Document ID: chunk:federal_register_of_legislation:C2025C00029:section:115:p34
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 115 (pt 34/40)
Character Range: 6589511–6592038

that thing, or the first of those things, is done; and
 (c) either or both of subsections (2) and (3) are satisfied.
Examples of something done under a scheme are issuing new shares at a *discount, buying back shares or changing the voting rights attached to shares.
 (2) One or more *equity or loan interests in the target entity must be issued at a *discount. The issue must be, or must be reasonably attributable to, the thing, or one or more of the things, referred to in paragraph (1)(b). It must also occur at or after the time referred to in that paragraph.
Example: A company runs a family business. There are 2 shares originally issued for $2 each. They are owned by husband and wife. The market value of the shares is much greater (represented by the value of the assets of the company less its liabilities). The company issues one more share for $2 to their son.
 Caution is needed in such a situation. The example would result in a large CGT liability for the husband and wife under this Division, because they have shifted 1/3 of the value of their own shares to their son. No such liability would arise if the share had been issued for its market value.
 (3) Or, there must be an increase in the *market value of one or more *equity or loan interests in the target entity. The increase must be reasonably attributable to the thing, or to one or more of the things, referred to in paragraph (1)(b). It must also occur at or after the time referred to in that paragraph.

725‑150  Issue of equity or loan interests at a discount
 (1) An *equity or loan interest is issued at a discount if, and only if, the *market value of the interest when issued exceeds the amount of the payment that the issuing entity receives. The excess is the amount of the discount.
 (2) The payment that the issuing entity receives can include property. If it does, use the *market value of the property in working out the amount of the payment.

Amounts for which bonus equities are treated as being issued
 (3) If:
 (a) a *primary equity interest is issued as mentioned in subsection 130‑20(1) (about bonus equities issued in relation to original equities); and
 (b) subsection 130‑20(3) does not apply (about bonus equities that are a dividend or otherwise assessable income);
subsection (1) of this section applies to the interest as if the amount of the payment that the issuing entity receives were equal to the *cost base of the interest when issued (as worked out under section 130‑20).
 (4) If:
 (a) a *primary equity interest is