Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p1
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 1/5)
Character Range: 5899370–5902025

3                              less than or equal to its *reduced cost base                      its reduced cost base

Note: Under section 716‑855, if membership interests are pre‑CGT assets that have been subject to certain roll‑overs, the cost base and reduced cost base are worked out in the same way as if they were post‑CGT assets.

No indexation of cost base of pre‑CGT membership interests
 (2) If the *membership interest is a *pre‑CGT asset, in working out its *cost base for the purposes of subsection (1) no element is indexed.

Adjustment if value shifting or loss transfer provision could apply
 (3) If, on the assumption that a *CGT event had happened just before the joining time in relation to the *membership interest, the *cost base or the *reduced cost base of the membership interest would have been changed by a provision of this Act, then the cost base or reduced cost base of the membership interest that is to be used in subsection (1) of this section is instead:
 (a) the cost base as it would have been so changed; or
 (b) the reduced cost base, as it would have been so changed, but ignoring the amount of any reduction resulting from the application of former subsection 160ZK(5) of the Income Tax Assessment Act 1936.
Note: For example, a change in the cost base or reduced cost base may be required under provisions that apply where a loss transfer or value shift involving the joining entity has occurred.
 (3AA) If, on the assumption that:
 (a) the *members of the joined group had, just before the joining time, *disposed of their *membership interest in the joining entity; and
 (b) the consideration received by the members for the disposal were equal to the *market value of the membership interest at that time;
they would have made a *capital loss that section 727‑615 would have reduced (because of an indirect value shift), then the *reduced cost base of the membership interest that is to be used in subsection (1) of this section is reduced by the amount of that reduction.

Reduction if section 165‑115ZD could apply
 (3A) If, on the assumption that:
 (a) the *members of the joined group had, just before the joining time, *disposed of their *membership interest in the joining entity; and
 (b) the consideration received by the members for the disposal were equal to the *market value of the membership interest at that time;
the *reduced cost base of the membership interest would have been reduced as a result of the operation of section 165‑115ZD of this Act or the Income Tax (Transitional Provisions) Act 1997, then the reduced cost base of the membership interest that is to be used in subsection (1) of