Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:1_3:p8
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 1 cl 3 (pt 8/22)
Character Range: 382429–385103

the interposed company issued to all the exchanging members (worked out just after the completion time);

must equal the ratio of:

 • the market value of that member's shares in the original company that were redeemed or cancelled to the market value of all the shares in the original company that were redeemed or cancelled (worked out just before the first redemption or cancellation).

Example: There are 100 shares in X Pty Ltd (the original company), all having the same rights. X issues 2 shares to Y Pty Ltd (the interposed company) and cancels all other shares in itself. Y issues each shareholder in X 10 shares in itself for each share they had in X. All shares in Y have the same rights. Wil owned 10 shares in X and received 100 shares in Y in exchange.

 (4) Either:

 (a) you are an Australian resident at the time your *shares in the original company are redeemed or cancelled; or

 (b) if you are not an Australian resident at that time—your *shares in the original company have the *necessary connection with Australia.

Rules applying to both cases

124‑380  Requirements to be satisfied in both cases

 (1) The *shares issued in the interposed company must not be *redeemable shares.

 (2) Each exchanging member who is issued *shares in the interposed company must own the shares from the time they are issued to the completion time.

 (3) Just after the completion time:

 (a) the exchanging members must own all the *shares in the interposed company; or

 (b) entities other than those members must own no more than 5 *shares in the interposed company and the market value of those shares expressed as a percentage of the market value of all the shares in the interposed company is such that it is reasonable to treat the exchanging members as owning all the shares.

 (4) The original company and interposed company must be Australian residents at the completion time.

Choice to be made by interposing company

 (5) The interposed company must choose that section 124‑385 apply. It must make its choice within 2 months after the completion time, or within such further time as the Commissioner allows.

Note: This is an exception to the general rule about choices in section 103‑25.

Consequences for the interposed company

124‑385  Consequences for the interposed company

 (1) A whole number of the *shares that the interposed company owns in the original company (just after the completion time) are taken to have been *acquired before 20 September 1985 if any of the original company's assets as at the completion time were acquired by it before that day.

Note: Generally, a capital gain or capital loss you make from a