Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:1_8:p8
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 1 cl 8 (pt 8/14)
Character Range: 498931–501555

value increase is the increase in market value of all shares. This is $50,000.

 The controller's shift proceeds are:

Note: This represents the decrease in the market value of the controller's shares which has shifted into shares owned by the controller's associate.

 (4) The total share value increase of the *share value shift is the total of:

 (a) the increases in the market value of, and the *discounts given in relation to, *increased value shares; and

 (b) the increases in the market value of, and the discounts given in relation to, all other shares in the company if they are reasonably attributable to the thing done under the *scheme.

 (5) The part of those *shares' *cost base is:

Example: To continue the example, suppose the cost base of the controller's class A shares just after they decreased in value is $16,000. Those shares' market value just before they decreased in value is $80,000.

 The part of those shares' cost base is:

 The controller makes a capital gain of:

 The controller's associate also makes a capital gain because its class A shares have materially decreased in value and part of the decrease has been shifted into the controller's shares. The gain is worked out in the same way.

 The third party does not make a capital gain because its 100 class A shares are not decreased value shares.

Note: The relevant proportion of the cost base of the controller's class A shares is the same proportion as the value of those shares that has shifted into the class B shares of the controller's associate.

140‑60  Cost base adjustment for shares decreasing in value

 (1) The *cost base and *reduced cost base of each *decreased value share that has *materially decreased in market value are reduced by the lesser of the following:

 (a) this fraction:

 (b) the amount of the decrease in the market value of the share.

Example: To continue the example in section 140‑55, the cost base and reduced cost base of each of the controller's class A shares is $20. Each one decreased in value from $100 to $50.

 The $20 is reduced by:

 This is less than $50 (the decrease in the market value of each of the controller's class A shares). So, the cost base and reduced cost base of each one are reduced from $20 to $11.

Note: The reduction is by the same proportion as the proportion of the value of the controller's class A shares that has shifted into its class B shares and the class B shares of its associate.

 (2) The reduction occurs when the *share value shift happens.

140‑65  Cost base adjustment for shares increasing in value

 (1) The fourth element