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INCOME TAX ASSESSMENT ACT 1997 - SECT 725.150

Issue of equity or loan interests at a discount

             (1)  An * equity or loan interest is issued at a discount if, and only if, the * market value of the interest when issued exceeds the amount of the payment that the issuing entity receives. The excess is the amount of the discount .

             (2)  The payment that the issuing entity receives can include property. If it does, use the * market value of the property in working out the amount of the payment.

Amounts for which bonus equities are treated as being issued

             (3)  If:

                     (a)  a * primary equity interest is issued as mentioned in subsection 130-20(1) (about bonus equities issued in relation to original equities); and

                     (b)  subsection 130-20(3) does not apply (about bonus equities that are a dividend or otherwise assessable income);

subsection (1) of this section applies to the interest as if the amount of the payment that the issuing entity receives were equal to the * cost base of the interest when issued (as worked out under section 130-20).

             (4)  If:

                     (a)  a * primary equity interest is issued as mentioned in subsection 6BA(1) of the Income Tax Assessment Act 1936 (about bonus shares issued in relation to original shares); and

                     (b)  subsection 6BA(2) of that Act applies (about bonus shares that are a dividend);

subsection (1) of this section applies to the interest as if the amount of the payment that the issuing entity receives were equal to the consideration worked out under subsection 6BA(2) of that Act.

             (5)  If both of subsections (3) and (4) apply to the issue of the same * primary equity interest, subsection (1) of this section applies to the interest as if the amount of the payment that the issuing entity receives were equal to the greater of the amounts worked out under subsections (3) and (4).

Application of subsections (3), (4) and (5)

             (6)  Subsection (3) does not apply if, for the income year in which the interest is issued, the issuing entity is a public trading trust within the meaning of section 102R of the Income Tax Assessment Act 1936 .

             (7)  Subsections (3), (4) and (5) have effect only for the purposes of working out whether a * direct value shift has happened and, if so, its consequences (if any) under this Division.



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