The ATO today [Wed 13.7.2016] issued the following Class Ruling:
- CR 2016/51: Return of Capital and Scheme of Arrangement – Unity Mining Limited. It applies from 1 July 2015 to 30 June 2016.
Extract from ruling
Ruling
Return of capital is not a dividend
30. The ROC paid by Unity to the Unity Scheme Shareholders is not a dividend as defined in subsection 6(1) of the ITAA 1936.
The application of section 45
31. The Commissioner will not make a determination under subsection 45B(3) of the ITAA 1936 that section 45C applies in relation to the ROC received by Unity Scheme Shareholders.
Capital Gains Tax (CGT) consequences
CGT event C2
32. CGT event C2 (section 104-25 of the ITAA 1997) happens when Unity pays the ROC to a Unity Scheme Shareholder in respect of a Unity ordinary share they owned at the Record Date, but ceased to own before the Payment Date.
CGT event A1
33. CGT event A1 (section 104-10 of the ITAA 1997) happens when a Unity Scheme Shareholder disposed of each of their Unity share to DMM under the Scheme of Arrangement.
34. The capital proceeds received by a Unity Scheme Shareholder is the money received or entitled to receive in respect of the event happening (subsection 116-20(1) of the ITAA 1997). The capital proceeds received by a Unity Scheme Shareholder in respect of CGT event A1 happening is $0.023 per Unity share.