Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-3 - CAPITAL GAINS AND LOSSES: SPECIAL TOPICS  

Division 130 - Investments  

Subdivision 130-E - Exchangeable interests  

SECTION 130-105   Shares acquired in exchange for the disposal or redemption of an exchangeable interest  

Cost base and reduced cost base

130-105(1)  
The table has effect:


Exchange of an exchangeable interest
Item In this situation: The rules about cost base and reduced cost base are modified in this way...
1 You *acquire shares in a company in exchange for the disposal of an *exchangeable interest, and the disposal of the exchangeable interest was to:

(a) the issuer of the exchangeable interest; or

(b) a *connected entity of the issuer of the exchangeable interest.
The first element of the *cost base of the shares is the sum of:

(a) the cost base of the exchangeable interest at the time of the disposal; and

(b) any amount paid for the exchange, except to the extent that the amount is represented in the paragraph (a) amount; and

(c) all the amounts to be added under subsection (2).

The first element of their *reduced cost base is worked out similarly.
2 You *acquire shares in a company in exchange for the redemption of an *exchangeable interest. The first element of the *cost base of the shares is the sum of:

(a) the cost base of the exchangeable interest at the time of the redemption; and
(b) any amount paid for the exchange, except to the extent that the amount is represented in the paragraph (a) amount; and
(c) all the amounts to be added under subsection (2).
The first element of their *reduced cost base is worked out similarly.

130-105(2)  
An amount is to be added under this subsection if a *capital gain on the disposal or redemption of the exchangeable interest has been reduced under section 118-20 . This is so even though a capital gain that is made on the disposal or redemption of the exchangeable interest is disregarded under subsection (4). The amount to be added is the amount of the reduction.

130-105(3)  
The payment for the exchange can include giving property (see section 103-5 ). Other CGT consequences

130-105(4)  
The table has effect:


Exchange of an exchangeable interest
Item In this situation: This is the result:
1 You *acquire shares in a company in exchange for the disposal of an *exchangeable interest, and the disposal of the exchangeable interest was to:

(a) the issuer of the exchangeable interest; or

(b) a *connected entity of the issuer of the exchangeable interest.
(a) you are taken to have acquired the shares when the disposal of the exchangeable interest happened; and

(b) a *capital gain or *capital loss you make from the disposal of the exchangeable interest is disregarded.
2 You *acquire shares in a company in exchange for the redemption of an *exchangeable interest. (a) you are taken to have acquired the shares when the redemption of the exchangeable interest happened; and

(b) a *capital gain or *capital loss you make from the redemption of the exchangeable interest is disregarded.

Application

130-105(5)  
This section applies to the disposal or redemption of an *exchangeable interest on or after 1 July 2001.


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