Document ID: chunk:federal_register_of_legislation:C2025C00029:section:5:p2
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 5 (pt 2/2)
Character Range: 7378600–7380223

and subtract all amounts received by the partner in respect of those shares or interests by way of reduction in capital of the entity.
           Step 2. Work out the amount that, if the capital of the entity had been distributed to its *shareholders on a winding‑up or to its partners on a dissolution, at the end of the income year before the hybrid year, the partner could reasonably be expected to have received of the total distribution.
           Step 3. If the result of step 1 exceeds the result of step 2, the partner paid a premium for its interest in the asset. If the result of step 2 exceeds the result of step 1, the partner received a discount for its interest in the asset.
           Step 4. Work out the amount of the premium or discount using the formula:
 (3) The entity's tax cost setting amount for an asset at the start of the post‑hybrid year in relation to an *asset‑based income tax regime is equal to the sum of what the partners' *tax costs for their interests in the asset would be at that time for the purpose of applying the asset‑based income tax regime if the entity had continued to be a *foreign hybrid in relation to that income year.

830‑100  What the expression tax cost means
  The tax cost of a partner's interest in an asset or of an asset of the entity for the purposes of applying an *asset‑based income tax regime at the start of the post‑hybrid year or the hybrid year is worked out using the following table:

Tax cost of an asset
Item                  If the asset‑based income tax regime is:                                     the tax cost of the interest or the asset is: