Document ID: chunk:federal_register_of_legislation:C2025C00029:section:2:p22
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 2 (pt 22/59)
Character Range: 2587400–2589901

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 entity for the qualifying interest in the original entity is worked out similarly.

Rights and options to acquire membership interests
 (7) For the purposes of step 5 of subsection (2), if at the completion time a person holds an option, right or similar interest (including a contingent option, right or interest), created or issued by the original entity, to acquire a *membership interest in the original entity, that option, right or interest is treated as if it were a membership interest in the original entity.

124‑784C  Cost base of equity or debt given within acquiring group

Purpose
 (1) This section allocates an appropriate *cost base to equity issued, or new debt owed, under the *arrangement by a member of a *wholly‑owned group to another member (the holder) of the group, if:
 (a) an acquiring entity is a member of the group; and
 (b) the cost base of the acquiring entity for a qualifying interest was worked out under section 124‑784B.

Allocation of cost base
 (2) The first element of the *cost base of the equity or debt for the holder is that part of the cost base of the qualifying interest worked out under section 124‑784B as:
 (a) may be reasonably allocated to the equity or debt; and
 (b) is not more than the *market value of the equity or debt at the completion time.

124‑785  What is the roll‑over?
 (1) A *capital gain you make from your original interest is disregarded.
 (2) You work out the first element of the *cost base of each *CGT asset you received as a result of the exchange by reasonably attributing to it the cost base (or the part of it) of your original interest for which it was exchanged and for which you obtained the roll‑over.
 (3) In applying subsection (2), you reduce the *cost base of your original interest (just before you stop owning it) by so much of that cost base as is attributable to an ineligible part (see section 124‑790).
 (4) The first element of the *reduced cost base is worked out similarly.
Example 1: Lyn exchanges 1 share with a cost base of $10 for another share. The cost base of the new share is $10.
Example 2: Glenn exchanges 2 shares with cost bases of $10 and $11 respectively for one new share. The cost base of the new share is $21.
Example 3: Wayne exchanges 1 share with a cost base of $9 for share A