Tax Brief - New Rules on Taxation of Rights Issues

Historically, the issue of rights to acquire shares or units by companies and trusts to their shareholders and unit holders has been treated as not giving rise to any assessable income or capital gain for the shareholders or unit holders. However, last year the High Court handed down its decision in the case of Commissioner of Taxation v McNeil [2007] HCA 5 (‘McNeil’) which rather unexpectedly changed this situation and engendered considerable uncertainty in the process.

This Tax Brief examines the new rules proposed by the Government to try to clarify the post-McNeil situation, and in particular some of the difficulties these new rules create, as well as the areas they leave untouched.

For our full Tax Brief - click here