ED 2BTransfers to shareholders by ASX-listed Australian company of shares in subsidiary

1. This section applies when—

2. a company (the splitting company) is an ASX-listed Australian company under subsection (8); and
3. shares in a company (the subsidiary) that is a member of the same group of companies as the splitting company (the group), are issued or transferred (the share transfer) to—
   1. shareholders of the splitting company or of a company that is a member of the group:
   2. a member of the group; and
4. the subsidiary is a member of the group immediately before the share transfer; and
5. the share transfer is not a payment of assessable income or exempt income under the Income Tax Assessment Act 1936 (Aust).

6. Repealed

7. The cost for a shareholder of the shares in the splitting company that are held by the shareholder after the share transfer is the amount calculated using the formula—

   $cost\; before\; transfer\; \times \; value\; after\; transfer\; ÷\; (value\; acquired\; shares\; +\; value\; after\; transfer).$

   Where:

8. The cost for a shareholder of the shares acquired in the share transfer is the amount calculated using the formula—

   $cost\; before\; transfer\; \times \; value\; acquired\; shares\; ÷\; (value\; acquired\; shares\; +\; value\; after\; transfer).$

   Where:

9. In the formulas in subsections (3) and (4),—

10. cost before transfer is the cost for the shareholder, immediately before the share transfer, of the shares in the splitting company held by the shareholder immediately after the share transfer:
11. value after transfer is the market value of the shares in the splitting company held by the shareholder immediately after the share transfer:
12. value acquired shares is the market value of the shares in the subsidiary held by the shareholder immediately after the share transfer.

13. Immediately after the share transfer, the available subscribed capital,—

14. for each share held in the subsidiary, is—
    1. the amount given by section CD 43 (Available subscribed capital (ASC) amount) for the share; or
    2. zero, if it is impractical to recognise an amount of available subscribed capital for the shares held in the subsidiary:
15. for the shares held in the splitting company, equals the amount of the available subscribed capital for the shares in the splitting company held immediately before the share transfer, reduced by the total amount given by paragraph (a) for the shares held in the subsidiary immediately after the share transfer.

16. The transfer of the shares in the subsidiary to the shareholders in the splitting company is not a dividend.

17. ASX-listed Australian company means a company that—

18. is resident in Australia; and
19. is treated as resident in no tax jurisdiction other than Australia under each agreement that—
    1. is between Australia and another tax jurisdiction; and
    2. would be a double tax agreement if negotiated between New Zealand and the other tax jurisdiction; and
20. is included on the official list of ASX Limited, a market licensee under Chapter 7 of the Corporations Act 2001 (Aust); and
21. is not an entity described in schedule 25, part B (Foreign investment funds); and
22. is required under the Income Tax Assessment Act 1997 (Aust) and Income Tax Assessment Act 1936 (Aust) to maintain a franking account.

Notes

• Section ED 2B: inserted, on 29 March 2018 (with effect on 1 April 2016 and applying for the 2016–17 and later income years), by section 65(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
• Section ED 2B(1)(b): replaced (with effect on 1 April 2016), on 18 March 2019, by section 163(1) (and see section 163(4) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
• Section ED 2B(1)(c): replaced (with effect on 1 April 2016), on 18 March 2019, by section 163(1) (and see section 163(4) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
• Section ED 2B(2): repealed (with effect on 1 April 2016), on 18 March 2019, by section 163(2) (and see section 163(4) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
• Section ED 2B(8)(c): replaced, on 29 March 2018 (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 65(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
• Section ED 2B list of defined terms group of companies: inserted (with effect on 1 April 2016), on 18 March 2019, by section 163(3) (and see section 163(4) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).