Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p1
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 1/5)
Character Range: 2757780–2761485

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.

 (1A) An amount is to be added under this subsection if a *capital gain from the *convertible interest has been reduced under section 118‑20. This is so even though a capital gain that is made on conversion is disregarded under subsection (3). The amount to be added is the amount of the reduction.
Note: For example, a capital gain made on the conversion under section 118‑20 may be reduced because an amount is included in the owner's assessable income under subsection 26BB(2) of the Income Tax Assessment Act 1936 (about assessing a gain on disposal or redemption of a traditional security) or section 159GS of that Act (about balancing adjustments on transfer of a qualifying security).
 (1B) The payment to convert the convertible interest can include giving property (see section 103‑5).
 (2) You are taken to have *acquired the shares or units when the conversion of the convertible interest happened.
 (3) A *capital gain or *capital loss you make from converting the convertible interest is disregarded.
Note 1: The conversion of the convertible interest would be an example of CGT event C2 (about a CGT asset ending).
Note 2: There are transitional rules for some convertible notes: see section 130‑60 of the Income Tax (Transitional Provisions) Act 1997.

Subdivision 130‑D—Employee share schemes

Table of sections
130‑75 Objects of Subdivision
130‑80 ESS interests acquired under employee share schemes
130‑85 Interests in employee share trusts
130‑90 Shares held by employee share trusts
130‑95 Shares and rights in relation to ESS interests
130‑97 Application of certain provisions of Division 83A

130‑75  Objects of Subdivision
  The objects of this Subdivision are:
 (a) to recognise that:
 (i) Division 83A contains the primary rules for taxing gains on *ESS interests acquired under *employee share schemes; and
 (ii) *capital gains and *capital losses on such interests should usually be disregarded during the period in which Division 83A applies to them; and
 (b) to align the treatment of ESS interests under Division 83A and the CGT provisions by, for example:
 (i) turning off certain special CGT rules; and
 (ii) extending