INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 17 - Miscellaneous roll-over relief  

SECTION 160ZZMA   TRANSFER OF ASSETS FROM COMPANY OR TRUST TO SPOUSE UPON BREAKDOWN OF MARRIAGE  

160ZZMA(1)   [Application of section]  

This section applies where:

(a) on or after 20 September 1985, a taxpayer (in this section called the ``first taxpayer'' ), being a company or a trustee of a trust estate, disposes of an asset (in this section called the ``roll-over asset'' ) to a person (in this section called the ``spouse'' ) who is or was the spouse of another person; and

(b) the disposal of the roll-over asset is pursuant to:

(i) an order of a court under the Family Law Act 1975 or under a corresponding law of a foreign country; or

(ii) a maintenance agreement approved by a court under section 87 of the Family Law Act 1975 or a corresponding agreement approved by, or otherwise sanctioned by, a court under a corresponding law of a foreign country; or

(iii) an order of a court under a law of a State or Territory or of a foreign country relating to the breakdown of de facto marriages.

160ZZMA(2)   [Application of Pt IIIA]  

This Part (other than this section) does not apply in respect of the disposal and:

(a) if the roll-over asset was acquired by the first taxpayer before 20 September 1985 - the spouse shall be taken to have acquired the roll-over asset before that date; or

(b) if the roll-over asset was acquired by the first taxpayer on or after 20 September 1985:

(i) the spouse shall be taken to have paid as consideration in respect of the acquisition of the roll-over asset an amount equal to:

(A) for the purpose of ascertaining whether a capital gain accrued to the spouse in the event of a subsequent disposal of the roll-over asset by the spouse - the amount that would have been the indexed cost base to the first taxpayer of the roll-over asset for the purposes of this Part if this Part had applied in respect of the disposal of the roll-over asset by the first taxpayer to the spouse; or

(B) for the purpose of ascertaining whether the spouse incurred a capital loss in the event of a subsequent disposal of the roll-over asset by the spouse - the amount that would have been the reduced cost base to the first taxpayer of the roll-over asset for the purposes of this Part if this Part had applied in respect of the disposal of the roll-over asset by the first taxpayer to the spouse; and

(ii) in the case of a roll-over asset that was a personal-use asset of the first taxpayer - the roll-over asset shall be taken, for the purposes of this Part, to be a personal-use asset of the spouse.

160ZZMA(3)   [Asset disposed of by spouse within 12 months of company or trustee taxpayer's acquisition]  

If, in a case to which paragraph (2)(b) applies, the roll-over asset is disposed of by the spouse within 12 months after the day on which the roll-over asset was acquired by the first taxpayer, the reference in that paragraph to the indexed cost base to the first taxpayer of the roll-over asset shall be read as a reference to the cost base to the first taxpayer of the roll-over asset.

160ZZMA(3A)   [Application of Div 7 of Pt X]  

If:

(a) there is a requirement to calculate under Division 7 of Part X the attributable income of a company in relation to any taxpayer; and

(b) this section, as it has effect in accordance with that Division, is relevant to that calculation because both of the following subparagraphs apply:

(i) the company is the first taxpayer;

(ii) apart from the residency assumption mentioned in that Division, the disposal of the asset concerned is not a disposal of a taxable Australian asset;

then, in addition to the effect that this section has apart from this subsection, this section also has the effect, in relation to any subsequent disposal of the asset (whether by the spouse or otherwise) that it would have if it had applied in relation to the spouse subject to the modifications made by that Division.

160ZZMA(3B)   [Application of Subdiv D, Div 6AAA of Pt III]  

If:

(a) there is a requirement to calculate under section 102AAU the attributable income of a non-resident trust estate of a year of income; and

(b) this section, as it has effect in accordance with Subdivision D of Division 6AAA of Part III, is relevant to that calculation because both of the following subparagraphs apply:

(i) the trustee of the trust estate is the first taxpayer;

(ii) apart from the assumptions about residency that apply for the purposes of that Subdivision, the disposal of the asset concerned is not a disposal of a taxable Australian asset;

then, in addition to the effect that this section has apart from this subsection, this section also has the effect, in relation to any subsequent disposal of the asset (whether by the spouse or otherwise) that it would have if it had applied in relation to the spouse subject to the modifications made by that Subdivision.

160ZZMA(4)   [Reduction of indexed cost base and reduced cost base of second taxpayer's asset]  

Where, immediately before the disposal of the roll-over asset by the first taxpayer, another taxpayer (in this section called the ``second taxpayer'' ) (whether or not the spouse) held another asset, being:

(a) if the first taxpayer is a company:

(i) a share in the company that was acquired by the second taxpayer after 19 September 1985;

(ii) a loan to the company, being a loan acquired by the second taxpayer after 19 September 1985; or

(iii) an underlying interest in a share in, or loan to, the company, being an underlying interest that was acquired by the second taxpayer after 19 September 1985; or

(b) if the first taxpayer is a trustee of a trust estate:

(i) an interest or unit in the trust that was acquired by the second taxpayer after 19 September 1985;

(ii) a loan to the trustee, being a loan acquired by the second taxpayer after 19 September 1985; or

(iii) an underlying interest in an interest or unit in the trust, or in a loan to the trustee, being an underlying interest that was acquired by the second taxpayer after 19 September 1985;

(which other asset is in this section called the ``second taxpayer's asset'' ), the following provisions have effect:

(c) for the purposes of ascertaining whether a capital gain accrued to the second taxpayer in the event of a subsequent disposal of the second taxpayer's asset by the second taxpayer - the indexed cost base to the second taxpayer of the second taxpayer's asset shall be reduced by:

(i) if the roll-over asset was acquired by the first taxpayer before 20 September 1985 - the amount calculated in accordance with the formula:

Adjusted MV   −   Adjusted assessable amount

where:

Adjusted MV is so much of the adjusted market value of the roll-over asset immediately before the disposal of the roll-over asset by the first taxpayer as may reasonably be regarded as being represented in the adjusted market value of the second taxpayer's asset immediately before the disposal of the roll-over asset by the first taxpayer; and

Adjusted assessable amount is the adjusted assessable amount (if any); or

(ii) if the roll-over asset was acquired by the first taxpayer on or after 20 September 1985 - the amount calculated in accordance with the formula:

Adjusted ICB   −   Adjusted assessable amount

where:

Adjusted ICB is so much of the adjusted indexed cost base to the first taxpayer of the roll-over asset immediately before the disposal of the roll-over asset by the first taxpayer as may reasonably be regarded as being represented in the adjusted market value of the second taxpayer's asset immediately before the disposal of the roll-over asset by the first taxpayer; and

Adjusted assessable amount is the adjusted assessable amount (if any);

(d) for the purposes of ascertaining whether the second taxpayer incurred a capital loss in the event of a subsequent disposal of the second taxpayer's asset by the second taxpayer - the reduced cost base to the second taxpayer of the second taxpayer's asset shall:

(i) if subparagraph (iii) does not apply and the roll-over asset was acquired by the first taxpayer before 20 September 1985 - be reduced by the amount calculated in accordance with the formula:

MV   −   Assessable amount

where:

MV is so much of the market value of the roll-over asset immediately before the disposal of the roll-over asset by the first taxpayer as may reasonably be regarded as being represented in the market value of the second taxpayer's asset immediately before the disposal of the roll-over asset by the first taxpayer; and

Assessable amount is the assessable amount (if any);

(ii) if subparagraph (iii) does not apply and the roll-over asset was acquired by the first taxpayer on or after 20 September 1985 - be reduced by the amount calculated in accordance with the formula:

RCB   −   Assessable amount

where:

RCB is so much of the reduced cost base to the first taxpayer of the roll-over asset immediately before the disposal of the roll-over asset by the first taxpayer as may reasonably be regarded as being represented in the market value of the second taxpayer's asset immediately before the disposal of the roll-over asset by the first taxpayer; and

Assessable amount is the assessable amount (if any); or

(iii) if the reduced cost base to the second taxpayer, as reduced by subparagraph (i) or (ii) of this paragraph, exceeds the indexed cost base to the second taxpayer as reduced by subparagraph (c)(i) or (ii) - be taken to be equal to the indexed cost base as so reduced.

160ZZMA(5)   [Asset disposed of by second taxpayer within 12 months of company or trustee taxpayer's acquisition]  

If the second taxpayer's asset is disposed of by the second taxpayer within 12 months after the day on which the first taxpayer acquired the roll-over asset:

(a) a reference in paragraph (4)(c) to the adjusted market value shall be read as a reference to the market value;

(b) the reference in subparagraph (4)(c)(ii) to the adjusted indexed cost base shall be read as a reference to the cost base; and

(c) a reference in paragraph (4)(c) to the adjusted assessable amount shall be read as a reference to the assessable amount.

160ZZMA(6)   [Underlying interest in particular property]  

For the purposes of this section, an asset held by a taxpayer shall be taken to be an underlying interest in particular property if, because of the holding of that asset, the taxpayer holds an interest (whether directly or through one or more interposed companies or trusts) in the property.

160ZZMA(7)   [Substitution of index number]  

Subject to subsection (8), if at any time, whether before or after the commencement of this section, the Australian Statistician has published or publishes an index number in respect of a quarter in substitution for an index number previously published by the Australian Statistician in respect of that quarter, the publication of the later index number shall be disregarded for the purposes of this section.

160ZZMA(8)   [Change of reference base by Statistician]  

If at any time, whether before or after the commencement of this section, the Australian Statistician has changed or changes the reference base for the Consumer Price Index, then, for the purposes of the application of this section after the change took place or takes place, regard shall be had only to index numbers published in terms of the new reference base.

160ZZMA(9)   [Adjusted market value, adjusted indexed cost base, adjusted assessable amount]  

A reference in this section to the adjusted market value of an asset, to the adjusted indexed cost base of an asset or to the adjusted assessable amount is a reference to:

(a) if the factor ascertained in accordance with subsections (10) and (11) in relation to the market value, the indexed cost base or the assessable amount, as the case may be, is greater than 1 - the market value, the indexed cost base or the assessable amount, as the case may be, multiplied by that factor; or

(b) in any other case - the market value, the indexed cost base or the assessable amount, as the case may be.

160ZZMA(10)   [Factor]  

The factor to be ascertained for the purposes of subsection (9) in relation to the market value or the indexed cost base of an asset immediately before the disposal of the roll-over asset by the first taxpayer or in relation to the assessable amount in relation to that disposal is the number (calculated to 3 decimal places) ascertained by dividing the index number in respect of the quarter of the year in which the second taxpayer's asset was disposed of by the second taxpayer by the index number in respect of the quarter of the year in which the roll-over asset was disposed of by the first taxpayer.

160ZZMA(11)   [Rounding of decimal places]  

Where the factor ascertained in accordance with subsection (10) would, if it were calculated to 4 decimal places, end with a number greater than 4, that factor shall be taken to be the factor calculated to 3 decimal places in accordance with that subsection and increased by 0.001.

160ZZMA(12)   [Definitions]  

In this section:

"assessable amount"
, in relation to the disposal of the roll-over asset by the first taxpayer, means any amount that, as a result of that disposal, is included in the assessable income of the second taxpayer of any year of income by virtue of a provision of this Act other than this Part;

"index number"
, in relation to a quarter, means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of that quarter.