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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of private advice

Authorisation Number: 1012771834045

NOTICE

This edited version has been found to be misleading or incorrect. It does not represent the ATO's view of the relevant law.

This notice must not be taken to imply anything about:

Ruling

Subject: Cost base of shares

Question 1

Where the head company (Head Co) of a tax consolidated group (TCG) subscribed for shares (New Shares) in its subsidiary company (Sub Co) at a price in excess of their market value at the time of issue (such excess referred to herein as the Premium) and the purpose or expected effect of paying the Premium was to preserve or increase the value of the shares in Sub Co held by Head Co immediately prior to the subscription (Existing Shares), is the amount of the Premium included in the cost base of the Existing Shares as a fourth element pursuant to subsections 110-25(5) and 112-30(1A) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes

This ruling applies for the following periods:

XX/XX/XXXX to XX/XX/XXXX

The scheme commences on:

XX/XX/XXXX

Relevant facts and circumstances

The taxpayer, applied for a ruling in relation to a recapitalisation. Relevant facts and documents were submitted.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 103-5

Income Tax Assessment Act 1997 subdivision 110-A

Income Tax Assessment Act 1997 section 110-25

Income Tax Assessment Act 1997 subsection 110-25(1)

Income Tax Assessment Act 1997 subsection 110-25(2)

Income Tax Assessment Act 1997 subsection 110-25(5)

Income Tax Assessment Act 1997 Division 112

Income Tax Assessment Act 1997 section 112-20

Income Tax Assessment Act 1997 subsection 112-20(1)

Income Tax Assessment Act 1997 paragraph 112-20(1)(c)

Income Tax Assessment Act 1997 section 112-30

Income Tax Assessment Act 1997 subsection 112-30(1)

Income Tax Assessment Act 1997 subsection 112-30(1A)

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