Document ID: chunk:federal_register_of_legislation:C2025C00014:section:26bc:p6
Version: federal_register_of_legislation:C2025C00014
Segment Type: section
Provision Reference: s 26BC (pt 6/9)
Character Range: 252330–255004

lender acquired the borrowed security before 20 September 1985, the lender is taken (for the purposes of Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997) to have acquired the replacement security before that day.
 (6B) If the lender acquired the borrowed security on or after 20 September 1985, the first element of the cost base of the replacement security is the cost base of the borrowed security just before the acquisition of the replacement security. The reduced cost base of the replacement security is worked out similarly.
 (7) If:
 (a) the borrowed security was acquired on or after 20 September 1985; and
 (b) a CGT event (other than one involving a transaction covered by subsection (3)) happens in relation to the replacement security at least 12 months after the lender acquired a paired security in relation to the replacement security (otherwise than under a transaction covered by subsection (3));
section 114‑10 of the Income Tax Assessment Act 1997 (about the requirement for 12 months ownership) does not apply to the CGT event.
 (8) For the purposes of subsection (7):
 (a) if CGT event A1 happens (involving a transaction covered by subsection (3)) by the lender disposing of an eligible security to the borrower, that security is a paired security in relation to the replacement security subsequently acquired or re‑acquired by the lender; and
 (b) a security is a paired security in relation to a second security if the first security is a paired security in relation to a third security that is a paired security in relation to the second security (including a pairing with the second security by another application or other applications of this paragraph).
 (9) For the purpose of applying Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997 to the borrower:
 (a) if the borrower disposes of the borrowed security to a third party:
 (i) the first element of the cost base and reduced cost base of the borrowed security (in the hands of the borrower) is taken to be its market value when the borrower acquired it; and
 (ii) when the borrower disposes of a replacement security to the lender, the capital proceeds from that CGT event are taken to be that market value; and
 (b) if no third party is involved—the transactions referred to in paragraph (3)(a) are ignored.
 (9A) For the purpose of applying Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997 to the borrower, the incidental costs to the borrower of the acquisition of an eligible security covered by sub‑subparagraph (3)(a)(ii)(B) include a compensatory payment incurred by the borrower (to the extent that the borrower has not deducted and cannot deduct it).
 (9B) For