Income Tax (Transitional Provisions) Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 713 - Rules for particular kinds of entities  

Subdivision 713-L - Transitional relief for certain transactions relating to life insurance companies  

SECTION 713-535   Subsequent consequences  

713-535(1)    
This section operates if, after the deferral event happens, another event (the new event ) happens where the new event is:

(a) a CGT event happening to:

(i) the original asset; or

(ii) if the deferral event was CGT event C2 - the replacement asset; or

(b) the recipient entity ceasing to be a member of the consolidated group of which the member life insurance company is a member; or

(c) if the recipient entity is a life insurance company:

(i) the original asset being transferred to or from the company's virtual PST under section 320-180 , 320-185 or 320-195 of the Income Tax Assessment Act 1997 ; or

(ii) the original asset being transferred to or from the company's segregated exempt assets under section 320-235 , 320-240 or 320-250 of that Act; or

(d) if the originating entity is a company - the originating entity ceasing to exist.

713-535(2)    
For a section 713-505 case where the originating entity is a company:

(a) the originating entity must include the deferred amount in its assessable income for the income year in which the new event happens; or

(b) the originating entity is taken, just before the new event happened, to have made a capital gain equal to the deferred gain.

Note:

If the originating entity is a subsidiary member of a consolidated group, the head company of the group will have the amount included in its assessable income or will make the capital gain.

713-535(3)    
For a section 713-505 case where the originating entity is a trust:

(a) the member life insurance company must include the deferred amount in its assessable income for the income year in which the new event happens; or

(b) the member life insurance company is taken, just before the new event happened, to have made a capital gain equal to the deferred gain.

713-535(4)    
For a section 713-505 case where the originating entity is a life insurance company or a trust and the deferred amount or the deferred gain relates to an asset that was a virtual PST asset at the time when the deferral event happened, an amount equal to the deferred amount or deferred gain is taken to be an amount of assessable income to which subsection 320-205(3) of the Income Tax Assessment Act 1997 applies for the relevant entity.

713-535(5)    
For a section 713-510 case:

(a) the member life insurance company must include the deferred amount in its assessable income for the income year in which the new event happens; or

(b) the member life insurance company is taken, just before the new event happened, to have made a capital gain equal to the deferred gain.

713-535(6)    
In addition, if the deferral event involved the transfer of assets from the member life insurance company's virtual PST, an amount equal to the deferred amount or deferred gain is taken to be an amount of assessable income to which subsection 320-205(3) of the Income Tax Assessment Act 1997 applies for the relevant entity.