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In FC of T v Devuba Pty Limited [2015] FCAFC 168, the Full Federal Court has dismissed the Commissioner’s appeal in a case concerning whether the CGT small business concessions applied to reduce a capital gain arising from the sale of shares to nil. The court held that the taxpayer met the conditions for a sale of shares in a company pursuant to the CGT concession stakeholder tests.
This was primarily because the rights attaching to the dividend access shares were varied such that they did not carry a right to dividends unless the directors resolved that they did. In effect, two steps were then required to pay a dividend on the dividend access shares. The first was for the directors to resolve that the dividend access shares carried a right to dividends. The second was for the directors to declare a dividend on those dividend access shares.