Document ID: chunk:federal_register_of_legislation:C2014C00749:clause:16_1:p5
Version: federal_register_of_legislation:C2014C00749
Segment Type: clause
Provision Reference: sch 16 cl 1 (pt 5/12)
Character Range: 453942–456622

only relevant CGT events in a subparagraph (ii) case.
 (c) under the restructuring:
 (i) a *CGT event happens to an original interest owned by an entity in the head entity of the group and the entity *acquires a new interest and nothing else; or
 (ii) no CGT event happens to an original interest owned by an entity in the head entity of the group and the entity acquires a new interest and nothing else; and
 (d) the acquisition by entities of new interests happens only because those entities own or owned original interests; and
 (e) the new interests acquired are:
 (i) if the head entity is a company—ownership interests in a company; or
 (ii) if the head entity is a trust—ownership interests in a trust; and
 (f) just before the restructuring, it is reasonable for the head entity to assume that more than 50% of original interests in the head entity of the demerger group are owned by:
 (i) Australian residents; or
 (ii) foreign residents whose new interests have the *necessary connection with Australia just after they acquire them; and
 (g) neither the original interests nor the new interests are in a trust that is a *superannuation fund; and
 (h) the requirements of subsection (2) are met.
Example: To continue the example from subsection 125‑55(1), Peter owns 400 post‑CGT shares in Company A. Companies A and B are both members of a demerger group. Company A is the head entity of the demerger group and Company B is a demerger subsidiary.
 Company A proceeds to demerge 100% of its shares in Company B to its shareholders.
 Company A enters into a proportionate capital reduction, returning 40 cents per share to its ordinary shareholders. Peter is entitled to $160 (40c times 400 shares) under the capital reduction.
 For Peter, the capital reduction amount of $160 is compulsorily applied to acquire Company A's shares in Company B, at $6.75 (a discount of 10% to current market value). Company A rounds up the fractional amounts in calculating the number of whole shares to be distributed to each shareholder. This gives Peter 24 shares in Company B (160 divided by 6.75, rounded up to the nearest whole number).
Note: Acquiring new interests by an owner of original interests may include the allocation of the owner's entitlement to new interests to a nominee:
                  * to sell on the owner's behalf; or
                  * to hold pending the owner being located.
 (2) Each owner (an original owner) of original interests in the *head entity of the *demerger group must:
 (a) *acquire, under the *demerger, the same proportion, or as nearly as practicable the same proportion, of new interests in the *demerged entity as the original owner owned