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 326-90   DISPOSAL BY PRE-CGT MEMBER OF A DEMUTUALISATION SHARE (OTHER THAN A DEMUTUALISATION ORIGINAL SHARE) OR AN INTEREST IN SUCH A SHARE WHERE MEMBER ACQUIRED MEMBERSHIP RIGHTS BY DISPOSING OF MEMBERSHIP RIGHTS IN ANOTHER MUTUAL ENTITY  

326-90(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 acquired membership rights in the demutualising entity by disposing of membership rights in another mutual entity; and

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

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:

(d) to have paid for the acquisition of the share or interest both of the following amounts:

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

(ii) any amount actually paid for the acquisition;

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

(f) to have paid any amount referred to in subparagraph (d)(ii) when it was actually paid;

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

326-90(2)    
In the formula in subparagraph (1)(d)(i):

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

number of members
means the total number of members of the other mutual entity at the time of the disposal of the membership rights in that entity.