Document ID: chunk:federal_register_of_legislation:C2025C00029:section:2:p44
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 2 (pt 44/59)
Character Range: 2641661–2644434

gains and capital losses made by members of the demerger group from certain CGT events that happen under the demerger are disregarded (see Subdivision 125‑C).
Note: Dividend relief is also available: see section 44 of the Income Tax Assessment Act 1936.

Subdivision 125‑A—Object of this Division

Table of sections
125‑5 Object of this Division

125‑5  Object of this Division
  The object of this Division is to facilitate the demerging of entities by ensuring that capital gains tax considerations are not an impediment to restructuring a *business.

Subdivision 125‑B—Consequences for owners of interests

Guide to Subdivision 125‑B

125‑50  Guide to Subdivision 125‑B

      You can choose to obtain a roll‑over if a CGT event happens to your interests in a company or trust because of a demerger of an entity from the group of which the company or trust is the head entity.
      There are cost base adjustments if you receive new interests under a demerger and no CGT event happens to your original interests.

Table of sections

Operative provisions
125‑55 When a roll‑over is available for a demerger
125‑60 Meaning of ownership interest and related terms
125‑65 Meanings of demerger group, head entity and demerger subsidiary
125‑70 Meanings of demerger, demerged entity and demerging entity
125‑75 Exception: employee share schemes
125‑80 What is the roll‑over?
125‑85 Cost base adjustments where CGT event happens but no roll‑over chosen
125‑90 Cost base adjustments where no CGT event
125‑95 No other cost base adjustment after demerger
125‑100 No further demerger relief in some cases

Operative provisions

125‑55  When a roll‑over is available for a demerger
 (1) You can choose to obtain a roll‑over if:
 (a) you own an *ownership interest in a company or trust (your original interest); and
 (b) the company or trust is the *head entity of a *demerger group; and
 (c) a *demerger happens to the demerger group; and
 (d) under the demerger, a *CGT event happens to your original interest and you *acquire a new or replacement interest (your new interest) in the *demerged entity.
Note 1: Section 125‑80 sets out what the roll‑over is.
Note 2: You have to make cost base adjustments even if there is no CGT event: see section 125‑90.
Example: Peter owns shares (his original interests) in Company A, a public company. Company B is a wholly owned subsidiary of Company A. Company A announces a demerger utilising a proportionate capital reduction and the disposal of all its shares in Company B to its 320,000 shareholders. Following the demerger all of the shareholders in Company A, including Peter, will own all of the shares in Company B (their new interests).
 (2) You cannot choose to obtain a roll‑over under this Subdivision for an original interest