INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 19B - Share value shifting arrangements  

SECTION 160ZZRM   SHARE VALUE SHIFT UNDER AN ARRANGEMENT  

160ZZRM(1)   ``Share value shift''.  

A ``share value shift'' takes place under an arrangement (see subsection (3)) involving a company and a taxpayer if:

(a) under the arrangement, the company, the taxpayer or an associate of the taxpayer, either alone or with one or more other persons, does something in relation to a share or shares (including issuing a share or shares ) in the company (for example, changing voting rights attached to a share, buying-back shares or issuing new shares at a discount on their market value); and

(b) at the same time as, or after, the thing is done, one or more shares (each of which is a ``decreased value share'' ) in the company (whether or not shares to which paragraph (a) applies) that are post-CGT shares held by the taxpayer or an associate of the taxpayer decrease in market value; and

(c) at the same time as, or after, the thing is done, either or both of the following happen:

(i) one or more existing shares (each of which is an ``increased value share'' ) in the company (whether post-CGT shares or pre-CGT shares and whether or not shares to which paragraph (a) applies) held by:

(A) in any case - the taxpayer or an associate of the taxpayer; or

(B) if any decreased value share was held by an associate of the taxpayer - an associate of that associate;

increase in market value; or

(ii) one or more new shares (each of which is also an ``increased value share'' ) in the company are issued to:

(A) in any case - the taxpayer or an associate of the taxpayer; or

(B) if any decreased value share was held by an associate of the taxpayer - an associate of that associate;

where the market value of each new share exceeds the consideration (if any) given by the taxpayer or other person for its issue (the excess is referred to in this Division as an ``increase'' in its market value); and

(d) it is reasonable to conclude that the decrease and increase were caused by the doing of the thing mentioned in paragraph (a).

160ZZRM(2)   Increase or decrease partly due to arrangement.  

If it is reasonable to conclude that an increase or decrease in the market value of one or more shares is partly caused by the doing of the thing under the arrangement and partly caused by something else, subsection (1) applies to the decrease or increase to the extent only that it is reasonable to conclude that the decrease or increase is caused by the doing of the thing under the arrangement.

160ZZRM(2A)   Where subsection 159GZZZQ(2) applies to share buy-back.  

If:

(a) it is reasonable to conclude that a decrease in the market value of a share is caused by a proposed buy-back of the share by the company; and

(b) the buy-back of the share takes place; and

(c) subsection 159GZZZQ(2) applies in respect of the buy-back;

then the decrease in market value is disregarded for the purposes of this section.

160ZZRM(3)   ``Arrangement''.  

An ``arrangement'' is:

(a) any arrangement, agreement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; or

(b) any scheme, plan, proposal, action, course of action, or course of conduct, whether of one person or more than one person.

160ZZRM(4)   ``Share''.  

The expression ``share'' includes:

(a) an interest in a share; or

(b) a right or option (including a contingent right or option) to acquire a share or an interest in a share.

160ZZRM(5)   ``Pre-CGT share''.  

A share is a ``pre-CGT share'' if it was acquired by the shareholder before 20 September 1985.

160ZZRM(6)   ``Post-CGT share''.  

A share is a ``post-CGT share'' if it was acquired by the shareholder on or after 20 September 1985.