Document ID: chunk:federal_register_of_legislation:C2025C00029:section:7:p33
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 7 (pt 33/58)
Character Range: 2380476–2383201

of the capital of the resident investment vehicle that was acquired before that issue or allotment; or
 (iii) value is shifted out of a share or interest in that vehicle that was acquired before that issue or allotment; and
 (b) it is reasonable to conclude that the happening of the event referred to in paragraph (a) is connected to that issue or allotment, or to some *arrangement between the entities concerned.
Example: The capital of an Australian company is 100,000 shares, with a market value of $1 per share. The shares have full voting and dividend rights.
 The Australian company issues another 100,000 shares to a foreign company. The new shares are issued at one cent each, but have very limited voting and dividend rights.
 The Australian company then changes the rights attaching to its shares so that the new shares have full voting and dividend rights, and the original shares have none.
 Value has been shifted out of the original shares, effectively converting "old equity" to "new equity".
 (3) In deciding whether it is reasonable to reach the conclusion referred to in paragraph (2)(b), these matters are relevant:
 (a) whether the amount of the decrease in the *net value of the *resident investment vehicle because of the happening of the event referred to in paragraph (2)(a) is the same as, or is calculated by reference to, the value of the issue or allotment of *shares or interests to the *venture capital entity; and
 (b) the time lapse between the happening of that event and that issue or allotment.

Subdivision 118‑H—Demutualisation of Tower Corporation

118‑550  Demutualisation of Tower Corporation
 (1) This section applies if, just before the mutual entity known in New Zealand as Tower Corporation ceased to be a mutual entity, you had membership rights in that entity.
Note: Tower Corporation demutualised on 1 October 1999.

No capital gain or capital loss from end of membership rights
 (2) Disregard any *capital gain or *capital loss that resulted from any of your membership rights in Tower Corporation ceasing to exist when that entity ceased to be a mutual entity.
Note: Subsection (2) applies to you even if, because you could not be located at the time of demutualisation, you were not immediately issued with shares in the demutualised entity in substitution for your old membership rights, and rights to shares were instead put aside in a trust.

Cost base of replacement assets
 (3) The *cost base and the *reduced cost base of any *shares or other *CGT assets that you *acquire in substitution for the membership rights that have ceased to exist do not include any amounts that you paid in acquiring or maintaining those old rights.

Subdivision 118‑I—Look‑through earnout