Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

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

Division 124 - Replacement-asset roll-overs  

Subdivision 124-N - Disposal of assets by a trust to a company  

Operative provisions

SECTION 124-870   Roll-over for owner of units or interests in a trust  

124-870(1)    
You can choose to obtain a roll-over (whether or not the transferor and transferee choose to obtain a roll-over, and even if *CGT event J4 applies) if:

(a) you own units or interests in the transferor (your original interests ); and

(b) the ownership of all your units or interests ends under a trust restructure in exchange for *shares in the transferee (your replacement interests ).

Note 1:

The roll-over consequences are set out in Subdivision 124-A . The original assets are your units and interests in the transferor. The new assets are your shares in the transferee.

Note 2:

The effect of the roll-over may be reversed if the transferor does not cease to exist within 6 months: see section 104-195 .

124-870(2)    
You must make the choice for each of your original interests.

124-870(3)    

An entity that is a foreign resident cannot choose a roll-over under this section unless the replacement interests the entity *acquires in the transferee are *taxable Australian property just after their acquisition.

124-870(4)    
If you choose a roll-over, you cannot make a *capital loss from a *CGT event that happens to your original interests during the *trust restructuring period.

Note:

The rule in subsection (4) prevents a capital loss arising on your units or interests after the trust assets have been disposed of to the company but before your shares are issued to you.

Exception: trading stock

124-870(5)    
This section does not apply to your ownership of an original interest ending if:

(a) the interest was an item of your *trading stock and the corresponding replacement interest becomes an item of your trading stock when you *acquire it; or

(b) the interest was not an item of your trading stock but the corresponding replacement interest becomes an item of your trading stock when you acquire it.