Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-95 - VALUE SHIFTING  

Division 725 - Direct value shifting affecting interests in companies and trusts  

Subdivision 725-C - Consequences of a direct value shift  

Special cases

SECTION 725-225   Issue of bonus shares or units  

725-225(1)  
The consequences are different if you are an * affected owner of * up interests (the bonus interests ) that the target entity issues to you, at a * discount, under the * scheme, in relation to * down interests (the original interests ) of which you are an affected owner. Effect of treatment under subsection 130-20(3)

725-225(2)  
To the extent that the * direct value shift is to the bonus interests from original interests in relation to which the target entity issued bonus interests to which:


(a) subsection 130-20(3) applies (because none of them is a dividend or otherwise assessable income); and


(b) item 1 of the table in that subsection applies (because the original interests are post-CGT assets);

these paragraphs apply:


(c) the respective * cost bases and * reduced cost bases of those original interests are not reduced;


(d) the bonus interests referred to in subsection (1) do not give rise to a * taxing event generating a gain for you under the table in section 725-245 on any of those original interests.

725-225(3)  
To the extent that the * direct value shift is from the original interests to bonus interests to which subsection 130-20(3) applies (because none of them is a dividend or otherwise assessable income) and:


(a) item 1 of the table in that subsection applies (because the original interests are post-CGT assets); or


(b) item 2 of that table applies (because the original interests are pre-CGT assets and an amount has been paid for the bonus interests that you were required to pay);

the respective * cost bases and * reduced cost bases of those bonus interests are not uplifted.

Effect of treatment under subsection 6BA(3) of the Income Tax Assessment Act 1936

725-225(4)  
To the extent that the * direct value shift is to the bonus interests from original interests in relation to which the target entity issued bonus interests to which subsection 6BA(3) of the Income Tax Assessment Act 1936 applies (either because they are shares issued for no consideration and none of them is a dividend or because they qualify for the intercorporate dividend rebate):


(a) the respective * adjustable values of those original interests, in their character as * trading stock or * revenue assets, are not reduced; and


(b) the bonus interests referred to in subsection (1) do not give rise to a * taxing event generating a gain for you under the table in section 725-335 on any of those original interests.

725-225(5)  
To the extent that the * direct value shift is from the original interests to bonus interests to which subsection 6BA(3) of the Income Tax Assessment Act 1936 applies, the respective * adjustable values of those bonus interests of which you are an affected owner, in their character as * trading stock or * revenue assets, are not uplifted.


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