RSSA long-deferred proposal of Australia's Ralph review of business taxation finally hit the statute-book yesterday when the Senate finally passed a measure to improve the tax treatment of mergers and de-mergers, bringing them into line with the existing treatment of acquisitions.
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Restructuring companies will no longer suffer capital gains tax penalties, while shareholders will also benefit through the deferral of capital gains tax and relief of tax on deemed dividends. |
A number of large companies have merger or de-merger plans which have been on hold while the legislation seemed bogged down in the Senate, including mining company WMC, which revealed takeover discussions with US aluminium group Alcoa a year ago. As a result, WMC decided to demerge its alumina and minerals businesses, but held off while putting pressure on the Government to pass the legislation. Passing of the bill means "We are now free to pursue our timetable of releasing the scheme booklet by the end of this month," said a WMC spokesperson.
"Business has reacted positively to the Government's demerger legislation and several large Australian companies have been keenly awaiting the passage of this Bill," said Senator Helen Coonan, Minister for Revenue and the Assistant Treasurer. "Tax relief for demergers will increase efficiency by allowing greater flexibility in restructuring businesses, providing an overall benefit to the economy."
Mayne, CSR, Coles Myer and Orica are other companies which are expected to proceed with restructuring plans to take advantage of the new legislation.
