Document ID: chunk:federal_register_of_legislation:C2008A00097:clause:1_11:p7
Version: federal_register_of_legislation:C2008A00097
Segment Type: clause
Provision Reference: sch 1 cl 11 (pt 7/8)
Character Range: 23540–26337

the result of step 2 by the number of shares that can be *acquired under the right. The result is the first element of the *cost base and *reduced cost base of the asset.
Example: Wellbeing Health demutualises on 1 April 2008 and has a market value of $400 million on that day. It distributes its accumulated mutual surplus in the form of rights to acquire shares in its holding company Healthiness Insurance Ltd (Healthiness). The rights do not have an exercise price.

 A total of 800 million shares can be acquired in Healthiness under rights issued under the demutualisation. Each right allows the holder to acquire 50 shares. No shares in Healthiness are issued.

 Under the method statement, the first element of the cost base and reduced cost base of each right is worked out by dividing the market value of Wellbeing Health (step 1) by the number of shares in Healthiness that can be acquired under the demutualisation (step 2) and multiplying the result by the number of shares that can be acquired under the right (step 4):

Acquisition rule

 (3) The participating policy holder or trustee is taken to have *acquired the *CGT asset at the time it is issued.

Subdivision 315‑E—Special CGT rule for legal personal representatives and beneficiaries

Table of sections

315‑260 Special CGT rule for legal personal representatives and beneficiaries

315‑260  Special CGT rule for legal personal representatives and beneficiaries

 (1) This section sets out what happens if a *CGT asset:
 (a) is a demutualisation asset; and
 (b) forms part of the estate of a participating policy holder mentioned in subsection 315‑90(1) who has died, but was not owned by the policy holder just before dying; and
 (c) *passes to a beneficiary in the policy holder's estate because the asset is transferred to the beneficiary by the policy holder's *legal personal representative.

Note: Division 128 deals with the effect of death in relation to CGT assets a person owns just before dying.

 (2) Disregard a *capital gain or *capital loss the *legal personal representative makes if the asset *passes to a beneficiary in the policy holder's estate.

Consequence for beneficiary

 (3) The *cost base and *reduced cost base of the asset in the hands of the *legal personal representative just before the asset *passes to the beneficiary becomes the first element of the cost base and reduced cost base of the asset in the hands of the beneficiary.

 (4) The beneficiary is taken to have *acquired the asset when the *legal personal representative acquired it.

Subdivision 315‑F—Non‑CGT consequences of demutualisation

Table of sections

315‑310 General taxation consequences of issue of demutualisation assets etc.

315‑310  General taxation consequences of issue of demutualisation assets etc.

 (1)