19 February 2008

The Hon. Chris Bowen MP
Assistant Treasurer and Minister for Competition Policy
and Consumer Affairs
Parliament House
CANBERRA ACT 2600

Dear Minister

Scrip-for-scrip takeover deals

The Group of 100 (G100) is an organisation of chief financial officers from Australia’s largest business enterprises with a purpose of advancing the nation’s financial competitiveness.

The G100 strongly supports your recent announcement to review the proposed change to the tax consolidation rules, in particular, those relating to scrip-for-scrip takeover transactions.

If the changes, as announced before the November 2007 elections, are retained they will provide a significant impediment to corporate mergers and acquisitions and a disincentive to private shareholders because of potentially adverse tax consequences. These impediments would serve to delay the benefits and efficiencies arising from industry and corporate rationalisation and would impact adversely on the operation of capital markets.

A benefit of the scrip-for-scrip rollover relief is that it encourages shareholders to maintain their investment in the succeeding entity without incurring capital gains tax on the exchange of shares until disposal of the shares issued in exchange.

Yours sincerely

Tony Reeves
National President

c.c. The Treasurer, Mr Wayne Swan, MP