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
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
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.