In 2 decisions handed down on Mon 21.1.2013, with identical facts, but involving 2 different taxpayers, the AAT has held that scrip-for-scrip roll-over relief was available under s 124-780 of the ITAA 1997 for the sale of shares pursuant to a share purchase agreement.
The taxpayers were shareholders of a company. Under 2 arrangements, a Share Purchase Agreement and a Deed of Variation, the taxpayers exchanged their shares for shares in another company. In both cases, each taxpayer chose scrip-for-scrip roll-over relief under Div 124–M of the ITAA 1997 in relation to the exchanges of shares, and this was reflected in the way their tax returns for the year ended 30 June 2007 was prepared and lodged. The Commissioner disagreed and the taxpayers sought review of the Commissioner’s decision.
The AAT said the draftsman imposed the requirement for roll-over simply on the basis that “the arrangement must be one in which participation was available on substantially the same terms for all of the owners of interests of a particular type in the original entity”. The Tribunal considered this construction made it clear that the exchange does not necessarily have to take place substantially on the same terms so long as participation is available on substantially the same terms. In this case, the Tribunal said it was clear from all the evidence that participation was available on substantially the same terms.
The Tribunal therefore set aside the decisions under review and held that scrip-for-scrip roll-over relief was available for each taxpayer under s 124-780 of the ITAA 1997.
(AAT Case [2013] AATA 25, Re Dickinson and FCT; AAT Case [2013] AATA 26; Re Fabig and FCT, AAT, Deutsch DP, AAT Refs: 2011/1732, 2011/1388, 21 January 2013.)
[LTN 13, 21/1/13]