Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) For the purposes of step 1 in the table in section 705‑60, the step 1 amount is the sum of the following amounts for each * membership interest that * members of the joined group hold in the joining entity at the joining time:
| Working out the step 1 amount | ||
| Item | If the market value of the membership interest is... |
The amount is... |
| 1 | equal to or greater than its * cost base | its cost base |
| 2 | less than its * cost base but greater than its * reduced cost base | its * market value |
| 3 | less than or equal to its * reduced cost base | its reduced cost base |
No indexation of cost base of pre‑CGT membership interests
(2) If the * membership interest is a * pre‑CGT asset, in working out its * cost base for the purposes of subsection (1) no element is indexed.
Adjustment if value shifting or loss transfer provision could apply
(3) If, on the assumption that the * members of the joined group had, just before the joining time, * disposed of their * membership interests in the joining entity, the * cost base or the * reduced cost base of the membership interests would have been changed by a provision of this Act, then the cost base or reduced cost base of the membership interests that is to be used in subsection (1) of this section is instead:
(a) the cost base as it would have been so changed; or
(b) the reduced cost base, as it would have been so changed, but ignoring the amount of any reduction resulting from the application of subsection 160ZK(5) of the Income Tax Assessment Act 1936 .
Note: For example, a change in the cost base or reduced cost base may be required under provisions that apply where a loss transfer or value shift involving the joining entity has occurred.
(4) Also, if a provision mentioned in subsection (3) would, because of events that happened before the joining time, apply to a * CGT event that happens after the joining time in relation to the * members’ * membership interests in the joining entity, the provision does not so apply.
Reduction in cost base under subsection 110‑55(7) to be added back
(5) If, in working out the * reduced cost base of the * membership interest for the purposes of subsection (1), a reduction has taken place under subsection 110‑55(7) (about certain distributions of pre‑acquisition profits), the reduced cost base is increased by the amount of that reduction.
Rights and options to acquire membership interests
(6) For the purposes of this section, if at the joining time a * member of the joined group holds a right or option (including a contingent right or option), created or issued by the joining entity, to acquire a * membership interest in the joining entity, that right or option is treated as if it were a membership interest in the joining entity.