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  

Replacement-asset roll-over if the partners dispose of all the assets of a business

SECTION 122-185   All interests acquired before 20 September 1985  

122-185(1)    
A partner is taken to have *acquired all of the *shares before 20 September 1985 if the partner acquired all the partner's interests in the assets of the *business before that day and none of the assets is a *precluded asset.

122-185(2)    

However, if at least one of the assets is a *precluded asset, the partner is taken to have *acquired a whole number of the *shares (but not all of them) before that day. The number is the greatest possible that (when expressed as a percentage of all the shares) does not exceed:

• the total of the *market values of the partner's interests in the assets that are not *precluded assets, less any liabilities the company undertakes to discharge in respect of those interests;

expressed as a percentage of:

• the total of the market values of the partner's interests in all the assets, less any liabilities the company undertakes to discharge in respect of those interests.

Note:

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

122-185(3)    

The first element of the partner's *cost base and *reduced cost base of each other *share is the total of the *market values of the partner's interests in the *precluded assets (less any liabilities the company undertakes to discharge in respect of those interests) divided by the number of the other shares.

122-185(4)    

The *market value of an interest in an asset is worked out when the partner *disposed of it. The *cost base or *reduced cost base of an interest is worked out at the same time.