IPE : Class Ruling - Capital Return (27 July 2017)

IPE Limited

IPE Limited ABN 48 107 843 381 c/o Pomona Australia Pty Limited Level 9, 1 Castlereagh Street Sydney NSW 2000 Australia T: [phone] E: [e-mail] W: ipelimited.com.au

27 July 2017

The Manager, Listings

Company Announcements Office Australian Securities Exchange Level 4, Exchange Centre

20 Bridge Street

SYDNEY NSW 2000

Class Ruling - capital return.

The Company is pleased to advise that the Australian Taxation Office has issued Class Ruling CR2017/45 "Income tax: Returns of share capital: IPE Limited".

The ruling was sought in relation to the capital returns paid by the Company on 25 November 2016 and 12 April m2017.

The ruling advises that the capital returns are not dividends for income tax purposes. Shareholders are encouraged to read the ruling in its entirety.

We attach a copy of CR2017/45 below. Yours sincerely,

Sam Jackson Company Secretary

IPE Limited P 1 of 1

Class Ruling

CR 2017/45

Page status: legally binding Page 1 of 13

Class Ruling

Income tax: returns of share capital: IPE Limited

Contents Para

LEGALLY BINDING SECTION: Summary - what this ruling is about 1 Date of effect 7 Scheme 8 Ruling 25 NOT LEGALLY BINDING SECTION: Appendix 1:

Explanation 31

Appendix 2:

Detailed contents list 63

This publication provides you with the following level of protection:

This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. (TAA 1953)

A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes.

If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you.

Summary - what this ruling is about

1. This Ruling sets out the Commissioner's opinion on the way in which the relevant provision(s) identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates.

   Relevant provisions

2. The relevant provisions dealt with in this Ruling are:

   • subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936)

   • section 45A of the ITAA 1936

   • section 45B of the ITAA 1936

   • section 45C of the ITAA 1936

   • section 104-25 of the Income Tax Assessment Act 1997 (ITAA 1997)

   • section 104-135 of the ITAA 1997

   • section 885-10 of the ITAA 1997.

     All subsequent legislative references in this Ruling are to the ITAA 1936 unless otherwise stated.

     Class Ruling

     CR 2017/45

     Page 2 of 13 Page status: legally binding

     Class of entities

3. The class of entities to which this Ruling applies are the holders of ordinary shares in IPE Limited (IPE) who:

   • were listed on the IPE share register on the relevant date (Record Date) for determining entitlements to receive the returns of share capital made on

     25 November 2016 and/or 12 April 2017

   • did not hold their IPE shares as revenue assets (as defined in section 977-50 of the ITAA 1997) nor as trading stock (as defined in subsection 995-1(1) of the ITAA 1997), that is they held their IPE shares on capital account, and

   • were not subject to the taxation of financial arrangements rules in Division 230 of the ITAA 1997 in relation to gains and losses on their IPE shares.

     (Note: Division 230 will generally not apply to individuals, unless they have made an election for it to apply to them.)

     In this Ruling, a person belonging to this class of entities is referred to as an 'IPE shareholder'.

     Qualifications

4. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling.

5. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 8 to 24 of this Ruling.

6. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then:

   • this Ruling has no binding effect on the Commissioner because the scheme entered into is not the scheme on which the Commissioner has ruled, and

   • this Ruling may be withdrawn or modified.

     Class Ruling

     CR 2017/45

     Page status: legally binding Page 3 of 13

     Date of effect

7. This Ruling applies from 1 July 2016 to 30 June 2017. The Ruling continues to apply after 30 June 2017 to all entities within the specified class who entered into the specified scheme during the term of the Ruling. However, this Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10).

   Scheme

8. The following description of the scheme is based on the class ruling application and other correspondence provided by the applicant.

   Note: certain information has been provided on a

   commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation.

   Background

9. IPE is an Australian resident company which has been listed on Australian Securities Exchange (ASX) since November 2004.

10. IPE's primary business activity is investing in private equity funds which usually have an investment period of five or six years from the initial commitment date.

11. IPE's board determined in 2008 that IPE would cease making new investments and would instead be wound down over time.

12. IPE keeps accounts and portfolio records of its investments such that it is able to identify all of its receipts as one of the following:

    • a return of capital invested

    • a capital gain on capital invested, or

    • income generated by capital invested.

      Status of the IPE portfolio - capital now excess to requirements

13. In recent years, IPE had been able to pay dividends to its shareholders purely out of profits (being income and capital gains arising from its investments in private equity funds). It had used the capital returns from the private equity funds to satisfy calls from other private equity funds in respect of its commitments.