Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:1_3:p2
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 1 cl 3 (pt 2/7)
Character Range: 313333–315948

There are 3 possible cases:

                  * you acquired all the assets on or after 20 September 1985: see section 122‑50;

                  * you acquired all the assets before that day: see section 122‑55;

                  * you acquired some of the assets on or after that day: see section 122‑60.

Note 2: There are special indexation rules for roll‑overs: see Division 114.

Note 3: There are other consequences for you and the company if you dispose of trading stock: see Division 70.

122‑50  All assets acquired on or after 20 September 1985

 (1) If you *acquired all of the assets of the *business on or after 20 September 1985:

 (a) the first element of each *share's *cost base is the sum of the market values of the *precluded assets and the cost bases of the other assets (less any liabilities the company undertakes to discharge in respect of all of those assets) divided by the number of shares; and

 (b) the first element of each share's *reduced cost base is worked out similarly.

Note 1: There are rules for working out what are the liabilities in respect of an asset: see section 122‑37.

Note 2: There are special indexation rules for roll‑overs: see Division 114.

Example: Nick is a small trader. He wants to incorporate his business. He disposes of all its assets to a company and receives 10 shares in return.

 Nick acquired all the assets of the business after 20 September 1985. The market value of the items of his trading stock when he disposed of them is $20,000. Trading stock is a precluded asset.

 The cost bases of the other assets when he disposed of them are:

                  * plant and equipment: $50,000;

                  * buildings: $120,000;

                  * office furniture: $10,000.

 Nick has a business overdraft of $15,000. It is taken to be a liability in respect of all the assets of his business.

 The first element of the cost base of the 10 shares is:

 The first element of the reduced cost base of the 10 shares is worked out similarly.

 (2) The market value of an asset is worked out when you *disposed of it. The *cost base or *reduced cost base of an asset is worked out at the same time.

122‑55  All assets acquired before 20 September 1985

 (1) You are taken to have *acquired all of the *shares before 20 September 1985 if you acquired all the assets of the *business before that day and none of the assets is a *precluded asset.

 (2) However, if at least one of the assets is a *precluded asset, you are taken to have *acquired a whole number of the *shares (but not all of them) before that day. The