Capital gains tax: C&W Optus (Optus) - SingTel takeover: acquisition date of SingTel shares where Optus shares were compulsorily acquired

What is the date of acquisition under Subdivision 109-A of the Income Tax Assessment Act 1997 (ITAA 1997) of the taxpayer's SingTel shares acquired in exchange for Optus shares that were compulsorily acquired?

Pursuant to section 109-10 of the ITAA 1997, the taxpayer acquired their SingTel shares when those shares were issued to the SingTel Optus Compulsory Acquisition Trust on 22 October 2001.

The taxpayer acquired Optus shares in the 1999-2000 year of income.

SingTel made a takeover offer to all shareholders of Optus. SingTel acquired more than 90% of the Optus shares allowing them to invoke provisions of the Corporations Law and compulsorily acquire all remaining Optus shares. A notice of compulsory acquisition was sent to the taxpayer which was not received as the taxpayer had changed address.

The taxpayer's Optus shares were compulsorily acquired on 22 October 2001. On the same day the capital proceeds for the Optus shares (being $2.25 cash plus 0.8 SingTel share for each Optus share) were placed in the SingTel Optus Compulsory Acquisition Trust. This trust was created to hold the proceeds until the previous owners of Optus shares could be located.

In the early part of 2002, the taxpayer was located and received $2.25 cash and 0.8 SingTel share for every Optus share that they had owned.

Division 109 of the ITAA 1997 sets out the ways in which a taxpayer can acquire a CGT asset and the time of acquisition. Generally, an asset is acquired when the taxpayer becomes its owner. However, a taxpayer may acquire an asset as a result of a CGT event happening, or in circumstances where no CGT event happens as listed in section 109-10 of the ITAA 1997.

Item 2 of the table in section 109-10 of the ITAA 1997 provides that where a company issues or allots equity interests, those interests are taken to be acquired when a contract for their acquisition is entered into or, if none, when they are issued or allotted.

Further, section 106-50 of the ITAA 1997 ensures that where a trust beneficiary is absolutely entitled to a trust asset as against the trustee, any act done by a trustee in relation to the asset shall apply as if the taxpayer had done it.

The taxpayer's SingTel shares were issued to the SingTel Optus Compulsory Acquisition Trust on 22 October 2001.. At that time the taxpayer was absolutely entitled to the shares as against the trustee of the trust, such that the acquisition of the SingTel shares by the trustee is taken to be an acquisition by the taxpayer.

Therefore, the taxpayer is taken to have acquired their SingTel shares under section 109-10 of the ITAA 1997 when those shares were placed in the SingTel Optus Compulsory Acquisition Trust on 22 October 2001.