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 326-85   DISPOSAL BY PRE-CGT MEMBER OF A DEMUTUALISATION SHARE (OTHER THAN A DEMUTUALISATION ORIGINAL 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  

326-85(1)    
If:

(a) the disposal is a disposal of a demutualisation share (other than a demutualisation original 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 disposer is taken to have done the following:

(e) to have paid for the acquisition of the share or interest the lesser of the following amounts:

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

Adjusted market value   ×

Share or interest disposed of   Total number of shares

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

Adjusted first day   trading price of the demutualisation   shares

×

Share or interest     disposed of

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

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

326-85(2)    
In the formula in subparagraph (1)(e)(i):

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