Document ID: chunk:federal_register_of_legislation:C2025C00029:section:115:p37
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 115 (pt 37/40)
Character Range: 6596579–6599265

shift happens. That gain will be both a capital gain (because the down interest can be characterised as a CGT asset) and an increase in your assessable income (because the down interest can be characterised as a revenue asset). Again, any overlap is dealt with under section 118‑20.

725‑210  Consequences for down interests depend on pre‑shift gains and losses
 (1) The consequences for a *down interest also depend on whether it has a *pre‑shift gain or a *pre‑shift loss.
 (2) It has a pre‑shift gain if, immediately before the *decrease time, its *market value was greater than its *adjustable value.
 (3) It has a pre‑shift loss if, immediately before the *decrease time, its *market value was equal to or less than its *adjustable value.

Special cases

725‑220  Neutral direct value shifts
 (1) The consequences are different if the total decrease in *market value of your *down interests is equal to the sum of:
 (a) the total increase in market value of your *up interests; and
 (b) the total *discounts given to you on the issue of your up interests.
 (2) In that case, this Subdivision and Subdivisions 725‑D to 725‑F apply to you as if the *direct value shift:
 (a) consisted only of:
 (i) the decreases in *market value of your *down interests; and
 (ii) the issue at a *discount of your *up interests covered by subsection 725‑145(2); and
 (iii) the increases in market value of your up interests covered by subsection 725‑145(3); and
 (b) were from each of your down interests to each of your up interests.
 (3) This section has effect despite section 725‑160.

725‑225  Issue of bonus shares or units
 (1) The consequences are different if you are an *affected owner of *up interests (the bonus interests) that the target entity issues to you, at a *discount, under the *scheme, in relation to *down interests (the original interests) of which you are an affected owner.

Effect of treatment under subsection 130‑20(3)
 (2) To the extent that the *direct value shift is to the bonus interests from original interests in relation to which the target entity issued bonus interests to which:
 (a) subsection 130‑20(3) applies (because none of them is a dividend or otherwise assessable income); and
 (b) item 1 of the table in that subsection applies (because the original interests are post‑CGT assets);
these paragraphs apply:
 (c) the respective *cost bases and *reduced cost bases of those original interests are not reduced;
 (d) the bonus interests referred to in subsection (1) do not give rise to a *taxing event generating a gain for you under the table in section 725‑245 on any of those original interests.
 (3) To the extent that the *direct value shift is from