Income Tax Assessment Act 1997

Chapter 4 inserted by No 162 of 2001.

Part 4-5 inserted by No 162 of 2001.

Div 768 heading substituted by No 110 of 2014, s 3 and Sch 2 item 3, applicable to distributions and non-share dividends made after 16 October 2014. Div 768 heading formerly read:

Division 768 - Exempt foreign income and gains

Div 768 inserted by No 96 of 2004.

Subdiv 768-R inserted by No 32 of 2006, s 3 and Sch 1 item 1, effective 6 April 2006.

S 768-920 repealed by No 133 of 2009, s 3 and Sch 1 item 62, applicable in relation to the ESS interests mentioned in subsections 83A-5(1) and (2) of the Income Tax (Transitional Provisions) Act 1997 . S 768-920 formerly read:

SECTION 768-920 Capital gains and losses on employee shares and rights where taxation of discount not deferred  
When this section applies

786-920(1)
This section applies to a ^* share or right if:

(a) you ^* acquire the share or right under an ^* employee share scheme; and

(b) you engage in employment, or render services, that affect the holding or acquisition of the shares or rights while you are a ^* temporary resident; and

(c) the share or right is not *taxable Australian property; and

(d) either:

(i) the share or right is not a ^* qualifying share or ^* qualifying right; or

(ii) the share or right is a qualifying share or qualifying right and you have made an election under section 139E of the Income Tax Assessment Act 1936 covering the share or right; and

(e) a ^* CGT event happens in relation to the share or right; and

(f) if the CGT event is CGT event I1 - you are not a temporary resident immediately before the event happens; and

(g) you would make a ^* capital gain or ^* capital loss from the CGT event, and the capital gain or capital loss would not be disregarded, if you were an Australian resident (but not a temporary resident) when the CGT event happens; and

(h) this section has not previously applied to you in relation to a CGT event in relation to the share or right.

Note 1:

Paragraph (a) - section 139DQ of the Income Tax Assessment Act 1936 applies for the purposes of this Subdivision to treat a matching share or right issued as part of a 100% takeover or restructure as a continuation of the share or right it matches.

Note 2:

For a stapled security acquired under an employee share scheme, the operation of this Subdivision is affected by section 130-97 .

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S 768-920(1) amended by No 56 of 2007 , s 3 and Sch 3 items 30 and 31, by inserting note 2, effective 12 April 2007. No 56 of 2007 , s 3 and Sch 3 item 39 contains the following application provision:

(1)
The amendment applies to acquisitions of stapled securities, and of rights to acquire stapled securities, on or after 1 July 2006.

(2)
In this item:

acquisition
has the same meaning as in Division 13A of Part III of the Income Tax Assessment Act 1936 .

S 768-920(1) amended by No 168 of 2006 , s 3 and Sch 4 item 90, by substituting " is not *taxable Australian property " for " does not have the *necessary connection with Australia " in para (c), applicable to CGT events that happen on or after 12 December 2006.

768-920(2)
This section also applies to a ^* share (the derived share ) if:

(a) you ^* acquire a right (the original right ) under an ^* employee share scheme; and

(b) you engage in employment, or render services, that affect the holding or acquisition of the original right, or the derived share, while you are a ^* temporary resident; and

(c) you acquire the derived share by exercising the original right; and

(d) the derived share is not *taxable Australian property; and

(e) either:

(i) the original right is not a ^* qualifying right; or

(ii) the original right is a qualifying right and you have made an election under section 139E of the Income Tax Assessment Act 1936 covering the original right; and

(f) a ^* CGT event happens in relation to the derived share; and

(g) if the CGT event is CGT event I1 - you are not a temporary resident immediately before the event happens; and

(h) you would make a ^* capital gain or ^* capital loss from the CGT event, and the capital gain or capital loss would not be disregarded, if you were an Australian resident (but not a temporary resident) when the CGT event happens; and

(i) this section has not previously applied to you in relation to the original right or the derived share.

Note 1:

Paragraph (a) - section 139DQ of the Income Tax Assessment Act 1936 applies for the purposes of this Subdivision to treat a matching share or right issued as part of a 100% takeover or restructure as a continuation of the share or right it matches.

Note 2:

For a stapled security acquired under an employee share scheme, the operation of this Subdivision is affected by section 130-97 .

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S 768-920(2) amended by No 56 of 2007 , s 3 and Sch 3 items 32 and 33, by inserting note 2, effective 12 April 2007. No 56 of 2007 , s 3 and Sch 3 item 39 contains the following application provision:

(1)
The amendment applies to acquisitions of stapled securities, and of rights to acquire stapled securities, on or after 1 July 2006.

(2)
In this item:

acquisition
has the same meaning as in Division 13A of Part III of the Income Tax Assessment Act 1936 .

S 768-920(2) amended by No 168 of 2006 , s 3 and Sch 4 item 91, by substituting " is not *taxable Australian property " for " does not have the *necessary connection with Australia " in para (d), applicable to CGT events that happen on or after 12 December 2006.

768-920(3)
To avoid doubt, paragraph (1)(e) or (2)(f) applies:

(a) even if you are not a ^* temporary resident when the ^* CGT event happens; and

(b) whether you are an Australian resident or a foreign resident when the CGT event happens.

Capital gain or loss

768-920(4)
If you are a ^* temporary resident or a foreign resident when the ^* CGT event happens, you make a ^* capital gain or ^* capital loss from the CGT event.

Note:

If you are an Australian resident (but not a temporary resident) when the CGT event occurs, neither section 768-915 nor Division 855 prevents you having a capital gain or capital loss.

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S 768-920(4) amended by No 168 of 2006 , s 3 and Sch 4 item 92, by substituting " section 768-915 nor Division 855 " for " Division 136 nor section 768-915 " in the note, applicable to CGT events that happen on or after 12 December 2006.

768-920(5)
Subsection (4) has effect despite section 768-915 and Division 855 .

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S 768-920(5) amended by No 168 of 2006 , s 3 and Sch 4 item 93, by substituting " section 768-915 and Division 855 " for " Division 136 and section 768-915 " , applicable to CGT events that happen on or after 12 December 2006.

Amount of capital gain or capital loss for temporary residents and foreign residents

768-920(6)
If you are a ^* temporary resident or a foreign resident when the ^* CGT event happens, the amount of the ^* capital gain or ^* capital loss is the amount of your adjusted notional gain or loss worked out under subsection (9).

Amount of capital gain or capital loss for Australian residents

768-920(7)
If you are an Australian resident (but not a ^* temporary resident) when the ^* CGT event happens, the amount of the ^* capital gain or ^* capital loss is the sum of:

(a) the amount that would be the amount of your capital gain or capital loss if this section did not apply to you; and

(b) the amount of your adjusted notional gain or loss worked out under subsection (9).

Example:

George, a New Zealander, is granted shares (with a total market value at the time of $100,000) under an employee share scheme on 20 January 2006. He comes to Australia as a temporary resident on 1 January 2007 and completes the rest of the employment to which the shares relate in Australia. George elects to have the discount assessed in that income year. He then ceases to be a temporary resident but remains an Australian resident on 8 May 2008. At that time the shares have a market value of $80,000. George disposes of the shares on 30 June 2009 for $115,000. George's capital gain for the purpose of paragraph (a) would be $35,000. Assume that the amount of the loss that accrued up to 8 May 2008 that is to be counted for the purpose of paragraph (b) is $9,000. For the year ending 30 June 2009, George would, as a result of subsection (7), make a capital gain of $26,000 (being $35,000 less $9,000).

768-920(8)
If subsection (7) applies to the ^* CGT event, subsections 768-955(3) and 855-45(3) do not apply for the purposes of applying Division 115 in relation to the CGT event.

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S 768-920(8) amended by No 168 of 2006 , s 3 and Sch 4 item 94, by substituting " subsections 768-955(3) and 855-45(3) " for " subsections 136-40(3) and 768-955(3) " , applicable to CGT events that happen on or after 12 December 2006.

Adjusted notional gain or loss

768-920(9)
To work out your adjusted notional gain or loss:

(a) work out your notional gain or loss using section 768-925 ; and

(b) adjust your notional gain or loss using sections 768-930 , 768-935 and 768-940.

S 768-920 inserted by No 32 of 2006, s 3 and Sch 1 item 1, applicable if the relevant CGT event happens on or after 1 July 2006.