Document ID: chunk:federal_register_of_legislation:C2025C00029:section:2:p20
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 2 (pt 20/59)
Character Range: 2582342–2585196

day, the officially quoted price of the interest is determined under subsection (6) in respect of whichever of those the entity chooses.

124‑784B  What is the cost base and reduced cost base when arrangement is a restructure?
 (1) This section applies in relation to each qualifying interest in the original entity:
 (a) *acquired by an acquiring entity under an *arrangement to which section 124‑784A applies; and
 (b) for which the first element of the *cost base of the acquiring entity is not worked out under section 124‑782.
Note: Section 124‑782 applies when an original interest holder is a significant stakeholder or a common stakeholder.

First element of cost base—qualifying interests acquired in exchange for replacement interests only
 (2) The first element of the *cost base of the acquiring entity for the qualifying interest in the original entity is worked out as follows:

      Method statement
           Step 1. Add up:

                (a) the *market value, at the completion time, of the original entity's *pre‑CGT assets (except *trading stock); and
                (b) the *cost bases, at the completion time, of the original entity's *post‑CGT assets (except trading stock); and
                (c) for the original entity's *CGT assets (except trading stock) that had no cost base—the maximum amount of consideration the original entity would need to receive if it were to dispose, at the completion time, of those assets without an amount being assessable income of, or deductible to, the original entity; and
                (d) the amount worked out under steps 2 and 3.

           Step 2. For the original entity's *trading stock, add up:

                (a) the *value of the trading stock at the start of the income year containing the completion time; and
                (b) for *live stock acquired by natural increase during that income year but before the completion time—the *cost of that live stock; and
                (c) the amount of any outgoing incurred in connection with acquiring an item of trading stock during that income year but before the completion time (except live stock acquired by natural increase); and
                (d) the amount of any outgoings forming part of the cost of the trading stock incurred by the entity during its current holding of the trading stock but before the completion time.

           Step 3. For any asset of the original entity not covered by steps 1 and 2, work out the amount that would be the asset's *cost base at the completion time if it were a *CGT asset.
           Step 4. Subtract from the result of step 1 the original entity's liabilities (if any) at the completion time in respect of those assets.
           Step 5. If there is one class of *membership interests in the original entity, divide the result of step 4 by the total number of those