Document ID: chunk:federal_register_of_legislation:C2025C00029:section:115:p28
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 115 (pt 28/40)
Character Range: 6575124–6577855

base of a *primary equity interest, *secondary equity interest, or *indirect primary equity interest, in a company or trust is reduced just before a *realisation event that is a *CGT event happens to the interest if:
 (a) apart from this Division, a loss would be *realised for income tax purposes by the CGT event; and
 (b) apart from this Division, a loss would have been *realised for income tax purposes by a realisation event if the event had happened, just before the CGT event, to a *CGT asset (the underlying asset) that the company or trust then owned and that:
 (i) was not then a *depreciating asset; or
 (ii) was then an item of *trading stock of the company or trust; or
 (iii) was then a *revenue asset of the company or trust; and
 (c) the loss referred to in paragraph (b) would have been reduced under Subdivision 723‑A by an amount (the underlying asset loss reduction); and
 (d) for the entity (the transferor) that owned the interest just before the CGT event, the interest was a *direct roll‑over replacement or *indirect roll‑over replacement for the underlying asset.
 (2) If the interest was a *direct roll‑over replacement, its *reduced cost base is reduced by the amount worked out using this formula, unless that amount does not appropriately reflect the matters referred to in subsection (4):
 (3) For the purposes of the formula in subsection (2):
RCB of interest means the interest's *reduced cost base when the transferor *acquired it.
total of RCBs of direct roll‑over replacements means the total of the *reduced cost bases of all *direct roll‑over replacements for the underlying asset when the transferor *acquired them.
 (4) If:
 (a) the interest was an *indirect roll‑over replacement; or
 (b) the amount worked out under subsection (2) does not appropriately reflect the matters referred to in this subsection;
the interest's *reduced cost base is reduced by an amount that is appropriate having regard to these matters:
 (c) the underlying asset loss reduction; and
 (d) the quantum of the interest relative to all *direct roll‑over replacements and indirect roll‑over replacements that the transferor owns or has previously owned.

723‑110  Direct and indirect roll‑over replacement for underlying asset
 (1) For an entity (the transferor) that owns a *CGT asset, the CGT asset is a direct roll‑over replacement for something (the underlying asset) that another entity owns if, and only if:
 (a) a *CGT event happened to the underlying asset while the transferor owned it; and
 (b) the other entity *acquired the underlying asset as a result of that CGT event; and
 (c) there was a *replacement‑asset roll‑over for the CGT event; and
 (d) the transferor received the CGT asset (or CGT assets