Income Tax Assessment Act 1997
CHAPTER 3
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SPECIALIST LIABILITY RULES
PART 3-1
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CAPITAL GAINS AND LOSSES: GENERAL TOPICS
Division 118
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Exemptions
Subdivision 118-F
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Venture capital investment
Operative provisions
SECTION 118-415 Exemption for certain venture capital investments by foreign residents
General
118-415(1)
A *capital gain or a *capital loss from a *CGT event is disregarded if:
(a) the CGT event relates to an investment that you made that is an *eligible venture capital investment; and
(b) you were an *eligible venture capital investor when you made the investment; and
(c) at the time of the CGT event:
Meaning of eligible venture capital investor
118-415(2)
An entity is an eligible venture capital investor at a particular time if, at that time, the entity:
(a) is a *tax-exempt foreign resident; and
(b) is registered under Part 3 of the Venture Capital Act 2002 .
Effect of converting convertible notes etc.
118-415(3)
An entity that acquired a *share in a company by converting a *convertible note, or a convertible preference share, issued by the company is treated, for the purposes of subparagraph (1)(c)(ii), as having owned the share from the time when it last acquired the convertible note or convertible preference share.
118-415(4)
An entity that acquired a unit in a unit trust by converting a *convertible note issued by or on behalf of the trustee of the unit trust is treated, for the purposes of subparagraph (1)(c)(ii), as having owned the unit from the time when it last acquired the convertible note.
118-415(5)
Subsection (3) or (4) applies whether or not the acquisition of the *convertible note, or convertible preference share, was an *eligible venture capital investment.
118-415(6)
An entity that converts a *convertible note into a share or a unit is treated, for the purposes of subparagraph (1)(c)(ii), as continuing to own the convertible note until the entity no longer owns the share or unit.
View history note
Hide history noteSECTION 118-415 Exemption for certain venture capital investments by foreign residents
General
118-415(1)
A *capital gain or a *capital loss from a *CGT event is disregarded if:
(a) the CGT event relates to an investment that you made that is an *eligible venture capital investment; and
(b) you were an *eligible venture capital investor when you made the investment; and
(c) at the time of the CGT event:
(i) you owned the investment; and
(ii) you had owned the investment for at least 12 months; and
(iii) you were an eligible venture capital investor.
Meaning of eligible venture capital investor
118-415(2)
An entity is an eligible venture capital investor at a particular time if, at that time, the entity:
(a) is a *tax-exempt foreign resident; and
(b) is registered under Part 3 of the Venture Capital Act 2002 .
Effect of converting convertible notes etc.
118-415(3)
An entity that acquired a *share in a company by converting a *convertible note, or a convertible preference share, issued by the company is treated, for the purposes of subparagraph (1)(c)(ii), as having owned the share from the time when it last acquired the convertible note or convertible preference share.
118-415(4)
An entity that acquired a unit in a unit trust by converting a *convertible note issued by or on behalf of the trustee of the unit trust is treated, for the purposes of subparagraph (1)(c)(ii), as having owned the unit from the time when it last acquired the convertible note.
118-415(5)
Subsection (3) or (4) applies whether or not the acquisition of the *convertible note, or convertible preference share, was an *eligible venture capital investment.
118-415(6)
An entity that converts a *convertible note into a share or a unit is treated, for the purposes of subparagraph (1)(c)(ii), as continuing to own the convertible note until the entity no longer owns the share or unit.
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