New Business Tax System (Taxation of Financial Arrangements) Act (No. 1) 2003 (133 of 2003)

Schedule 2 Convertible interests

Income Tax Assessment Act 1997

7 Subsection 130-60(1) (table)

Repeal the table, substitute:

Conversion of a convertible interest
Item	In this situation:	The modification is...
1	You acquire shares or units in a unit trust by converting a convertible interest that is a traditional security.	The first element of the cost base of the shares or units is the sum of: (a) the cost base of the convertible interest at the time of conversion; and (b) any amount paid to convert the convertible interest, except to the extent that the amount is represented in the paragraph (a) amount; and (c) all the amounts to be added under subsection (1A). The first element of their reduced cost base is worked out similarly.
2	You acquire shares (except shares acquired under an employee share scheme) by converting a convertible interest that is not a *traditional security.	The first element of the cost base of the shares is the sum of: (a) the cost base of the convertible interest at the time of conversion; and (b) any amount paid to convert the convertible interest, except to the extent that the amount is represented in the paragraph (a) amount; and (c) all the amounts to be added under subsection (1A). The first element of their reduced cost base is worked out similarly.
3	You acquire units in a unit trust by converting a convertible interest (except one that is a *traditional security) that was issued by the trustee of the unit trust after 28 January 1988.	The first element of the cost base of the units is the sum of: (a) the cost base of the convertible interest at the time of conversion; and (b) any amount paid to convert the convertible interest, except to the extent that the amount is represented in the paragraph (a) amount; and (c) all the amounts to be added under subsection (1A). The first element of their reduced cost base is worked out similarly.

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Conversion of a convertible interest
Item	In this situation:	The modification is...
1	You acquire shares or units in a unit trust by converting a convertible interest that is a traditional security.	The first element of the cost base of the shares or units is the sum of: (a) the cost base of the convertible interest at the time of conversion; and (b) any amount paid to convert the convertible interest, except to the extent that the amount is represented in the paragraph (a) amount; and (c) all the amounts to be added under subsection (1A). The first element of their reduced cost base is worked out similarly.
2	You acquire shares (except shares acquired under an employee share scheme) by converting a convertible interest that is not a *traditional security.	The first element of the cost base of the shares is the sum of: (a) the cost base of the convertible interest at the time of conversion; and (b) any amount paid to convert the convertible interest, except to the extent that the amount is represented in the paragraph (a) amount; and (c) all the amounts to be added under subsection (1A). The first element of their reduced cost base is worked out similarly.
3	You acquire units in a unit trust by converting a convertible interest (except one that is a *traditional security) that was issued by the trustee of the unit trust after 28 January 1988.	The first element of the cost base of the units is the sum of: (a) the cost base of the convertible interest at the time of conversion; and (b) any amount paid to convert the convertible interest, except to the extent that the amount is represented in the paragraph (a) amount; and (c) all the amounts to be added under subsection (1A). The first element of their reduced cost base is worked out similarly.