Document ID: chunk:federal_register_of_legislation:C2010C00615:clause:5_4:p8
Version: federal_register_of_legislation:C2010C00615
Segment Type: clause
Provision Reference: sch 5 cl 4 (pt 8/8)
Character Range: 323009–324819

or entities, and their *associates, between them:
 (a) had, just before the arrangement started, the right to receive for their own benefit 80% or more of any distribution to beneficiaries of the original entity of income or capital of the original entity; and
 (b) had, just after the arrangement was completed, the right to receive for their own benefit 80% or more of any distribution to beneficiaries of the replacement entity of income or capital of that entity.

124‑784  Cost base of equity or debt given by acquiring entity to ultimate holding company

Purpose

 (1) This section allocates an appropriate *cost base to equity issued, or new debt owed, by an acquiring entity under the *arrangement to the *ultimate holding company where the cost base of an original interest was transferred or allocated under section 124‑782 because the original interest holder is a *significant stakeholder or a *common stakeholder for the arrangement.

Allocation of cost base

 (2) The first element of the *cost base of the equity or debt for the *ultimate holding company is that part of the cost base of the original interest transferred or allocated under section 124‑782 as:
 (a) may be reasonably allocated to the equity or debt; and
 (b) is not more than the market value of the equity or debt just after the arrangement was completed.

No capital gain on debt repayment

 (3) Any *capital gain of the *ultimate holding company from the repayment of new debt owed by an acquiring entity under the *arrangement is disregarded to the extent that it relates to the difference between the part of the *cost base transferred or allocated under section 124‑782 and the market value of the debt just after the arrangement was completed.

Note: If the debt is assigned or exchanged, there may be a capital gain.