Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:1_3:p12
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 1 cl 3 (pt 12/22)
Character Range: 391913–394434

after the completion time, each exchanging member must own:

 (a) a whole number of *shares in the company; and

 (b) a percentage of the *shares in the company that were issued to all the exchanging members that is equal to the percentage of the units in the unit trust (that were redeemed or cancelled) that the member owned.

 (3) The ratio of:

 • the market value of each exchanging member's *shares in the company to the market value of the shares in the company issued to all the exchanging members (worked out just after the completion time);

must equal the ratio of:

 • the market value of that member's units in the unit trust that were redeemed or cancelled to the market value of all the units that were redeemed or cancelled (worked out just before the first redemption or cancellation).

Example: There are 1,000 units in the A unit trust, all having the same rights. 2 new units in A are issued to B Pty Ltd, and all other units in A are cancelled. Each unitholder in A is issued 10 shares in B for each 100 units they have in A. All shares in B have the same rights. Alison owned 200 units in A and received 20 shares in B in exchange.

 (4) Either:

 (a) you are an Australian resident at the time your units in the unit trust are redeemed or cancelled; or

 (b) if you are not an Australian resident at that time—your units have the *necessary connection with Australia.

Rules applying to both cases

124‑465  Requirements to be satisfied in both cases

 (1) The *shares issued in the company must not be *redeemable shares.

 (2) Each exchanging member who is issued *shares in the company must own the shares from the time they are issued to the completion time.

 (3) Just after the completion time:

 (a) the exchanging members must own all the *shares in the company; or

 (b) entities other than those members must own no more than 5 *shares in the company and the market value of those shares expressed as a percentage of the market value of all the shares in the company is such that it is reasonable to treat the exchanging members as owning all the shares.

 (4) The unit trust must be a *resident trust for CGT purposes for the income year in which the completion time occurs. The company must be an Australian resident at the completion time.

Choice to be made by company

 (5) The company must choose that the rules in section 124‑470 apply. It must make its choice within 2 months after the completion time, or within such further time as the Commissioner allows.