Document ID: chunk:federal_register_of_legislation:C2025C00014:section:26bb:p1
Version: federal_register_of_legislation:C2025C00014
Segment Type: section
Provision Reference: s 26BB (pt 1/2)
Character Range: 236326–238984

26BB  Assessability of gain on disposal or redemption of traditional securities
 (1) In this section:
acquire, in relation to a security, means acquire, on issue, purchase, transfer, assignment or otherwise, the security or the right to receive payment of the amount or amounts payable under the security.
connected entity has the same meaning as in the Income Tax Assessment Act 1997.
dispose, in relation to a security, means sell, transfer, assign or dispose of in any way the security or the right to receive payment of the amount or amounts payable under the security.
eligible return has the same meaning as in Division 16E.
periodic interest has the same meaning as in Division 16E.
security has the same meaning as in Division 16E.
traditional security, in relation to a taxpayer, means a security held by the taxpayer that:
 (a) is or was acquired by the taxpayer after 10 May 1989;
 (b) either:
 (i) does not have an eligible return; or
 (ii) has an eligible return, where:
 (A) the precise amount of the eligible return is able to be ascertained at the time of issue of the security; and
 (B) that amount is not greater than 11/2 % of the amount calculated in accordance with the formula:

  where:
  Payments is the amount of the payment or of the sum of the payments (excluding any periodic interest) liable to be made under the security when held by any person; and
  Term is the number (including any fraction) of years in the term of the security; and
 (d) is not trading stock of the taxpayer.
 (2) Where a taxpayer disposes of a traditional security or a traditional security of a taxpayer is redeemed, the amount of any gain on the disposal or redemption shall be included in the assessable income of the taxpayer of the year of income in which the disposal or redemption takes place.
 (3) Where the Commissioner, having regard to any connection between the parties to the transaction by which the taxpayer disposed of the traditional security or by which it was redeemed, or by which the taxpayer acquired the traditional security, is satisfied that the parties were not dealing with each other at arm's length in relation to the transaction, then, for the purposes of determining under subsection (2) the amount of any gain on the disposal or redemption, the consideration for the transaction shall be taken to be:
 (a) the amount that might reasonably be expected for the transaction if the parties were independent parties dealing at arm's length with each other; or
 (b) where, for any reason it is not possible or practicable for the Commissioner to ascertain that amount—such amount as the Commissioner determines.
 (4) Subsection