Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) Where:
(a) as a result of the application of section 159GZZZF in relation to a cancellation of shares, the subsidiary concerned is taken to have received or to be entitled to receive an amount of capital proceeds or an increase in an amount of capital proceeds (which amount or increase is in this section called the cancellation adjustment amount ) in relation to the cancellation of the shares; and
(b) an eligible entity in relation to the holding company and the subsidiary concerned holds an eligible interest at the time of the share cancellation;
then this section applies in relation to the eligible interest.
(2) For the purposes of this Act (other than Parts 3 - 1 and 3 - 3 of the Income Tax Assessment Act 1997 ):
(a) if the eligible interest is not trading stock--in determining:
(i) the amount of any deduction allowed or allowable to the eligible entity in respect of the acquisition of the eligible interest; or
(ii) the amount of any profit included in, or loss allowable as a deduction from, the assessable income of the eligible entity in respect of the acquisition and any subsequent disposal of the eligible interest;
the capital proceeds in respect of the acquisition of the eligible interest shall be taken to have been reduced by the eligible interest's eligible proportion of the cancellation adjustment amount; and
(b) if the eligible interest is trading stock--the capital proceeds in respect of any subsequent disposal of the eligible interest shall be taken to be increased by the eligible interest's eligible proportion of the cancellation adjustment amount.
(3) For the purposes of Parts 3 - 1 and 3 - 3 of the Income Tax Assessment Act 1997 , if a CGT event happens in relation to the eligible interest, the cost base and reduced cost base of the eligible interest is reduced by the eligible interest's eligible proportion of the cancellation adjustment amount.
(5) This section applies in relation to the acquisition of the eligible interest held by the eligible entity, and to a CGT event happening in relation to the eligible interest, even if the entity was not an eligible entity, and the interest was not an eligible interest, at the time of the acquisition or CGT event.