Income Tax Assessment Act 1936

PART X - ATTRIBUTION OF INCOME IN RESPECT OF CONTROLLED FOREIGN COMPANIES  

Division 8 - Active income test  

Subdivision D - General interpretive provisions  

SECTION 438   ROLL-OVERS - ASSET DISPOSALS  

438(1)    
This section applies in determining the application of paragraph 434(1)(b) and section 445 in relation to a non-taxable Australian asset of a company.

438(2)    
If a CGT roll-over provision applies to:

(a) the disposal of the asset by an entity (in this section called the transferor ) to the company (in this section called the transferee ); or

(b) the disposal of the asset by the company (in this section also called the transferor ) to another entity (in this section also called the transferee );

the following provisions have effect:

(c) the transferee is taken to have paid, as consideration to acquire the asset, the sum of:

(i) the consideration (if any) paid or payable by the transferor to acquire the asset; and

(ii) the expenditure (if any) incurred by the transferor in making capital improvements to the asset; and

(d) the transferor is not taken to have:

(i) derived any gains; or

(ii) incurred any loss;

in respect of the disposal of the asset.

438(2A)    

If:

(a) a CGT roll-over provision applies to the disposal of the asset (in this subsection called the original asset ) by the company; and

(b) the disposal is not to another entity; and

(c) the company acquires another asset (in this subsection called the replacement asset ) that is referred to in the CGT roll-over provision as being by way of replacement of, substitution for, or consideration for the disposal of, the original asset (whether or not exactly those expressions are used);

the following provisions have effect:

(d) the company is not taken to have:

(i) derived any gains; or

(ii) incurred any loss;

in respect of the disposal of the original asset; and

(e) the company is taken to have paid, as consideration to acquire the replacement asset, the sum of:

(i) the consideration (if any) paid or payable by the company to acquire the original asset; and

(ii) the expenditure (if any) incurred by the company in making improvements to the original asset.

438(2B)    

For the purposes of subsections (2) and (2A), if an asset is disposed of by being cancelled, redeemed or consolidated into another asset, the disposal is taken not to be to another entity.

438(3)    

For the purposes of this section, in determining whether a CGT roll-over provision applies to the disposal of an asset, Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 have the effect they would have if:

(a) the company had failed the active income test in relation to the statutory accounting period concerned; and

(b) those Parts were being applied to calculate the attributable income of the company for the statutory accounting period in relation to any taxpayer.

438(3A)    

For the purposes of applying Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 in relation to a statutory accounting period as mentioned in paragraph (3)(b), any election or choice that may be made by the company, or by the company and another entity, apart from this section under any of the CGT roll-over provisions:

(a) on or before the date of lodgment of a particular return of income; or

(b) within such period as the Commissioner allows;

is to be made instead:

(c) if there is only one attributable taxpayer in relation to the company at the end of the statutory accounting period - on or before the date of lodgment of the taxpayer's return of income of the year of income in which the end of the statutory accounting period occurs; or

(d) if there are 2 or more attributable taxpayers in relation to the company at the end of the statutory accounting period:

(i) if the taxpayers ' returns of income of the year of income in which the end of the statutory accounting period occurs are lodged on different dates - on or before the later or latest of those dates; or

(ii) if the taxpayers ' returns of income of the year of income in which the end of the statutory accounting period occurs are lodged on the same date - on or before that date; or

(e) in any case - within such further period as the Commissioner allows.

438(3B)    

For the purposes of applying subsection (3A) to a company in relation to a statutory accounting period, if:

(a) the company is a CFC at the end of the statutory accounting period; and

(b) an entity (the designated entity ) is the only attributable taxpayer in relation to the company at the end of the statutory accounting period; and

(c) the designated entity's attribution percentage in relation to the company is 100% at the end of the statutory accounting period;

then, instead of the election being given or the choice being made by the company, or by the company and another entity (which other entity may be the designated entity), the election may be given or the choice may be made by:

(d) the designated entity; or

(e) if the designated entity is not the same as the other entity - the designated entity and the other entity;

as the case requires.

438(4)    

A reference in this section to a non-taxable Australian asset of a company is a reference to an asset of the company that is a CGT asset that is not taxable Australian property.