Income Tax Act 2007 section 438A

Acquisition value of qualifying investments

Section 438A defines how to determine the acquisition value of a qualifying investment when an individual disposes of it, including rules for derived or representative assets and adjustments for amounts received back in connection with the acquisition.

• If the individual acquired the qualifying investment within the four years ending on the date of disposal, the acquisition value is simply the cost they paid to acquire it.
• If the disposed investment derives from or represents something else the individual acquired within that four-year window, the acquisition value is a just and reasonable proportion of the original acquisition cost attributable to the qualifying investment.
• The cost of acquisition means the consideration the individual gave for the purchase, reduced by any amounts received back by the individual or a connected person as part of the scheme in question.
• The net effect is to prevent inflation of acquisition values where part of the purchase price is effectively returned to the individual or someone connected with them under the arrangement.