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Assessing market value ratios for roll-over relief provision
Published on 01 Nov 19 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE
The application of the CGT roll-over relief under s 615-20(2) of the Income Tax Assessment Act 1997 (Cth) depends on the comparison of two market value ratios. The first market value ratio involves exchanging shareholders’ shares in the interposed entity, and the second market value ratio involves exchanging shareholder’s shares in the original entity. Assessing whether the two ratios are equal is complicated if the original entity has different classes of shares with different rights. The outcome of the comparison is very fact-specific, depending on whether or not a market value discount should be applied to shares subject to certain shareholder right restrictions, which in turn depends on, inter alia, the certainty of the proposed exchange of shares to proceed and the time frame for the completion of the proposed exchange of shares.
Author profile
Dr Hung Chu
Hung is a Director of Lonergan Edwards & Associates Limited. Dr Hung Chu completed his master degree in Finance and Banking (with Merit among the top 2% of graduates) from the University of Sydney and his doctoral degree in Finance from the University of Technology, Sydney (graduated on Chancellor's List for Exceptional Scholarly Achievement in PhD research). He has 12 years of experience in the provision of valuation services and numerous technical papers published in academic and practitioners' journals. - Current at 11 July 2019
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