INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 17 - Miscellaneous roll-over relief  

SECTION 160ZZK   INVOLUNTARY DISPOSAL  

160ZZK(1)   [Circumstances in which roll-over relief available]  

Where -

(a) a taxpayer is to be taken to have disposed of, or to have disposed of part of, an asset (in this section referred to as the ``original asset'' ) by reason of an act, transaction or event as a result of which the taxpayer has received an amount of money (in this section referred to as the ``relevant amount'' ) -

(i) by way of compensation for the compulsory acquisition of the asset or for loss or destruction of, or damage to, the asset; or

(ii) under a policy of insurance against the risk of loss or destruction of, or damage to, the asset;

(b) not earlier than one year (or such extended period as the Commissioner in special circumstances allows) before the disposal took place and not later than one year (or such further period as the Commissioner in special circumstances allows) after the end of the year of income in which the disposal took place the taxpayer incurred expenditure in acquiring an asset (in this section referred to as the ``replacement asset'' ) in place of the original asset or incurred expenditure of a capital nature in repairing or restoring the original asset;

(ba) in the case of the acquisition of a replacement asset - the replacement asset is not trading stock of the taxpayer immediately after its acquisition by the taxpayer;

(c) if, immediately before the disposal took place, the original asset was owned by -

(i) a person (not being a person in the capacity of a trustee) who was not a resident of Australia; or

(ii) a person in the capacity of a trustee of a trust estate that was not a resident trust estate or in the capacity of a trustee of a unit trust that was not a resident unit trust,

and the taxpayer incurred expenditure as mentioned in paragraph (b) in acquiring an asset in place of the original asset - the original asset was a taxable Australian asset and the replacement asset is a taxable Australian asset; and

(d) the taxpayer has, by notice in writing given to the Commissioner on or before the date of lodgment of the return of income of the taxpayer for the year of income in which the disposal took place, or within such further period as the Commissioner allows, elected that this section is to apply in respect of the disposal,

the following provisions of this section have effect.

160ZZK(2)    

160ZZK(3)   [Section paramount]  

The application of the provisions of this Part, other than this section, in respect of the disposal is subject to this section.

160ZZK(4)   [Original asset acquired before 20/9/85]  

If the original asset was acquired before 20 September 1985 and expenditure of a capital nature was incurred in repairing or restoring the original asset, the original asset as repaired or restored is taken, for the purposes of this Part, to have been acquired before that date.

160ZZK(5)   [Replacement asset deemed acquired before 20/9/85]  

Where the original asset was acquired before 20 September 1985, the replacement asset is taken, for the purposes of this Part, to have been acquired before that date if:

(a) the consideration in respect of the acquisition of the replacement asset did not exceed 120% of the market value of the original asset immediately before the disposal of the original asset; or

(b) both of the following conditions are satisfied:

(i) the act or event referred to in paragraph (1)(a) was a natural disaster that occurred on or after 28 December 1989;

(ii) having regard to all relevant circumstances, including the location, size, value, quality, composition and utility of the original asset and of the replacement asset, it would be reasonable to treat the replacement asset as substantially the same as the original asset.

160ZZK(5A)   [Time of disposal of lost or destroyed asset]  

Notwithstanding subsection 160U(9) , where an asset is taken to have been disposed of because of the loss or destruction of the asset, the time of disposal shall be taken, for the purposes of subsection (5) of this section, to be the time when the loss or destruction occurred.

160ZZK(6)   [Adjustment: relevant amount not equal to consideration for replacement asset]  

Where, if this Part other than this section had applied in respect of the disposal, a capital gain (in this subsection referred to as the ``notional capital gain'' ) would have accrued to the taxpayer in respect of the disposal -

(a) if the relevant amount does not exceed the consideration that was paid or given by the taxpayer in respect of the acquisition of the replacement asset or the expenditure that was incurred in respect of the repair or restoration of the original asset, as the case may be - that consideration or expenditure shall, for the purposes of this Part, be deemed to be reduced by the amount of the notional capital gain; or

(b) if the relevant amount exceeds that consideration or expenditure -

(i) in the case where the notional capital gain is greater than the excess -

(A) a capital gain equal to the excess shall, for the purposes of this Part, be deemed to have accrued to the taxpayer in the year of income in which the disposal took place; and

(B) the consideration that was paid or given by the taxpayer in respect of the acquisition of the replacement asset or the expenditure that was incurred by the taxpayer in respect of the repair or restoration of the original asset, as the case may be, shall, for the purposes of this Part, be deemed to be reduced by the amount by which the notional capital gain is greater than the excess; or

(ii) in the case where the excess is greater than or equal to the notional capital gain - a capital gain equal to the notional capital gain shall be deemed to have accrued to the taxpayer in the year of income in which the disposal took place.

160ZZK(7)   [When asset replacement asset]  

For the purposes of this section -

(a) an asset shall be deemed to have been acquired by a taxpayer in replacement of an asset disposed of by the taxpayer if -

(i) the asset disposed of was, immediately before the disposal took place, used in a business carried on by the taxpayer and the asset acquired is, for a reasonable time after its acquisition, used by the taxpayer in that business; or

(ii) the asset acquired is, for a reasonable time after its acquisition, used by the taxpayer for the same purpose as, or for a similar purpose to, the purpose for which the asset disposed of was used by the taxpayer immediately before the disposal took place; and

(b) an asset shall be deemed to have been used in a particular business or for a particular purpose immediately before its disposal if, immediately before its disposal, it was being installed for use, or was installed ready for use, in that business or for that purpose, as the case may be.

160ZZK(7A)   [Compensation for non-renewal of a renewable Crown lease]  

For the purposes of this section, where:

(a) an Australian Crown lease owned by a taxpayer expires;

(b) the Crown lease is capable of being renewed; and

(c) the Crown lease is not renewed;

an amount of money received by the taxpayer by way of compensation for the non-renewal of the Crown lease shall be treated as if it were received by the taxpayer by way of compensation for the compulsory acquisition of the Crown lease.

160ZZK(7B)   [Negotiated acquisition of asset by government authority under threat of compulsory acquisition]  

For the purposes of this section, where:

(a) a notice is served on a taxpayer by or on behalf of an Australian government or Australian government authority:

(i) inviting the taxpayer to negotiate with the government or authority with a view to the acquisition, by agreement, by the government or authority, of an asset; and

(ii) informing the taxpayer that, if those negotiations are unsuccessful, the asset will be compulsorily acquired by the government or authority; and

(b) as a result of those negotiations, the asset is acquired by the government or authority;

an amount of money received by the taxpayer in respect of the disposal of the asset to the government or authority shall be treated as if it were received by the taxpayer by way of compensation for the compulsory acquisition of the asset.

160ZZK(7C)   [Reference to compulsory acquisition]  

A reference in this section to the compulsory acquisition of an asset is a reference to the compulsory acquisition of the asset by an Australian government or an Australian government authority.

160ZZK(7D)   [Definitions]  

In this section:

"Australian Crown lease"
means a lease of the kind referred to in paragraph (a) of the definition of ``Crown lease'' in subsection 160K(1) ;

"Australian government"
means the Commonwealth, a State or a Territory;

"Australian government authority"
means an authority of the Commonwealth, of a State or of a Territory;

"natural disaster"
includes the following:

(a) a bushfire;

(b) a cyclone;

(c) an earthquake;

(d) a flood;

(e) a storm.

160ZZK(8)   [Amendment of assessment]  

Nothing in section 170 prevents the amendment of an assessment at any time for the purpose of giving effect to this section.