Australia To Amend CGT Rules For Dual-Listed Companies

by Mary Swire, Tax-News.com, Hong Kong

23 October 2009

The Australian government is to amend the income tax law to make it easier for companies participating in dual listed company arrangements to access capital gains tax (CGT) demerger provisions.

The CGT rules allow companies in dual listed company arrangements to exclude their special voting shares when determining their eligibility to defer CGT on demergers.

Currently, a company must meet the legislative definition of a “dual listed company arrangement” which requires companies to have common or almost identical boards of directors in order to make use of CGT demerger provisions. But in some cases, it is said, companies may be unable to meet the dual listed company arrangement requirements because other regulations prevent them from having common or identical boards of directors.

The government has said that it will therefore amend the definition of a “dual listed company arrangement” so that companies will not have to meet the common or identical boards of directors’ requirement if regulations prevent them from doing so.

The amendments to the definition will form part of legislation implementing into domestic law three tax treaties the government signed earlier this year with New Zealand, Belgium, and Jersey.

"The Government is committed to lowering compliance costs affecting business," the Assistant Treasurer, Nick Sherry, said. "These treaties will provide real benefits to Australian taxpayers and further Australia's efforts in the fight against tax evasion."

"The Government wishes to introduce the bill before the end of this year's parliamentary sittings but, as is normal practice with treaty bills, will not do so until such time as the Joint Standing Committee on Treaties has completed its report and this is considered by the government," he added. The government will conduct targeted consultation on the bill.

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