INCOME TAX ASSESSMENT ACT 1997 - SECT 126.195 Consequences of roll - over
INCOME TAX ASSESSMENT ACT 1997 - SECT 126.195
Consequences of roll - over(1) A * capital gain or * capital loss the trustee makes from the * CGT event is disregarded.
(2) The first element of the * cost base of the replacement share for the entity is the cost base of the replacement share in the hands of the trustee just before the * CGT event happened. The first element of the * reduced cost base of the replacement share for the entity is worked out similarly.
Example: The JB mutual insurance company demutualises, issuing shares in JB Limited to its policyholders. It is unable to locate some of its policyholders so it establishes a trust and issues shares to the trustee on behalf of those policyholders. Steve is one of those policyholders (being potentially entitled to 50 shares).
JB Limited is taken over by PVDM Limited. Members of JB are issued with 2 shares in PVDM for each share they have in JB. The trustee obtains a roll - over under Subdivision 124 - M for the exchange. Each PVDM share held by the trustee has a cost base and reduced cost base of $15.
Steve writes to the trustee and proves his entitlement to the shares held in trust for him.
There is a roll - over under this Subdivision so that any capital gain
or loss made by the trustee is disregarded. The first element of the cost base
and reduced cost base of each of Steve's PVDM shares is $15.