CR 2018/34-35 – Return of share capital is not a dividend and is a G1 or C2 CGT event; ESS Rights for non-executive directors (when settled with CSL shares)

On 15 August 2018, the ATO released 2 Class Rulings:

• CR 2018/34 – IPE Limited: return of share capital. The ATO accepts that the return of share capital paid to IPE shareholders is not a dividend and that ss 45A, 45B and 45C ITAA 1936 do not apply. Further, the relevant CGT events are CGT event G1 for shareholders who continued to hold the shares at the relevant payment date, and CGT event C2 for shareholders who ceased owning the shares before the payment date. DATE OF EFFECT: 1 July 2017 to 30 June 2018.
• CR 2018/35 – CSL Limited: Non-Executive Director Rights Plan. The ATO says that rights acquired under the plan are indeterminate rights, which will become ESS interests when the vesting conditions are met and the rights are settled with CSL shares. The ATO accepts that Subdiv 83A-C ITAA 1997 applies to the rights, so that taxation is deferred until an ESS deferred taxing point occurs. DATE OF EFFECT: 1 July 2018 to 30 June 2021.

FJM 29.8.18

[LTN 156, 15/8/18; Tax Month – August 2018]