INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 19B - Share value shifting arrangements  

SECTION 160ZZRP   CONSEQUENCES OF VALUE SHIFT TO PRE-CGT SHARE  

160ZZRP(1)   Section sets out consequences.  

If the requirements of section 160ZZRL are satisfied and a particular increased value share is a pre-CGT share, the following are the consequences.

160ZZRP(2)   Deemed capital gain.  

If:

(a) in respect of each decreased value share for which there was a material decrease in market value, this Part were applied on the following assumptions:

(i) that a part of the share had been disposed of by its holder immediately after the decrease in value of the share;

(ii) that the consideration for the disposal was an amount worked out using the formula:

Increase in market value of particular increased value                                       share                                       Total market value increase

×

Decrease in market   value of decreased     value share

(iii) that the cost base or indexed cost base of the part was the amount worked out by multiplying the amount that would be the cost base or indexed cost base for the whole of the share if it were being disposed of at the time, by the fraction worked out using the formula:

Amount worked out under                           subparagraph (ii)                           Market value of the share immediately before the decrease

(b) as a result a capital gain would accrue to the holder;

then, for the purposes of this Act, a capital gain of that amount is taken to accrue to the holder for the year of income in respect of the disposal of an asset (even though no asset was actually disposed of).

160ZZRP(3)   Adjustment to acquisition consideration etc. for decreased value share.  

Regardless of whether subsection (2) applies, for the purposes of any application of this Part to a later disposal by the holder of any decreased value share for which there was a material decrease in market value:

(a) all amounts that, under section 160ZH (which deals with cost base, indexed cost base and reduced cost base) are attributable to the share in relation to the period before the decrease in value took place;

are taken to be reduced by:

(b) the fraction worked out using the formula:

Increase in market value of     particular increased value share   Total market value increase

×

Decrease in market value   of decreased value share       Market value of   decreased value share   immediately before the         decrease