Document ID: chunk:federal_register_of_legislation:C2025C00029:section:2:p49
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 2 (pt 49/59)
Character Range: 2653810–2656496

of the demerger, that the market values of Peter's and the other shareholders' shares in A and B are expected to be in proportion with their original interests in Company A, and advises the shareholders of this position.
 (3) In working out whether an original owner complies with subsection (2):
 (a) disregard *ownership interests that are original interests the owner owns in the *demerged entity; and
 (b) an anticipated reasonable approximation of the *market value of ownership interests is sufficient.
Example: An anticipated reasonable approximation of market values of ownership interests may include:
• valuations provided to shareholders in scheme documents;
• the price selected for use under a sale facility;
 and may be made by reference to long‑term value.

Exception: off‑market buy‑backs
 (4) A buy‑back of *shares that is an off‑market purchase for the purposes of Division 16K of Part III of the Income Tax Assessment Act 1936 is not a *demerger.

Exception: roll‑over available under another provision
 (5) Circumstances where an owner of original interests can obtain a roll‑over under a provision of this Act outside this Division for all of the CGT events that happened to the owner's original interests under the circumstances cannot be a demerger.
Note: An owner might be able to obtain a roll‑over for the CGT events under Subdivision 124‑E, or 124‑M or Division 615.

Meaning of demerged entity
 (6) An entity that is a former member of a *demerger group is a demerged entity if, under a *demerger that happens to the group, *ownership interests in the entity are acquired by:
 (a) shareholders in the *head entity of the group; or
 (b) unitholders or holders of interests in the head entity of the group.

Meaning of demerging entity
 (7) An entity that is a member of a *demerger group just before the *CGT event referred to in section 125‑155 happens is a demerging entity if, under a *demerger that happens to the group:
 (a) the entity (either alone or together with other members of the demerger group)*dispose of at least 80% of their total *ownership interests in another member of the demerger group to owners of original interests in the *head entity of the demerger group; or
 (b) at least 80% of the total ownership interests of that entity and of other members of the demerger group in another member of the demerger group end and new interests are issued to owners of original interests in the head entity; or
Note: CGT event C2 and CGT event C3 are the only relevant CGT events.
 (c) the demerged entity issues sufficient new ownership interests in itself with the result that owners of original interests in the head entity own at least 80% of