Tax Law Improvement Act (No. 1) 1998 (46 of 1998)

2   CGT (new Parts 3-1, 3-3 and 3-5)

3   Consequential amendment of the Income Tax Assessment Act 1936

108   Subsections 26BC(6) and (7)

Repeal the subsections, substitute:

(6) Any capital gain or capital loss from the disposal of the borrowed security by the lender is disregarded.

(6A) If the lender acquired the borrowed security before 20 September 1985, the lender is taken (for the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997) to have acquired the replacement security before that day.

(6B) If the lender acquired the borrowed security on or after 20 September 1985, the first element of the cost base of the replacement security is the cost base of the borrowed security just before the acquisition of the replacement security. The reduced cost base of the replacement security is worked out similarly.

(7) If:

(a) the borrowed security was acquired on or after 20 September 1985; and

(b) a CGT event (other than one involving a transaction covered by subsection (3)) happens in relation to the replacement security at least 12 months after the lender acquired a paired security in relation to the replacement security (otherwise than under a transaction covered by subsection (3));

section 114-10 of the Income Tax Assessment Act 1997 (about the requirement for 12 months ownership) does not apply to the CGT event.