Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 124.784

Purpose

             (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

             (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

             (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.