Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 124.784C

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 of a * wholly-owned group where the cost base of the acquiring entity for a qualifying interest was worked out under section 124-784B.

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 qualifying interest worked out under section 124-784B 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 at the completion time.

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 worked out under section 124-784B and the * market value of the debt at the completion time.

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