In a significant ruling by the Full Federal Court – AusNet Services Limited v Commissioner of Taxation [2025] FCAFC 21 – the Court has dismissed the taxpayer’s appeal and confirmed that a valid Capital Gains Tax (CGT) rollover election was made under Division 615 of the Income Tax Assessment Act 1997.
This case provides valuable guidance for businesses undertaking complex corporate restructures, especially those involving stapled structures, trusts, and multiple consolidated entities. If your business is considering a restructure, this case is a must-know.
Background: A Complex Stapled Group Restructure
The case involved the restructure of a stapled group, comprising:
- Two corporate entities (each the head of their own tax consolidated group), and
- One trust.
In June 2015, AusNet (the taxpayer) acquired all shares in the two companies and all units in the trust through a series of court-approved schemes of arrangement. The former stapled security holders became shareholders of AusNet.
As a result of the restructure, one of the acquired entities became a subsidiary member of a new tax consolidated group, with AusNet as the new head company.
The Legal Question: Was the Rollover Election Valid?
AusNet argued that Division 615 did not apply to the restructure scheme, meaning it couldn’t have made a valid CGT rollover election under that Division. If that were the case, AusNet would be able to increase the cost base of the acquired assets, potentially reducing tax on future disposals.
The Court, however, disagreed with this interpretation.
Court’s Key Findings: Division 615 Applies
The Court found that:
- The “affairs” referred to in section 615-5(1)(c) meant the business affairs of the original entities, not the new parent (AusNet).
- The restructure clearly reorganised those affairs – turning widely held entities into wholly owned subsidiaries was sufficient for Division 615 to apply.
- The requirement that shares be exchanged solely for shares in the new company was met. The only consideration received by the original shareholders was shares in AusNet.
- Any uplift in the value of existing shares was a natural outcome of the restructure, not an additional form of consideration.
- The ratio requirements under section 615-20 were also met, as both the numerator and denominator referred to shares issued under the same scheme.
Therefore, the CGT rollover relief election made by AusNet was valid.
What Does This Mean for You?
This case sends a clear message: businesses that undergo group restructures involving corporate entities and trusts can access CGT rollover relief, provided their arrangements meet the requirements under Division 615.
For business owners, this means:
- You may be able to defer CGT liabilities when consolidating group entities or transferring ownership to a holding company;
- As long as consideration is limited to shares, and the restructure is properly structured, ATO challenges can be minimized;
- This is particularly relevant to family groups, corporate restructures, and succession planning.
How Boa & Co. Can Help
At Boa & Co. Chartered Accountants, we specialise in tax-effective business restructuring for private companies, family groups, and high-net-worth clients. This ruling provides an excellent opportunity to review your current structure or plan a tax-effective consolidation.
We can assist with:
- Structuring your group to qualify for CGT rollover relief;
- Preparing valid Division 615 elections and supporting documentation;
- Advising on the tax implications of trust and corporate restructures;
- Handling ATO audits or disputes involving CGT or consolidated groups;
- Tailoring restructure strategies for long-term tax efficiency and growth.
If you’re considering a business restructure or simply want to explore your options, now is the time to speak with an expert. Call 1300 952 286, email [email protected] or visit www.boanco.com.au for more information.
Let Boa & Co. help you restructure with confidence, stay compliant, and unlock tax benefits.