INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 19B - Share value shifting arrangements  

SECTION 160ZZRP   CONSEQUENCES OF VALUE SHIFT TO PRE-CGT SHARE  

160ZZRP(1)   Section sets out consequences.  

If the requirements of section 160ZZRL are satisfied and a particular increased value share is a pre-CGT share, the following are the consequences.

160ZZRP(2)   Deemed capital gain.  

If:


(a) in respect of each decreased value share for which there was a material decrease in market value, this Part were applied on the following assumptions:


(i) that a part of the share had been disposed of by its holder immediately after the decrease in value of the share;

(ii) that the consideration for the disposal was an amount worked out using the formula:


Increase in market value of
particular increased value
                                      share                                      
Total market value increase
× Decrease in market
  value of decreased
    value share


(iii) that the cost base or indexed cost base of the part was the amount worked out by multiplying the amount that would be the cost base or indexed cost base for the whole of the share if it were being disposed of at the time, by the fraction worked out using the formula:


Amount worked out under
                          subparagraph (ii)                          
Market value of the share
immediately before the decrease


(b) as a result a capital gain would accrue to the holder;

then, for the purposes of this Act, a capital gain of that amount is taken to accrue to the holder for the year of income in respect of the disposal of an asset (even though no asset was actually disposed of).

160ZZRP(3)   Adjustment to acquisition consideration etc. for decreased value share.  

Regardless of whether subsection (2) applies, for the purposes of any application of this Part to a later disposal by the holder of any decreased value share for which there was a material decrease in market value:


(a) all amounts that, under section 160ZH (which deals with cost base, indexed cost base and reduced cost base) are attributable to the share in relation to the period before the decrease in value took place;

are taken to be reduced by:


(b) the fraction worked out using the formula:


Increase in market value of  
  particular increased value share  
Total market value increase  

×
  Decrease in market value
  of decreased value share  
    Market value of
  decreased value share
  immediately before the
        decrease


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