Income Tax Assessment Act 1936

SCHEDULE 2H - DEMUTUALISATION OF MUTUAL ENTITIES OTHER THAN INSURANCE COMPANIES AND HEALTH INSURERS  

Division 326 - DEMUTUALISATION  

Subdivision 326-D - CGT consequences of disposal of demutualisation shares or an interest in such shares by a member of a mutual entity where the entity or a holding company of the entity becomes a listed public company  

SECTION 326-105   DISPOSAL BY PRE-CGT MEMBER OF A DEMUTUALISATION ORIGINAL SHARE OR A NON-DEMUTUALISATION BONUS SHARE, OR AN INTEREST IN SUCH A SHARE, ON OR AFTER DEMUTUALISATION LISTING DAY WHERE MEMBER DID NOT ACQUIRE MEMBERSHIP RIGHTS BY DISPOSING OF MEMBERSHIP RIGHTS IN ANOTHER MUTUAL ENTITY  

326-105(1)  
If:


(a) the disposal is a disposal of either:


(i) a demutualisation original share or an interest in such a share; or

(ii) a non-demutualisation bonus share or an interest in such a share; and


(b) the disposer did not acquire membership rights in the demutualising entity by disposing of membership rights in another mutual entity; and


(c) the disposer is a pre-CGT member; and


(d) the disposal occurs on or after the demutualisation listing day;

then, for the purpose of working out whether the disposer made a capital gain or capital loss from the disposal, the following paragraphs have effect:


(e) for the purpose of applying Subdivision 130-A of the Income Tax Assessment Act 1997 , the amount paid for the acquisition of all the demutualisation original shares that is to be taken into account under that Division or Subdivision, as the case may be, is taken to be the lesser of the following amounts:


(i) the amount worked out by using the formula:


Adjusted market
value      
× Number of disposer ' s shares
  Total number of shares


(ii) the amount worked out by using the formula:


Adjusted first day  
trading price of the
demutualisation  
shares      
×   Number of disposer ' s shares


(f) if the disposal is a disposal of a demutualisation original share or an interest in such a share, the disposer is taken:


(i) to have paid the amount referred to in paragraph (e) on the demutualisation resolution day; and

(ii) to have acquired the share or interest on the demutualisation resolution day.

326-105(2)  
In the formulas in subparagraphs 1(e)(i) and (ii):

number of disposer ' s shares
means the number of demutualisation original shares issued to the disposer or in which the disposer had an interest.

total number of shares
means the total number of demutualisation shares issued.


 

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