Document ID: chunk:federal_register_of_legislation:C2025C00014:section:26bc:p5
Version: federal_register_of_legislation:C2025C00014
Segment Type: section
Provision Reference: s 26BC (pt 5/9)
Character Range: 249983–252563

under a provision of this Act other than Part 3‑1 or 3‑3 of the Income Tax Assessment Act 1997, the lender is to be treated as if:
 (a) the lender had held the borrowed security at all relevant times during the borrowing period; and
 (b) the right or option had been issued directly to the lender in respect of the borrowed security; and
 (c) the lender had disposed of the right or option immediately after its issue for a consideration equal to the compensatory payment.
 (4B) If the lender receives a compensatory payment covered by sub‑subparagraph (3)(c)(vi)(C), then, in determining whether an amount is included in the assessable income of the lender under a provision of this Act other than Part 3‑1 or 3‑3 of the Income Tax Assessment Act 1997, the lender is to be treated as if:
 (a) the lender had held the right or option at all relevant times during the borrowing period; and
 (b) the lender had exercised the right or option; and
 (c) the lender had immediately disposed of the shares, units, bonds, debentures or financial instruments that resulted from exercising the right or option for a consideration equal to the compensatory payment.
 (5) In determining:
 (a) whether an amount is included in the assessable income of the borrower under a provision of this Act other than Part 3‑1 or 3‑3 of the Income Tax Assessment Act 1997; or
 (b) an amount (other than a fee payable under the securities lending arrangement) is allowable as a deduction to the borrower;
in respect of either or both of the transactions covered by paragraph (3)(a):
 (c) if the borrowed security was disposed of by the borrower to a third party:
 (i) the borrower is to be treated as if the borrower had acquired the borrowed security from the lender for a consideration equal to the market value of the borrowed security at the time of its acquisition; and
 (ii) the borrower is to be treated as if the borrower had disposed of the replacement security to the lender for a consideration equal to the market value of the borrowed security at the time of its acquisition from the lender; or
 (d) in any other case—the borrower is to be treated as if neither of the transactions referred to in paragraph (3)(a) had been entered into.
 (6) Any capital gain or capital loss from the disposal of the borrowed security by the lender is disregarded.
 (6A) If the lender acquired the borrowed security before 20 September 1985, the lender is taken (for the purposes of Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997) to have acquired the replacement security before that day.
 (6B) If the