arrangements). The Scheme of Arrangements are subject to the approval of SNL Shareholders, SNL TELYS3 Shareholders, the Federal Court of Australia and various regulatory bodies. | SNL Shares: 17. Under the first Scheme of Arrangement, on the Implementation Date of 13 May 2010, all SNL Shares will be transferred to WesTrac Holdings in exchange for SGH issuing new shares to SNL Shareholders. 18. SNL Shareholders will receive one SGH Share for each SNL Share they held on 6 May 2010 (the Scheme Record Date). 19. As a result, all SNL Shares will be owned by WesTrac Holdings. | SNL TELYS3: 20. Under a separate Scheme of Arrangement (Second Scheme of Arrangement), on the Implementation Date of 13 May 2010, all SNL TELYS3 will be transferred to WesTrac Holdings in exchange for SGH issuing SGH TELYS4 to the SNL TELYS3 Shareholders. 21. SNL TELYS3 Shareholders will receive one SGH TELYS4 for each SNL TELYS3 they held on 6 May 2010 (the Scheme Record Date). 22. As a result, all SNL TELYS3 will be owned by WesTrac Holdings. | Foreign shareholders: 23. SGH Shares and SGH TELYS4 will not be issued to certain shareholders of SNL whose address is in a place outside Australia, New Zealand, the UK, US, Hong Kong and Canada (foreign shareholders). The relevant SGH Shares and SGH TELYS4 will instead be issued to a nominee agent for sale on the ASX and net proceeds from the sale will be remitted to SGH and then paid by SGH to each foreign shareholder. | CGT event A1 happens on the disposal of SNL Shares and SNL TELYS3: 24. CGT event A1 will happen as a result of the disposal by a to WesTrac Holdings under the scheme described in the Ruling (subsection 104-10(1)). 25. The time of the event will be when the SNL Shares or SNL TELYS 3 are transferred to WesTrac Holdings on the Implementation Date 13 May 2010 (paragraph 104-10(3)(b)). Capital gain or capital loss 26. A SNL Shareholder or a SNL TELYS3 Shareholder will make a capital gain from CGT event A1 happening if the capital proceeds from the disposal of a SNL Share or SNL TELYS3 exceeds its cost base. A SNL Shareholder or SNL TELYS3 Shareholder will make a capital loss if those capital proceeds are less than its reduced cost base (subsection 104-10(4)). Capital Proceeds 27. The capital proceeds for each SNL Share or SNL TELYS3 will be the market value of the SGH Share or SGH TELYS4 received in respect of CGT event A1 happening, worked out at the time of the CGT event (subsection 116-20(1)). 28. The Commissioner accepts that the market value of the SGH Shares on 13 May 2010 may be determined by reference to the volume weighted average price (VWAP) of SGH Shares traded on the ASX on that day. 29. The Commissioner accepts that the market value of the SGH TELYS4 on 13 May 2010 may be determined by reference to the VWAP of SGH TELYS4 traded on the ASX on that day. | If a capital loss is made: 30. If a SNL Shareholder or SNL TELYS3 Shareholder makes a capital loss from the disposal of their SNL Shares or SNL TELYS3, they cannot choose scrip for scrip roll-over under Subdivision 124-M (subsection 124-780(3)). | If a capital gain is made: 31. Subject to the qualification in paragraph 32 of this Ruling, a SNL Shareholder or SNL TELYS3 Shareholder who makes a capital gain from the disposal of a SNL Share or SNL TELYS3 may choose scrip for scrip roll-over under Subdivision 124-M (section 124-780). 32. Scrip for scrip roll-over cannot be chosen if any capital gain the SNL Shareholder or SNL TELYS3 Shareholder might make from the replacement SGH Share or SGH TELYS4 would be disregarded, except because of a roll-over (paragraph 124-795(2)(a)). If scrip for scrip roll-over is chosen 33. If a SNL Shareholder or SNL TELYS3 Shareholder chooses scrip for scrip roll-over, the capital gain made from the disposal of a SNL Share or SNL TELYS3 is disregarded (subsection 124-785(1)). If scrip for scrip roll-over is not chosen 34. If a SNL Shareholder or SNL TELYS3 Shareholder does not choose scrip for scrip roll-over, the capital gain made from the disposal of a SNL Share or SNL TELYS3 is not disregarded. Discount capital gain 35. SNL Shareholders or SNL TELYS3 Shareholders, who make a capital gain where roll-over is not chosen or cannot be chosen, may be eligible to treat the gain as a 'discount capital gain' provided that they satisfy the requirements of Subdivision 115-A. | If scrip for scrip roll-over is chosen: 36. Where scrip for scrip roll-over is chosen, the first element of the SNL Shareholder's or SNL TELYS3 Shareholder's cost base and reduced cost base of each SGH Share or SGH TELYS4 is worked out by reasonably attributing to it the cost base of the SNL Share or SNL TELYS3 exchanged for the relevant SGH Share or SGH TELYS4 (subsections 124-785(2) and 124-785(4)). | If scrip for scrip roll-over is not chosen, or cannot be chosen: 37. Where scrip for scrip roll-over is not, or cannot be, chosen the first element of the SNL Shareholder's or SNL TELYS3 Shareholder's cost base and reduced cost base of each SGH's Share or SGH's TELYS4 received is equal to the market value of the SNL Share or SNL TELYS3 exchanged for the relevant SGH Share or SGH TELYS4 (subsection 110-25(2) and subsection 110-55(2)). 38. The Commissioner will accept the market value of one SGH Share received by a SNL Shareholder on 13 May 2010 as the market value of the SNL Share exchanged. The market value of SGH Shares on 13 May 2010 may be determined by reference to the VWAP of SGH Shares traded on the ASX on that day. 39. The Commissioner will accept the market value of one SGH TELYS3 received by a SNL Shareholder on 13 May 2010 as the market value of the SGH TELYS4 exchanged. The market value of SGH TELYS4 on 13 May 2010 may be determined by reference to the VWAP of SGH TELYS4 traded on the ASX on that day. | Acquisition date of SGH shares: 40. SNL Shareholders and/or SNL TELYS3 Shareholders will acquire their SGH Shares and/or SGH TELYS4 on the date those shares are issued to each SNL Shareholder and/or SNL TELYS3 Shareholder, that is, 13 May 2010 (item 2 of the table in section 109-10). 41. However, for the purposes of determining eligibility to a discount capital gain, SNL Shareholders or SNL TELYS3 Shareholders who choose scrip for scrip roll-over are taken to have acquired their SGH Shares or SGH TELYS4 when they acquired the corresponding SNL Share(s) or SNL TELYS3 (item 2 of the table in subsection 115-30(1)). Commissioner of Taxation 26 May 2010 42. The tax consequences and relevant legislative provisions that arise concerning the scheme that is the subject of this Ruling are outlined in the Ruling part of this document. 43. The significant tax consequence is the availability of scrip for scrip roll-over under Subdivision 124-M. Scrip for scrip roll-over enables a shareholder to disregard a capital gain from a share that is disposed of as part of a corporate takeover or merger if the shareholder receives a replacement share in the exchange. It also provides special rules for calculating the cost base and reduced cost base of the replacement share. 44. Subdivision 124-M contains a number of conditions for, and exceptions to, a shareholder being eligible to choose scrip for scrip roll-over. The main conditions and exceptions that are relevant to the circumstances of the merger of SNL and WesTrac Holdings are: 45. Under the scheme the conditions for roll-over under Subdivision 124-M are satisfied. 46. The following is a detailed contents list for this Ruling: Not previously issued as a draft

Ruling: CGT event A1 happens on the disposal of SNL Shares and SNL TELYS3: 24. CGT event A1 will happen as a result of the disposal by a to WesTrac Holdings under the scheme described in the Ruling (subsection 104-10(1)). 25. The time of the event will be when the SNL Shares or SNL TELYS 3 are transferred to WesTrac Holdings on the Implementation Date 13 May 2010 (paragraph 104-10(3)(b)). Capital gain or capital loss 26. A SNL Shareholder or a SNL TELYS3 Shareholder will make a capital gain from CGT event A1 happening if the capital proceeds from the disposal of a SNL Share or SNL TELYS3 exceeds its cost base. A SNL Shareholder or SNL TELYS3 Shareholder will make a capital loss if those capital proceeds are less than its reduced cost base (subsection 104-10(4)). Capital Proceeds 27. The capital proceeds for each SNL Share or SNL TELYS3 will be the market value of the SGH Share or SGH TELYS4 received in respect of CGT event A1 happening, worked out at the time of the CGT event (subsection 116-20(1)). 28. The Commissioner accepts that the market value of the SGH Shares on 13 May 2010 may be determined by reference to the volume weighted average price (VWAP) of SGH Shares traded on the ASX on that day. 29. The Commissioner accepts that the market value of the SGH TELYS4 on 13 May 2010 may be determined by reference to the VWAP of SGH TELYS4 traded on the ASX on that day. | If a capital loss is made: 30. If a SNL Shareholder or SNL TELYS3 Shareholder makes a capital loss from the disposal of their SNL Shares or SNL TELYS3, they cannot choose scrip for scrip roll-over under Subdivision 124-M (subsection 124-780(3)). | If a capital gain is made: 31. Subject to the qualification in paragraph 32 of this Ruling, a SNL Shareholder or SNL TELYS3 Shareholder who makes a capital gain from the disposal of a SNL Share or SNL TELYS3 may choose scrip for scrip roll-over under Subdivision 124-M (section 124-780). 32. Scrip for scrip roll-over cannot be chosen if any capital gain the SNL Shareholder or SNL TELYS3 Shareholder might make from the replacement SGH Share or SGH TELYS4 would be disregarded, except because of a roll-over (paragraph 124-795(2)(a)). If scrip for scrip roll-over is chosen 33. If a SNL Shareholder or SNL TELYS3 Shareholder chooses scrip for scrip roll-over, the capital gain made from the disposal of a SNL Share or SNL TELYS3 is disregarded (subsection 124-785(1)). If scrip for scrip roll-over is not chosen 34. If a SNL Shareholder or SNL TELYS3 Shareholder does not choose scrip for scrip roll-over, the capital gain made from the disposal of a SNL Share or SNL TELYS3 is not disregarded. Discount capital gain 35. SNL Shareholders or SNL TELYS3 Shareholders, who make a capital gain where roll-over is not chosen or cannot be chosen, may be eligible to treat the gain as a 'discount capital gain' provided that they satisfy the requirements of Subdivision 115-A. | If scrip for scrip roll-over is chosen: 36. Where scrip for scrip roll-over is chosen, the first element of the SNL Shareholder's or SNL TELYS3 Shareholder's cost base and reduced cost base of each SGH Share or SGH TELYS4 is worked out by reasonably attributing to it the cost base of the SNL Share or SNL TELYS3 exchanged for the relevant SGH Share or SGH TELYS4 (subsections 124-785(2) and 124-785(4)). | If scrip for scrip roll-over is not chosen, or cannot be chosen: 37. Where scrip for scrip roll-over is not, or cannot be, chosen the first element of the SNL Shareholder's or SNL TELYS3 Shareholder's cost base and reduced cost base of each SGH's Share or SGH's TELYS4 received is equal to the market value of the SNL Share or SNL TELYS3 exchanged for the relevant SGH Share or SGH TELYS4 (subsection 110-25(2) and subsection 110-55(2)). 38. The Commissioner will accept the market value of one SGH Share received by a SNL Shareholder on 13 May 2010 as the market value of the SNL Share exchanged. The market value of SGH Shares on 13 May 2010 may be determined by reference to the VWAP of SGH Shares traded on the ASX on that day. 39. The Commissioner will accept the market value of one SGH TELYS3 received by a SNL Shareholder on 13 May 2010 as the market value of the SGH TELYS4 exchanged. The market value of SGH TELYS4 on 13 May 2010 may be determined by reference to the VWAP of SGH TELYS4 traded on the ASX on that day. | Acquisition date of SGH shares: 40. SNL Shareholders and/or SNL TELYS3 Shareholders will acquire their SGH Shares and/or SGH TELYS4 on the date those shares are issued to each SNL Shareholder and/or SNL TELYS3 Shareholder, that is, 13 May 2010 (item 2 of the table in section 109-10). 41. However, for the purposes of determining eligibility to a discount capital gain, SNL Shareholders or SNL TELYS3 Shareholders who choose scrip for scrip roll-over are taken to have acquired their SGH Shares or SGH TELYS4 when they acquired the corresponding SNL Share(s) or SNL TELYS3 (item 2 of the table in subsection 115-30(1)). Commissioner of Taxation 26 May 2010


Appendix: 42. The tax consequences and relevant legislative provisions that arise concerning the scheme that is the subject of this Ruling are outlined in the Ruling part of this document. 43. The significant tax consequence is the availability of scrip for scrip roll-over under Subdivision 124-M. Scrip for scrip roll-over enables a shareholder to disregard a capital gain from a share that is disposed of as part of a corporate takeover or merger if the shareholder receives a replacement share in the exchange. It also provides special rules for calculating the cost base and reduced cost base of the replacement share. 44. Subdivision 124-M contains a number of conditions for, and exceptions to, a shareholder being eligible to choose scrip for scrip roll-over. The main conditions and exceptions that are relevant to the circumstances of the merger of SNL and WesTrac Holdings are: 45. Under the scheme the conditions for roll-over under Subdivision 124-M are satisfied. 46. The following is a detailed contents list for this Ruling: Not previously issued as a draft


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. | What this Ruling is about 1 | Appendix 2 - Detailed contents list


Related rulings: TR 2006/10
Legislative references: ITAA 1997 ITAA 1997 104-10 ITAA 1997 104-10(1) ITAA 1997 104-10(3)(b) ITAA 1997 104-10(4) ITAA 1997 109-10 ITAA 1997 110-25 ITAA 1997 110-25(2) ITAA 1997 110-55 ITAA 1997 110-55(2) ITAA 1997 Subdiv 115-A ITAA 1997 115-30(1) ITAA 1997 116-20 ITAA 1997 116-20(1) ITAA 1997 Subdiv 124-M ITAA 1997 124-780 ITAA 1997 124-780(3) ITAA 1997 124-785(1) ITAA 1997 124-785(2) ITAA 1997 124-785(4) ITAA 1997 124-795(2)(a) ITAA 1936 6(1) Corporations Act 2001 Pt 5.1 TAA 1953 Copyright Act 1968
Subject references: CGT asset CGT capital proceeds CGT cost base CGT event A1 scrip for scrip roll-over takeovers and mergers
Other references: Assistant Treasurer's Media Release No. 004, New Merger Tax Rules to Make it Easier for Shareholders available at http://assistant.treasurer.gov.au