The taxation implications of company law reform
A discussion document
December 1993
CONTENTS
PART ONE
CHAPTER 1: OVERVIEW
1.1 Purpose of the Discussion Document
1.4 Objective and Scope of this Review
1.5.1 Share Repurchases and Related Issues (Chapter 2)
1.5.2 Amalgamations (Chapter 3)
1.5.3 Tax Accounting Issues (Chapter 4)
Recovery of Excess Distributions
1.5.4 Miscellaneous Issues (Chapter 5)
CHAPTER 2: SHARE REPURCHASES AND RELATED ISSUES
2.3 Current Rules for Taxing Share Cancellations
2.3.2 Problems With Existing Rules
2.4.1 Distributions Funded by Way of Capital Profits
Determining The Capital Gain Amount
2.4.2 New Anti-Dividend Substitution Rule
2.4.3 Reinforcing the "Slice Rule"
Commissioner's Residual Discretion
Treatment of Fixed Rate Shares
2.5 Mechanism for Taxing the Dividend Component of Share Repurchases
2.5.2 Off-Market Purchases by Resident Non-Qualifying and Qualifying Companies
Repurchase from Resident Non-Corporate Shareholder
Repurchase from a Resident Corporate Shareholder
Repurchase from a Vendor who Holds Shares on Revenue Account
Repurchase from a Non-Resident Shareholder
Repurchase from Tax Exempt Shareholder
2.5.3 On-Market Repurchase by a Resident Non-Qualifying Company
Repurchase from Resident Non-Corporate
Repurchase from Resident Companies
Repurchase from Tax-Exempt Entities
Repurchase from a Non-Resident Shareholder
Repurchase from a Vendor who is Holds Shares on Revenue Account
2.5.4 Repurchase by Non-Resident Companies
Annex 2.2 Mechanisms for Taxing the Dividend Component
Annex 2.3 Examples of Mechanisms for Taxing the Dividend Component
CHAPTER 3: AMALGAMATIONS
3.2 The Amalgamation Provisions of the New Companies Act
3.3 Tax Treatment of Revenue Account Shareholders in an Amalgamation
3.4 Tax Treatment of Asset Transfers
3.4.1 Asset Transfers in an Amalgamation
3.5 Losses and Imputation Credits
3.5.2 Losses - Implications of Shareholder Continuity and Loss Grouping Rules for Amalgamations
3.5.3 Existing Shareholder Continuity Rules
3.5.4 Shareholder Continuity Rules and Amalgamations
3.5.5 Existing Loss Grouping Rules
3.5.6 Loss Rules and Amalgamations
3.5.7 Imputation Credit Shareholder Continuity Rules
CHAPTER 4: TAX ACCOUNTING ISSUES
4.2 Treatment of Company Accounting Reserves for Tax Purposes
4.2.1 Existing Capital Reserves
4.2.2 Capital Redemption Reserves
4.2.5 Tax Exempt Taxable Bonus Issues and Dividends
4.2.6 Qualifying Share Premium Rules
Annex 4.1 Application of Tax Accounting Rules to an Amalgamation
CHAPTER 5: MISCELLANEOUS ISSUES
5.2 Capital Structure: Abolition of Nominal and Par Value
5.3 Measurement of Shareholder Interests
5.3.1 Associated Persons and Company Control Definitions
5.4 Abolition of Private and Public Company Distinction
5.7 One Shareholder/One Share Companies
5.8 Company Constitutions: Abolition of Memoranda and Articles of Association
5.9.1 Change from Allotment/Allotted to Issue/lssued
5.9.2 Change from Wound Up/Winding Up to Liquidated/Liquidation
5.10 Commissioner's Status as Preferred Creditor
Annex 5.1: Nominal Value, Nominal Capital and Par Value References
Annex 5.2: Private Company References
Annex 5.3: Income Tax Act Application of Proprietary Company Definition
Annex 5.4: Companies Act 1955 References
Annex 5.5: Memorandum and Articles of Association References
Annex 5.6: Allotment References
Annex 5.7: Winding Up References