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INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIAA - FRANKING OF DIVIDENDS  

Division 1A - Circumstances in which a taxpayer can qualify for a franking credit, a franking rebate or the intercorporate dividend rebate  

Subdivision A - Preliminary  

SECTION 160APHM  MATERIAL DIMINUTION OF RISKS OF LOSS OR OPPORTUNITIES FOR GAIN IN RESPECT OF SHARES OR INTERESTS IN SHARES  

160APHM(1)  Regulations may prescribe what constitutes material diminution.  


The regulations may prescribe the circumstances in which a taxpayer is taken to have materially diminished risks of loss or opportunities for gain in respect of shares or interests in shares, and the following provisions of this section have effect subject to any such regulations.

160APHM(2)  Material diminution if net position has less than 30% of risks and opportunities.  


A taxpayer is taken to have materially diminished risks of loss or opportunities for gain on a particular day in respect of shares held by the taxpayer, or in respect of an interest held by the taxpayer in shares, if the taxpayer's net position on that day in relation to the shares or interest has less than 30% of those risks and opportunities.

160APHM(3)  Net position worked out by reference to deltas.  


A taxpayer's net position is worked out using the financial concept known as delta (see section 160APHJ ). For example, an option to sell a share with a delta of minus 0.5 in relation to the share reduces the risks of loss and opportunities for gain by 50%.


 



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