Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES

PART 3-3 - CAPITAL GAINS AND LOSSES: SPECIAL TOPICS

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Division 124 - Replacement-asset roll-overs

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Subdivision 124-M - Scrip for scrip roll-over

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Operative provisions

SECTION 124-784 Cost base of equity or debt given within acquiring group

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Purpose

124-784(1)
This section allocates an appropriate *cost base to equity issued, or new debt owed, under the *arrangement, by a member of a *wholly-owned group to another member (the recipient ) of the group, if:

(a) the acquiring entity is a member of the group; and

(b) the cost base of an original interest was transferred or allocated under section 124-782 because the original interest holder is a *significant stakeholder or a *common stakeholder for the arrangement.

Allocation of cost base

124-784(2)
The first element of the *cost base of the equity or debt for the recipient is that part of the cost base of the original interest transferred or allocated under section 124-782 as:

(a) may be reasonably allocated to the equity or debt; and

(b) is not more than the *market value of the equity or debt just after the *arrangement was completed.

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History

S 124-784 substituted by No 135 of 2015, s 3 and Sch 1 item 8, applicable in relation to CGT events happening after 7:30 pm, by legal time in the Australian Capital Territory, on 8 May 2012. S 124-784 formerly read:

SECTION 124-784 Cost base of equity or debt given by acquiring entity to ultimate holding company
Purpose

124-784(1)
This section allocates an appropriate *cost base to equity issued, or new debt owed, by an acquiring entity under the *arrangement to the *ultimate holding company where the cost base of an original interest was transferred or allocated under section 124-782 because the original interest holder is a *significant stakeholder or a *common stakeholder for the arrangement.

Allocation of cost base

124-784(2)
The first element of the *cost base of the equity or debt for the *ultimate holding company is that part of the cost base of the original interest transferred or allocated under section 124-782 as:

(a) may be reasonably allocated to the equity or debt; and

(b) is not more than the *market value of the equity or debt just after the arrangement was completed.

No capital gain on debt repayment

124-784(3)
Any *capital gain of the *ultimate holding company from the repayment of new debt owed by an acquiring entity under the *arrangement is disregarded to the extent that it relates to the difference between the part of the *cost base transferred or allocated under section 124-782 and the *market value of the debt just after the arrangement was completed.
Note:

If the debt is assigned or exchanged, there may be a capital gain.

S 124-784 inserted by No 89 of 2000.

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