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2006 amendment to the concessionary continuity rules relating to reverse takeovers or mergers.

Section OD 5AA of the Income Tax Act 1994 and the Income Tax Act 2004

Concessionary continuity rules, which apply to carrying forward losses and imputation credits when there is a change in a company's shareholding, were extended to recognise that continuity can be maintained through reverse takeovers or mergers by the introduction of section OD 5AA by the Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Act 2006. That section has been amended because it did not produce the correct result where:

  • treasury stock or cross-shareholdings are cancelled without consideration upon the takeover; or
  • the subsidiary of the initial parent is also a limited attribution company.

Paragraphs (e) and (f) of section OD 5AA(2) have been amended to correct the position, effective from the original application date of the 1998-99 income year.