Income Tax Assessment Act 1936

PART X - ATTRIBUTION OF INCOME IN RESPECT OF CONTROLLED FOREIGN COMPANIES  

Division 7 - Calculation of attributable income of CFC  

Subdivision C - Modifications relating to Australian capital gains tax  

SECTION 414   EXERCISE OF RIGHTS  

414(1)   [Application in calculations]  

For the purposes of applying this Act in calculating the attributable income of the eligible CFC, the following provisions have effect.

414(2)   [Application of modifications]  

Despite section 130-40 of the Income Tax Assessment Act 1997 , the modifications in subsections (3) and (4) of this section apply if the eligible CFC exercises rights or options as mentioned in that section to acquire:

(a) shares in a company, or options to acquire shares in a company; or

(b) units in a unit trust, or options to acquire units in a unit trust;

and those rights or options are commencing day assets of the eligible CFC.

414(3)   [First element of cost base]  

The first element of the cost base of the shares, units or options is the sum of:

(a) the amount paid to exercise the rights or options; and

(b) the greater of the market value of the rights or options (at the end of the eligible CFC's commencing day) and the cost base of the rights or options (on that day).

414(4)   [First element of reduced cost base]  

The first element of the reduced cost base of the shares, units or options is the sum of:

(a) the amount paid to exercise the rights or options; and

(b) the lesser of the market value of the rights or options (at the end of the eligible CFC's commencing day) and the cost base of the rights or options (on that day).

414(5)   [Payment can include giving property]  

The payment referred to in subsection (3) or (4) can include giving property: see subsection 405(3) .

414(6)   [Indexation]  

For indexation purposes, the amount referred to in paragraph (3)(b) is taken to have been incurred on the eligible CFC's commencing day.