Document ID: chunk:federal_register_of_legislation:C2025C00029:section:2:p21
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 2 (pt 21/59)
Character Range: 2584960–2587610

original entity's liabilities (if any) at the completion time in respect of those assets.
           Step 5. If there is one class of *membership interests in the original entity, divide the result of step 4 by the total number of those membership interests at the completion time.
            If there are 2 or more classes of membership interests in the original entity, allocate a portion of the result of step 4 to each class in proportion to the *market value of all the membership interests in that class and divide that result by the total number of membership interests in that class at the completion time.
Note 1: For the purposes of this subsection, Division 701 (Core rules for consolidated groups) is disregarded for an original entity that becomes a subsidiary member of a consolidated group or MEC group under the arrangement (see paragraph 715‑910(1)(a)).
Note 2: If the original entity is the head company of a consolidated group or MEC group, then subsection 701‑1(1) (the single entity rule) and section 701‑5 (the entry history rule) apply in relation to that group when working out steps 1 and 2 (see subsection 715‑910(2)).
Note 3: For step 5, the replacement entity may choose to use the officially quoted price of the qualifying interests as their market value (see subsection 124‑784A(3)).

First element of cost base—interests acquired in exchange for replacement interests and cash etc.
 (3) However, if the qualifying interest was acquired under the *arrangement partly in exchange for one or more replacement interests and partly for something else, subsection (2) applies only for working out the first element of that part of the *cost base of the qualifying interest that is attributable to the replacement interests.
Note 1: This means that the acquiring entity will have to apportion the cost base amount worked out under subsection (2) according to the relative values of the replacement interests and the other component.
Note 2: The first element of that part of the cost base, and reduced cost base, of the qualifying interest that is attributable to cash etc. is worked out using the general rules about cost base.

Liabilities
 (4) For the purposes of step 4 of subsection (2), a liability of the original entity that is not a liability in respect of a specific asset or assets of the entity is taken to be a liability in respect of all the assets of the entity.
 (5) If a liability is in respect of 2 or more assets, the proportion of the liability that is in respect of any one of those assets is equal to:

First element of reduced cost base
 (6) The first element of the *reduced cost base of the acquiring