Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-3 - CAPITAL GAINS AND LOSSES: SPECIAL TOPICS  

Division 122 - Roll-over for the disposal of assets to, or the creation of assets in, a wholly-owned company  

Subdivision 122-B - Disposal or creation of assets by partners to a wholly-owned company  

When is a roll-over available

SECTION 122-140   What if the company undertakes to discharge a liability (disposal case)  
Disposal of a CGT asset

122-140(1)    

One of these requirements must be satisfied (for each partner) if:

(a) the partners *dispose of their interests in a *CGT asset; and

(b) the company undertakes to discharge one or more liabilities in respect of the interests in the asset.

(The *market value, or the *cost base, of an interest is worked out at the time of the disposal.)

What amount the liabilities cannot exceed
Item	In this situation:	the liabilities cannot exceed:
1	A partner *acquired the interest on or after 20 September 1985	The *cost base of the interest
.
2	A partner *acquired the interest before 20 September 1985	The *market value of the interest

Note:

There are rules for working out what are the liabilities in respect of an interest in an asset: see section 122-145 .

Disposal of all the assets of a business

122-140(2)    

One of these requirements must be satisfied (for each partner) if:

(a) the partners *dispose of their interests in all the assets of a *business; and

(b) the company undertakes to discharge one or more liabilities in respect of the interests in the assets.

(The *market value, or the *cost base, of an interest is worked out at the time of the disposal.)

What amount the liabilities cannot exceed
Item	In this situation:	the liabilities cannot exceed:
1	A partner *acquired all the interests on or after 20 September 1985	The sum of the *market values of the partner ' s interests in *precluded assets and the *cost bases of the partner ' s interests in other assets
.
2	A partner *acquired all the interests before 20 September 1985	The sum of the *market values of the interests
.
3	A partner *acquired at least one interest on or after 20 September 1985 and at least one before that day	For liabilities in respect of interests *acquired on or after that day - the sum of the *market values of the partner ' s interests in *precluded assets and the *cost bases of the partner ' s interests in other assets
		For liabilities in respect of interests *acquired before that day - the sum of the market values of those interests