Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) This section applies if:
(a) a * CGT event happens under the demutualisation to an entity's interest affected by demutualisation (see section 316 - 55); and
(b) the event involves:
(i) the variation or abrogation of rights attaching to or consisting of the interest; or
(ii) the conversion, cancellation, extinguishment or redemption of the interest; and
(c) either:
(i) the entity is one described in paragraph 316 - 55(1)(a); or
(ii) the entity is one described in paragraph 316 - 55(2)(a) and the interest is a * CGT asset described in paragraph 316 - 55(2)(b); and
(d) the * capital proceeds from the event include or consist of money received by the entity.
(2) Work out whether the entity makes a * capital gain or * capital loss from the * CGT event, and the amount of the gain or loss, assuming that:
(a) the * capital proceeds from the CGT event were the amount they would be if they did not include any * market value of property other than money; and
(b) the * cost base and * reduced cost base for the interest were the amount worked out using the formula:
Example: Assume the entity receives $50 in money and 10 shares with a market value of $4 each in respect of CGT event C2 happening, and that the valuation factor worked out under section 316 - 65 is 0.9. The entity makes a capital gain from the event of $5, worked out as follows:
This ignores the market value of the shares because they are property other than money.
Note: Division 114 (Indexation of cost base) is not relevant, because this section provides exhaustively for working out the amount of the cost base.
(3) The * capital gain or * capital loss is not to be disregarded, despite:
(a) section 316 - 55; and
(b) any provision of this Act for disregarding the * capital gain or * capital loss because the interest affected by demutualisation was * acquired before 20 September 1985.
Note: The capital gain is not a discount capital gain: see section 115 - 55.