Australian Assistant Treasurer, Senator Helen Coonan announced on Monday that the Federal government plans to provide tax relief for companies looking to demerge, as long as they fit certain criteria.
According to the Minister for Revenue, in order to claim capital gains tax relief during the demerger process, the underlying ownership of the company must not change, but the demerging entity must divest at least 80% of its ownership interests in the demerged entity.
Senator Coonan revealed that the new rules will apply from July 1 this year, and that demerged companies which fulfil the criteria will also gain an exemption from the existing dividend rules.
This new move, anxiously anticipated by the Australian business sector, forms part of the Federal government's drive to increase the country's competitiveness, and suitability as a location for international business.
Speaking last week, Treasurer Peter Costello announced that a review of the Australian international corporate taxation regime will take place soon.
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