Document ID: chunk:federal_register_of_legislation:C2009C00311:clause:1_2:p4
Version: federal_register_of_legislation:C2009C00311
Segment Type: clause
Provision Reference: sch 1 cl 2 (pt 4/5)
Character Range: 13422–16089

the officially quoted price of the qualifying interests as their market value (see subsection 124‑784A(3)).

First element of cost base—interests acquired in exchange for replacement interests and cash etc.

 (3) However, if the qualifying interest was acquired under the *arrangement partly in exchange for one or more replacement interests and partly for something else, subsection (2) applies only for working out the first element of that part of the *cost base of the qualifying interest that is attributable to the replacement interests.

Note 1: This means that the acquiring entity will have to apportion the cost base amount worked out under subsection (2) according to the relative values of the replacement interests and the other component.

Note 2: The first element of that part of the cost base, and reduced cost base, of the qualifying interest that is attributable to cash etc. is worked out using the general rules about cost base.

Liabilities

 (4) For the purposes of step 4 of subsection (2), a liability of the original entity that is not a liability in respect of a specific asset or assets of the entity is taken to be a liability in respect of all the assets of the entity.

 (5) If a liability is in respect of 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 by acquiring entity to ultimate holding company

Purpose

 (1) This section allocates an appropriate *cost base to equity issued, or new debt owed, by an acquiring entity under the *arrangement to the *ultimate holding company of a *wholly‑owned group where 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 *ultimate holding company 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