Division 615 and the AusNet Decision

The High Court has refused special leave for AusNet Services Limited to appeal against the Full Federal Court’s decision in [2025] FCAFC 21.

That refusal effectively ends the dispute and locks in an important reminder about how Division 615 interacts with the consolidation regime.

The Background — Rollover on a Corporate Restructure

AusNet undertook a corporate re-organisation that involved shareholders exchanging shares for shares — a textbook scrip-for-scrip style restructure.

The company elected capital-gains-tax rollover relief under Division 615 of the ITAA 1997, which allows certain share-for-share exchanges to occur without triggering an immediate CGT event.

The problem? That same election later stopped AusNet from claiming what it thought was a favourable cost-base uplift under the tax-consolidation rules.

The Court’s View — You Can’t Have It Both Ways

The Full Federal Court found that the taxpayer had validly chosen the Division 615 rollover.
Once that choice was made, the CGT consequences were locked in — meaning the relevant shares were treated as acquired for the same cost base as the original interests, and any potential step-up under the consolidation regime simply disappeared.

In other words:

✅ The rollover was valid.
❌ But the taxpayer couldn’t use it to engineer a higher cost base for consolidation purposes.

The Court saw no ambiguity: the legislation gives taxpayers a clear election — but that election carries trade-offs.

High Court Says “No Thanks”

The High Court refused special leave, effectively endorsing the Full Federal Court’s reasoning without further hearing.

For practitioners, that refusal reinforces two key takeaways:

Once made, a rollover election under Division 615 is binding.
It cannot be used to retrospectively enhance tax outcomes — such as resetting cost bases in a later consolidation.

The Lessons learned

If you’re advising on restructures, mergers, or consolidations, this decision is a timely warning:

Model both paths — with and without Division 615 — before making an election.

Watch for flow-on effects into consolidation, especially where subsidiaries are to be joined post-rollover.

Keep documentation clear on why the rollover was chosen (commercial purpose vs. tax outcome).

Once elected, there’s no back-door route to undo it via consolidation adjustments.

In complex multi-entity restructures, the “obvious” CGT relief can sometimes eliminate downstream benefits. Always run the full consolidation modelling before ticking the rollover box.

Why It Matters

The AusNet case isn’t about tax avoidance — it’s about the structural rigidity of Australia’s rollover provisions.

Division 615 offers immediate relief but also fixes the cost-base history of the new shares.

Once that election is made, there’s no opportunity to revisit cost bases under the consolidation rules.

So while the ruling provides certainty, it also narrows flexibility.
For corporate groups planning restructures, that’s the key takeaway: tax neutrality today can mean cost-base compromise tomorrow.