INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)
Hide history noteThe object of this Part is to provide for net capital gains to be included in assessable income (see section 160ZO ).
The following is a simplified outline of the scheme of this Part.
160AY(2) Step 1 - disposal of an asset.This Part applies if a taxpayer disposes of an asset. For a basic definition of ``asset'', see section 160A . The taxpayer must have acquired the asset on or after 20 September 1985 and the disposal of the asset must occur on or after that date (see section 160L ). 160M is the basic provision defining ``disposal'' and ``acquisition''. The timing of disposal and acquisition is dealt with by section 160U . There are various exemptions, including the principal residence exemption (see the Exemptions Sub Index in section 160AZA ). There are also various provisions giving roll-over relief on the disposal of assets (see the Roll-overs Sub Index in section 160AZA ).
160AY(3) Step 2 - disposal of asset may result in a capital gain or a capital loss.The disposal of the asset may result in a capital gain or capital loss (see section 160Z ).
For a basic definition of ``consideration in respect of a disposal of an asset'', see section 160ZD . For basic definitions of ``cost base'', ``indexed cost base'' and ``reduced cost base'', see section 160ZH . The basic idea is that the cost base of an asset consists of the cost of acquiring the asset and certain other costs, the indexed cost base is the cost base indexed for inflation (see section 160ZJ ) and the reduced cost base is the cost base adjusted to take account of certain capital deductions and balancing charges (see section 160ZK ).
The indexed cost base and the cost base are also adjusted to take account of certain deductions and balancing adjustments (see sections 160ZJA and 160ZJB ).
Capital gains and capital losses are netted under section 160ZC to work out the net capital gain.
160AY(5) Step 4 - net capital gain to be included in assessable income under section 160ZO.
The amount of the net capital gain is included in the taxpayer's assessable income under section 160ZO .
This section sets out an example of how this Part will work in a typical case involving the acquisition and disposal of an asset by a taxpayer. The taxpayer acquired the asset on 29 September 1985 for a cost of $100,000 and disposed of the asset on 29 September 1991 for $300,000. The cost base is $100,000. The indexed cost base is calculated as follows:
| $149,600
indexed cost base |
= | $100,000
(cost base) |
× | 215.7
(index number for
September 1991 quarter) 144.2 (index number for September 1985 quarter) |
(The fraction on the right is rounded up to 1.496.)
160AZ(2) Capital gain on disposal.There is a capital gain on disposal of the asset.
160AZ(3) Calculation of net capital gain.
Assuming that the taxpayer has no capital losses, the net capital gain is $150,400.
160AZ(4) Inclusion of net capital gain in assessable income under section 160ZO.The taxpayer's assessable income includes $150,400.
The following is an index of the key concepts relevant to the operation of this Part.
| Main Index | ||
| Acquisition | 160M | |
| Asset | 160A | |
| Bankruptcy | 160W | |
| Capital gain | 160Z | |
| Capital loss | 160Z | |
| Capital receipts | 160M(6) and (7) | |
| Consideration in respect of disposal of asset | 160ZD, 160ZF | |
| Controlled foreign companies, attribution of income | Divisions 6, 7, 8 and 10 of Part X | |
| Cost base | 160ZH, 160ZJA | |
| Disposal | 160M | |
| Employee's shares | 160ZYHD to 160ZYJE | |
| Exemptions | See Exemptions Sub Index below | |
| Indexed cost base | 160ZH, 160ZJ, 160ZJB | |
| Industrial property | 160ZZD | |
| Joint owners | 160ZN | |
| Leases | 160ZR to 160ZW | |
| Life assurance companies | Division 8 of Part III | |
| Net capital gain | 160ZC, 160ZO | |
| Net capital loss | 160ZC, 160ZO | |
| Net capital loss - transfer within company group | 160ZP | |
| Non-residents | 160L(2), 160M(8) to (14A), 160T | |
| Part of asset, disposal of | 160R, 160ZI | |
| Personal-use assets | 160B, 160ZE, 160ZG, 160ZQ | |
| Pooled superannuation trusts, units in | 160ZYEB | |
| Prospecting and mining rights | 160ZZE to 160ZZG | |
| Reduced cost base | 160ZH, 160ZK | |
| Roll-overs | See Roll-overs Sub Index below | |
| Securities lending arrangements | 26BC | |
| Security | - transfer by way of | 160S |
| - person enforcing | 160V(2) | |
| Shares | - bonus shares | 160ZYF to 160ZYHC |
| - buy-back of shares | Division 16K of Part III | |
| - cancellation of subsidiary's shares in holding company | Division 16J of Part III | |
| - return of capital | 160ZL | |
| - valueless, of company in liquidation | 160WA | |
| Superannuation funds, complying ADFs and PSTs | Division 10 of Part IX | |
| Time of acquisition and disposal | 160U | |
| Transitional | 160ZZS, 160ZZT | |
| Trusts | - accruals system of taxation on certain non-resident trust estates | Subdivision D of Division 6AAA of Part III 160V(1) |
| - bare trustee | 160ZYC to 160ZYEA | |
| - bonus units in unit trusts | 160ZX to 160ZYB | |
| - other than unit trusts | 160ZM | |
| - return of capital on investment | ||
| Value shifting, adjustment of cost base | Division 19A of Part IIIA | |
| Sub Index - Exemptions | ||
| Approved deposit funds, rights under | 160ZZJ | |
| Exemptions - general | 160L, 160Z, 160ZB | |
| Goodwill | 160ZZR, 160ZZRAA | |
| Insurance policies | 160ZZH | |
| Life assurance policies | 160ZZI | |
| Principal residence | 160ZZQ | |
| Small business retirement assets | Division 17B of Part IIIA | |
| Superannuation funds, rights under | 160ZZJ |
| Sub Index - Roll-overs | |||||
| Company group, transfer of asset within | 160ZZO | ||||
| Convertible notes | - | companies | 160ZYY to 160ZZB, 160ZZBE | ||
| - | unit trusts | 160ZZBA to 160ZZBD, 160ZZBF | |||
| Crown leases | 150ZWA | ||||
| Death | 160J, 160X, 160Y | ||||
| Incorporated association, conversion to company incorporated under company law | 160ZZPH | ||||
| Involuntary disposal | 160ZZK, 160ZZL | ||||
| Marriage, breakdown, transfer of assets upon | 160ZZM, 160ZZMA | ||||
| Options generally | 160ZZC | ||||
| Partnership assets, transfer of to wholly owned company | 160ZZNA | ||||
| Prospecting and mining rights | 160ZZF | ||||
| Shares | - | exchange of shares in the same company | 160ZZP | ||
| - | exchange of shares in original company for shares in interposed company | 160ZZPC | |||
| - | in specie distribution of shares by trustee of public trading trust | 160ZZPF | |||
| - | options and rights to acquire unissued shares affected by share splits or share consolidations | 160ZZPAB | |||
| - | options to shareholders to acquire unissued shares | 160ZZYR to 160ZYX | |||
| - | redemption or cancellation of shares in original company in exchange for shares in interposed company | 160ZZPD | |||
| - | rights to acquire shares | 160ZYK to 160ZYQ | |||
| Statutory licence, renewal or extension of | 160ZZPE | ||||
| Strata title conversion | 160ZZPG | ||||
| Trusts | - | change in trust deed | 160ZZPJ | ||
| Units | - | exchange of units in the same unit trust | 160ZZPAA | ||
| - | exchange of units in a unit trust for shares in a company | 160ZZPA | |||
| - | options and rights to acquire unissued units affected by unit splits or unit consolidations | 160ZZPAC | |||
| - | options to unitholders to acquire unissued units | ||||
| - | redemption or cancellation of units in a unit trust in exchange for shares in a company | 160ZYXA to 160ZYXF | |||
| - | rights to acquire units in a unit trust | 160ZZPB | |||
| 160ZYQA to 160ZYQF | |||||
| Wholly owned company, transfer of asset to | 160ZZN |
In this Part, unless the contrary intention appears, ``asset'' means any form of property and includes:
(a) any of the following:
(i) an option;
(ii) a debt;
(iii) a chose in action;
whether legal or equitable and whether or not a form of property;
(iv) any other right;
(aa) goodwill or any other form of incorporeal property;
(b) currency of a foreign country;
(c) (Omitted by No 191 of 1992)
(d) a taxpayer's interest in a partnership asset of a partnership in which the taxpayer is a partner; and
(e) so much of a taxpayer's interest in a partnership as is not covered by paragraph (d);
but does not include a motor vehicle of a kind covered by paragraph 82AF(2)(a) or an interest in such a motor vehicle.
For the purposes of this Part, ``personal-use asset'' , in relation to a taxpayer, means:
(a) an asset (other than land, or a building that is deemed to be a separate asset from land by virtue of section 160P ) owned by the taxpayer and used or kept primarily for the personal use or enjoyment of the taxpayer, of an associate or associates of the taxpayer or of the taxpayer and any one or more of the associates of the taxpayer;
(b) a debt owed to the taxpayer:
(i) in respect of an asset that was formerly a personal-use asset of the taxpayer; or
(ii) that came to be owed otherwise than in the course of the gaining or producing of income by the taxpayer or the carrying on of a business by the taxpayer; and
(c) an option or right of the taxpayer to acquire an asset that would, if acquired by the taxpayer, be an asset to which paragraph (a) would apply. 160B(1A) [Operation of subsec (2) and (2A)]
Subsections (2) and (2A) define listed personal-use asset for the purposes of this Part.
For the purposes of this Part, ``listed personal-use asset'' , in relation to a taxpayer, means a personal-use asset of the taxpayer the consideration in respect of the acquisition of which by the taxpayer exceeded $500 and which is:
(a) any of the following:
(i) a print, etching, drawing, painting, sculpture or other similar work of art;
(ii) jewellery;
(iii) a rare folio, rare manuscript or rare book;
(iv) a postage stamp or first day cover;
(v) a coin or medallion;
(vi) an antique;
(vii) an interest in an asset referred to in any of the preceding subparagraphs;
(b) a debt owed in respect of an asset referred to in paragraph (a); or
(c) an option or right to acquire an asset referred to in paragraph (a).
An interest in an asset is also a listed personal-use asset if the interest is covered by subparagraph (2)(a)(vii) and the market value of the asset at the time when the interest is acquired is more than $500.
For the purposes of this Part, ``non-listed personal-use asset'' means a personal-use asset other than a listed personal-use asset.
160B(4) [Set of articles](a) a taxpayer owned two or more articles being personal-use assets of a kind that would not ordinarily be disposed of otherwise than by one transaction as a set of articles; and
(b) the taxpayer has disposed of the articles by two or more transactions, whether the articles were disposed of to the same person or to different persons,
this Part applies, and shall be deemed to have applied, as if the articles constituted a single personal-use asset and as if each disposal were a disposal of part of that asset.
Subsection (4) does not apply if the disposal of the articles by several transactions instead of a single transaction was effected solely for a reason or reasons unrelated to the operation of this Part.
160B(6) [Amendment of assessments]Nothing in section 170 prevents the amendment of an assessment for the purpose of giving effect to subsection (4).
A reference in this Part to a taxpayer, in relation to an asset that has been disposed of or in relation to a capital gain or listed personal-use asset gain that accrued or a capital loss or a listed personal-use asset loss that was incurred in respect of such an asset, is a reference:
(a) except where paragraph (b) applies - to the person who owned the asset immediately before the disposal took place; or
(b) where the disposal resulted from an act that is, by virtue of subsection 160V(1) or section 160W, deemed to be the act of a person other than the person who owned the asset immediately before the disposal took place - to that other person. 160C(2) [Acquisition]
A reference in this Part to a taxpayer, in relation to an asset that has been acquired, is a reference to the person who owned the asset immediately after the acquisition took place.
160C(3) [Partnership]In calculating the net income of a partnership, or a partnership loss, in accordance with section 90 , the partnership is not taken to be a taxpayer for the purposes of this Part.
For the purposes of this Part:
(a) a taxpayer shall be deemed to have received money or other property if the money or other property has been applied for the benefit, or in accordance with the directions, of the taxpayer; and
(b) a taxpayer shall be deemed to be entitled to receive money or other property if the taxpayer is entitled to have the money or other property applied for the benefit, or in accordance with the directions, of the taxpayer. 160D(2) [Application of money or property]
For the purposes of this Part, a reference in subsection (1) to the application of money or other property for the benefit of a taxpayer includes, without limiting the generality of the expression, a reference to the application of money or other property in the discharge, in whole or in part, of a debt due by the taxpayer.
160D(3) [Effect limited]Nothing in this section limits the operation of subsections 6-5(4) and 6-10(3) of the Income Tax Assessment Act 1997 .
A reference in this Part to an associate of a taxpayer is a reference to:
(a) in the case of a taxpayer who is a natural person, other than a taxpayer in the capacity of a trustee:
(i) a relative of the taxpayer;
(ii) a partner of the taxpayer;
(iii) if a person who is an associate of the taxpayer by virtue of subparagraph (ii) is a natural person - the spouse or a child of that person;
(iv) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies or trusts; or
(v) a company where:
(A) the company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer, of another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph, of a company that is an associate of the taxpayer by virtue of another application of this subparagraph or of any two or more such persons; or
(B) the taxpayer is, the persons who are associates of the taxpayer by virtue of sub-subparagraph (A) of this subparagraph and the preceding subparagraphs of this paragraph are, or the taxpayer and the persons who are associates of the taxpayer by virtue of that sub-subparagraph and those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company;
(b) in the case of a taxpayer being a company, other than a taxpayer in the capacity of a trustee:
(i) a partner of the taxpayer;
(ii) if a person who is an associate of the taxpayer by virtue of subparagraph (i) is a natural person - the spouse or a child of that person;
(iii) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies or trusts;
(iv) another person where:
(A) the taxpayer company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of that person, or of that person and another person or other persons, whether those directions, instructions or wishes are communicated directly to the taxpayer company or its directors, or through any interposed companies, partnerships or trusts; or
(B) that person is, or that person and the persons who, if that person were the taxpayer, would be associates of that person by virtue of paragraph (a), by virtue of sub-subparagraph (A) of this subparagraph, by virtue of another subparagraph of this paragraph or by virtue of paragraph (c) are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the taxpayer company;
(v) another company where:
(A) the other company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer company, of a person who is an associate of the taxpayer company by virtue of another subparagraph of this paragraph, of a company that is an associate of the taxpayer company by virtue of another application of this subparagraph or of any two or more such persons; or
(B) the taxpayer company is, the persons who are associates of the taxpayer company by virtue of sub-subparagraph (A) of this subparagraph and the other subparagraphs of this paragraph are, or the taxpayer company and the persons who are associates of the taxpayer company by virtue of that sub-subparagraph and those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the other company; or
(vi) any other person who, if a third person who is an associate of the taxpayer company by virtue of subparagraph (iv) were the taxpayer, would be an associate of that third person by virtue of paragraph (a), by virtue of another subparagraph of this paragraph or by virtue of paragraph (c); or
(c) in the case of a taxpayer in the capacity of a trustee of a trust estate:
(i) any person who benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust estate, either directly or through any interposed companies or trusts;
(ii) where a person who is an associate of the taxpayer by virtue of subparagraph (i) is a natural person - any person who, if that natural person were the taxpayer, would be an associate of that natural person by virtue of paragraph (a) or this paragraph; or
(iii) where a person who is an associate of the taxpayer by virtue of subparagraph (i) or (ii) is a company - any person who, if that company were the taxpayer, would be an associate of that company by virtue of paragraph (b) or this paragraph.
(d) (Omitted by No 48 of 1991)
For the purposes of this Part, a trust estate is associated with another trust estate if a person who benefits or is capable of benefiting from the first-mentioned trust estate benefits or is capable of benefiting from the other trust estate.
160F(2) [Trust estates associated with common trust estate]For the purposes of this Part, trust estates that are associated with the same trust estate (including trust estates that are so associated by another application or other applications of this subsection) are associated with each other.
For the purposes of this Part, a company shall be taken to be related to another company if:
(a) one of the companies is a subsidiary of the other company; or
(b) each of the companies is a subsidiary of the same company. 160G(2) [Subsidiary]
For the purposes of this section, a company (in this subsection referred to as the ``subsidiary company'' ) shall be taken to be the subsidiary of another company (in this subsection referred to as the ``holding company'' ) if:
(a) all the shares in the subsidiary company are beneficially owned by:
(i) the holding company;
(ii) a company that is, or two or more companies each of which is, a subsidiary of the holding company; or
(iii) the holding company and a company that is, or two or more companies each of which is, a subsidiary of the holding company; and
(b) no person is in a position to affect rights of the holding company or of a subsidiary of the holding company in relation to the subsidiary company. 160G(3) [Sub-subsidiaries]
For the purposes of this section, where a company is a subsidiary of another company (including a company that is such a subsidiary by virtue of another application or other applications of this subsection), every company that is a subsidiary of the first-mentioned company shall be taken to be a subsidiary of that other company.
160G(4) [Position to affect rights]For the purposes of subsection (2), a person shall be taken to be in a position to affect any rights of a company in relation to another company if that person has a right, power or option (whether by virtue of any provision in the constituent document of either of those companies, by virtue of any agreement or otherwise) to acquire those rights or do an act or thing that would prevent the first-mentioned company from exercising those rights for its own benefit or receiving any benefits accruing by reason of those rights.
160G(5) [``agreement'']In subsection (4), ``agreement'' means an agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.
For the purposes of this Part, a trust estate shall be taken to be a resident trust estate in relation to the year of income if:
(a) a trustee of the trust estate was a resident at any time during the year of income; or
(b) the central management and control of the trust estate was in Australia at any time during the year of income. 160H(2)
(Omitted by No 48 of 1991)
160H(3) [Resident unit trust]
For the purposes of this Part, a unit trust shall be taken to be a resident unit trust in relation to the year of income if, at any time during the year of income:
(a) either of the following conditions was satisfied:
(i) any property of the unit trust was situated in Australia;
(ii) the trustee of the unit trust carried on business in Australia; and
(b) either of the following conditions was satisfied:
(i) the central management and control of the unit trust was in Australia;
(ii) a person who was a resident or persons who were residents held more than 50% of:
(A) the beneficial interests in the income of the unit trust; or
(B) the beneficial interests in the property of the unit trust.
In this Part -
(a) a reference to an asset that formed part of the estate of a deceased person passing to the legal personal representative of the deceased person is a reference to an asset that formed part of the estate of a deceased person coming into the ownership of a person as the executor of the will, or as the administrator of the estate, of the deceased person; and
(b) a reference to an asset that formed part of the estate of a deceased person passing to a beneficiary in that estate is a reference to an asset that formed part of the estate of the deceased person coming into the ownership of a person as a beneficiary:
(i) under the will of the deceased person, or under that will as varied by an order of a court; or
(ii) by operation of law as a result of the intestacy of the deceased person, or by operation of law as a result of that intestacy as the operation of the law is varied by an order of a court; or
whether the asset was transmitted directly to that person or was transferred to that person by the executor of the will, or by the administrator of the estate, of the deceased person.
(iii) under a deed of arrangement where:
(A) the deed was entered into in settlement of a claim to participate in the distribution of the estate of the deceased person; and
(B) the consideration (if any) given by the beneficiary for the asset consisted of the variation or waiver of a claim to one or more other assets that formed part of that estate;
In Divisions 3A, 3B, 3C, 3CA, 3CB, 3CC, 3CD and 3D, unless the contrary intention appears:
100% subsidiary
has the meaning given by section 975-505 of the
Income Tax Assessment Act 1997
.
abnormal trading
has the meaning given by Subdivision
960-H
of the
Income Tax Assessment Act 1997
.
approved deposit
fund has the meaning given by section 10 of the
Superannuation Industry (Supervision) Act 1993
.
arrangement
has the same meaning as in the
Income Tax Assessment Act 1997
.
capital shareholding of less than 1%
has the meaning given by section
160ZNSQ
.
complying approved deposit fund
means a complying approved deposit fund within the meaning of section 47 of the
Superannuation Industry (Supervision) Act 1993
.
complying superannuation fund
means a complying superannuation fund within the meaning of section 45 of the
Superannuation Industry (Supervision) Act 1993
.
constitution
of a company has the same meaning as in the
Income Tax Assessment Act 1997
.
dividend
has the meaning given by subsections 6(1), (4) and (5) and section
94L
.
dividend shareholding of less than 1%
has the meaning given by section
160ZNSQ
.
entity
has the meaning given by section 960-100 of the
Income Tax Assessment Act 1997
.
head company
has the meaning given by section
160ZNSM
.
indirectly
has the same meaning as in the
Income Tax Assessment Act 1997
.
interposed company
has the meaning given by section
160ZNSN
.
listed public company
has the same meaning as in the
Income Tax Assessment Act 1997
.
member
of a company includes a shareholder or stockholder.
more than a 50% stake
has the meaning given by section
160ZNC
.
more than 50% of the company's capital distributions
has the meaning given by section
160ZNJ
.
more than 50% of the company's dividends
has the meaning given by section
160ZNI
.
more than 50% of the listed public company's capital distributions
has the meaning given by section
160ZNSJ
.
more than 50% of the listed public company's dividends
has the meaning given by section
160ZNSI
.
more than 50% of the voting power
has the meaning given by section
160ZNH
.
more than 50% of the voting power in the listed public company
has the meaning given by section
160ZNSH
.
notional net capital gain
has the meaning given by subsection
160ZNF(1)
.
notional net capital loss
has the meaning given by subsection 160ZNF(2).
notional shareholder
has the meaning given by section
160ZNSO
.
ownership test period
has the meaning given by section
160ZNC
.
ownership test time
has the meaning given by section
160ZNSG
.
part of a substantial shareholding
has the meaning given by section
166-245
of the
Income Tax Assessment Act 1997
.
public company
means a company that is a public company as defined by section
103A
for the year of income.
redeemable shares
has the same meaning as in the
Income Tax Assessment Act 1997
.
same business test
has the meaning given by Division 3C.
same business test period
has the meaning given by sections 160ZNB, 160ZND and 160ZNE and subsection
160ZNSB(5)
.
shareholding interest
has the meaning given by section 175-65 of the
Income Tax Assessment Act 1997
.
special company
has the same meaning as in the
Income Tax Assessment Act 1997
.
substantial continuity of ownership
has the meaning given by section
160ZNSG
.
substantial shareholding
: see
part of a substantial shareholding
.
superannuation fund
has the meaning given by section 10 of the
Superannuation Industry (Supervision) Act 1993
.
test period
has the meaning given by section
160ZNSB
.
test time
has the meaning given by sections
160ZNB
,
160ZND
,
160ZNE
and
160ZNSB
.
voting share
in a company means:
(a) if the company is a body corporate - a voting share as defined by section 9 of the Corporations Law; and
(b) otherwise - a share that would be a voting share as defined by that section if the company were a body corporate.
voting shareholding of less than 1%
has the meaning given by section
160ZNSQ
.
In this Part, unless the contrary intention appears:
"building"
includes a structure;
(a) a lease of land granted by the Crown under a statutory law of the Commonwealth, of a State or of a Territory; or
(b) a similar lease granted under a statutory law of a foreign country (whether or not that country is a republic);
(a) a legal or equitable estate or interest in land;
(b) a right, power or privilege over, or in connection with, land;
(c) a legal or equitable estate or interest in a stratum unit; or
(d) a share in a company that owns land on which a building is erected, being a share that entitles the holder to a right of occupancy of a dwelling of a kind known as a flat or home unit contained in the building;
"law"
, in relation to a foreign country, means a law of that country, or of any part of, or place in, that country;
"relevant exempting provision"
means any of the following provisions:
(a) section 50-5, 50-10, 50-15, 50-20, 50-25, 50-30, 50-40 or 50-45 of the Income Tax Assessment Act 1997 ;
(b) paragraph 23(ja) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987 ;
(baa) paragraph 23(x) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 2) 1988 ;
(ba) section 23F , 23FA or 23FB , as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987 ;
(bb) paragraph 23(jaa) or section 23FC or 23FD , as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 2) 1989 ;
(bca) section 24AM ;
(bc) regulations under the International Organisations (Privileges and Immunities) Act 1963 , insofar as those regulations provide that an organisation is not liable to income tax;
(c) any provision of an Act other than this Act to the effect that income of a particular person or body is not subject to taxation under any law of the Commonwealth or to the effect that a particular person or body is not subject to taxation under any law of the Commonwealth;
"statutory law"
means a law, being a statutory instrument;
"stratum unit"
means a unit on a unit plan registered under a law of a State or Territory that provides for the registration of titles of a kind known as unit titles or strata titles, being a unit that comprises:
(a) a part of a building containing a dwelling, being a part consisting of a flat or home unit; or
(b) a part of a parcel of land, being a part on which a building containing the dwelling is constructed;
"transfer"
includes conveyance;
In this Part (other than sections 160ZZM and 160ZZMA), or in a provision of this Act other than this Part insofar as that provision has effect for the purposes of this Part, a reference to the spouse of a person (in this subsection called the ``first person'' ) does not include a reference to a person who is legally married to the first person but is living separately and apart from the first person on a permanent basis.
A reference in this Part to a person being entitled to receive money or property other than money includes a reference to a person being entitled to receive money or property other than money either immediately or at a future date and, in the case of money, either in a lump sum or by instalments.
160K(4) [Requirement to pay money or give property]A reference in this Part to a person being required to pay money or give property other than money includes a reference to a person being required to pay money or give property other than money either immediately or at a future date and, in the case of money, either in a lump sum or by instalments.
160K(5) [Amount expressed in foreign currency]Where an amount of money, or the value of any property, that is to be taken into account for the purposes of this Part as, or as part of:
(a) the cost base to a taxpayer in respect of an asset; or
(b) the consideration in respect of the disposal of an asset;
would, but for this subsection, be an amount in the currency of a foreign country, the amount to be so taken into account is the equivalent amount in Australian currency at the time when the costs were incurred or the time of disposal of the asset, as the case may be.
160K(6) [When deemed consideration given]Where by virtue of a provision of this Part a taxpayer is deemed for the purposes of this Part to have paid or given any consideration in respect of the acquisition of an asset, the taxpayer shall be deemed, unless the contrary intention appears, to have paid or given that consideration at the time when the taxpayer acquired the asset.
160K(7) [Person who did not pay consideration]Where a provision of this Part refers to a person who did not pay or give any consideration in respect of the acquisition of an asset, a person shall not be taken by reason of subsection 160ZH(9) not to be a person to whom the provision applies.
160K(8) [Person who did not receive consideration]Where a provision of this Part refers to a person who did not receive any consideration in respect of the disposal of an asset, a person shall not be taken by reason of subsection 160ZD(2) not to be a person to whom the provision applies.
160K(9) [Where Part does not apply to disposal]A provision of this Part that provides that this Part does not apply in respect of a disposal of an asset has effect only in relation to the person disposing of the asset and does not have effect in relation to the person who acquired the asset as a result of the disposal.
160K(10) [Trustee]In this Part, unless the contrary intention appears, a reference to the trustee of a trust estate includes a reference to the trustee of a unit trust.
Subject to this section, this Part applies in respect of every disposal on or after 20 September 1985 of an asset, whether situated in Australia or elsewhere or not situated anywhere, that:
(a) immediately before the disposal took place, was owned by:
(i) a person (not being a person in the capacity of a trustee) who was a resident of Australia; or
(ii) a person in the capacity of a trustee of a resident trust estate or of a resident unit trust; and
(b) was acquired by that person on or after 20 September 1985.
Subject to this section, this Part also applies in respect of every disposal on or after 20 September 1985 of a taxable Australian asset that:
(a) immediately before the disposal took place, 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 of a unit trust that was not a resident unit trust; and
(b) was acquired by that person on or after 20 September 1985. 160L(3) [Disposals not affected]
This Part does not apply in respect of a disposal of an asset, not being an asset referred to in subsection (4) or (5), if:
(a) at the time of the disposal the asset constituted trading stock of the taxpayer for the purposes of this Act; or
(b) (Omitted by No 138 of 1994)
(c) as a result of the disposal an amount has been or will be, or but for section 23H would have been or would be, included in the assessable income of the taxpayer of any year of income by virtue of section 26AG ; or
(d) as a result of the disposal an amount has been or will be included in the assessable income of the taxpayer of any year of income by virtue of subsection 73B(27A) .
This Part does not apply in respect of a disposal of an asset, being an asset which was owned by a taxpayer in the capacity of a trustee of a trust estate and to which a beneficiary was absolutely entitled immediately before the disposal, if:
(a) at the time of the disposal, the asset constituted trading stock of the trustee for the purposes of this Act; or
(b) (Omitted by No 138 of 1994)
(c) as a result of the disposal an amount has been or will be, or but for section 23H would have been or would be, included in the assessable income of the beneficiary, or the net income of the trust estate, of any year of income by virtue of section 26AG ; or
(d) as a result of the disposal an amount has been or will be included in the assessable income of the beneficiary, or the net income of the trust estate, of any year of income by virtue of subsection 73B(27A) .
This Part does not apply in respect of a disposal of a taxpayer's interest in a partnership asset of a partnership in which the taxpayer is a partner if:
(a) at the time of the disposal, the partnership asset constituted trading stock of the partnership for the purposes of this Act; or
(b) (Omitted by No 138 of 1994)
(c) as a result of the disposal an amount has been or will be, or but for section 23H would have been or would be, included in the net income of the partnership, or in the assessable income of a partner in the partnership, or taken into account in ascertaining the amount of the partnership loss, of any year of income by virtue of section 26AG; or
(d) as a result of the disposal an amount has been or will be included in the assessable income of a partner in the partnership of any year of income by virtue of subsection 73B(27A) .
This Part does not apply in respect of a disposal of a decoration awarded for valour or brave conduct if the person disposing of the decoration did not pay or give any consideration in respect of his or her acquisition of the decoration.
160L(6A) [Payment or reimbursement under government schemes]This Part does not apply to a disposal (other than a disposal by way of assignment) by a taxpayer of a right to reimbursement, or to payment, under a scheme, of expenses of the taxpayer in participating in the scheme where the scheme is:
(a) established by the Commonwealth, a State or a Territory or by an authority of the Commonwealth, of a State or of a Territory; and
(b) prescribed for the purposes of this subsection under regulations applying to the time of the disposal (whether the regulations concerned are made before or after the time of the disposal).
Nothing in section 170 prevents the amendment of an assessment for the purpose of giving effect to subsection (6A).
This Part does not apply in respect of a disposal being a sale, transfer or assignment of rights to mine if section 330-60 of the Income Tax Assessment Act 1997 applies in relation to the sale, transfer or assignment.
(a) an asset was disposed of by a taxpayer before 23 May 1986; and
(b)the asset was created after 19 September 1985 (whether the asset existed, either by itself or as part of another asset, before the disposal or was created by the disposal); and
(c) the asset consisted of a legal or equitable estate or interest in, or a right, power or privilege over, or in connection with, another asset that was acquired by that taxpayer before 20 September 1985;
this Part is taken not to have applied in respect of the disposal.
This Part does not apply in respect of the disposal by a person of an asset under the scheme formulated by the Australian Government and known as the Cultural Bequests Program.
Subject to this Part, where a change has occurred in the ownership of an asset, the change shall be deemed, for the purposes of this Part, to have effected a disposal of the asset by the person who owned it immediately before the change and an acquisition of the asset by the person who owned it immediately after the change.
160M(1A) [Change in beneficial ownership]It is declared for the avoidance of doubt that, subject to paragraphs (3)(a) and (aa), a change in the legal ownership of an asset does not constitute a change in the ownership of the asset for the purposes of this Part unless there is also a change in the beneficial ownership of the asset.
A reference in subsection (1) to a change in the ownership of an asset is a reference to a change that has occurred in any way, including any of the following ways:
(a) by the execution of an instrument;
(b) by the entering into of a transaction;
(c) by the transmission of the asset by operation of law;
(d) by the delivery of the asset;
(e) by the doing of any other act or thing;
(f) by the occurrence of any event. 160M(3) [Declaration of trust, choses in action, etc]
Without limiting the generality of subsection (2), a change shall be taken to have occurred in the ownership of an asset by:
(a) the creation of a trust, by declaration or settlement, over the asset, other than where either:
(i) all of the following sub-subparagraphs apply:
(A) the person who owned the asset immediately before the creation of the trust is the sole beneficiary of the trust;
(B) that person is absolutely entitled to the asset as against the trustee or would, but for a legal disability, be so entitled;
(C) the trust is not a unit trust; or
(ii) all of the following sub-subparagraphs apply:
(A) the trust is created by the transfer of an asset to a trust from another trust;
(B) the beneficiaries of the trusts are identical;
(C) the terms of the trusts, including the interest of each beneficiary in the income and corpus of the trusts, are identical;
(aa) the conversion of a trust over an asset to a unit trust where:
(i) the trust is not an existing unit trust; and
(ii) immediately before the conversion, a person was absolutely entitled to the asset as against the trustee or would, but for a legal disability, have been so entitled;
(b) in the case of an asset being a debt, a chose in action or any other right, or an interest or right in or over property - the cancellation, release, discharge, satisfaction, surrender, forfeiture, expiry or abandonment, at law or in equity, of the asset;
(c) in the case of an asset being a share in or debenture of a company - the redemption in whole or in part, or the cancellation, of the share or debenture; or
(d) subject to subsection (4), a transaction in relation to the asset under which the use and enjoyment of the asset was or is obtained by a person for a period at the end of which the title to the asset will or may pass to that person.
For the purposes of paragraph (3)(a), the transfer of an asset to a trust is taken to be the creation, by settlement, of a trust over the asset.
A change shall not be taken to have occurred in the ownership of an asset by a transaction referred to in paragraph (3)(d) if the period for which the person referred to in that paragraph has the use and enjoyment of the asset terminates without the title to the asset passing to that person and nothing in section 170 prevents the amendment of an assessment for the purpose of giving effect to this subsection.
160M(4A) [No beneficiary absolutely entitled to the asset](a) a change in the ownership of an asset results from the application of paragraph (3)(a); and
(b) the person who owned the asset immediately before the creation of the trust is the trustee of the trust; and
(c) immediately after the change, no beneficiary is absolutely entitled to the asset as against the trustee.
If this subsection applies, then, for the purposes of the application of this Part to any later disposal of the asset by the trustee, the cost base, indexed cost base or reduced cost base of the asset is the amount that would apply if the trustee had acquired the asset, at the time of the change in ownership resulting from the application of paragraph (3)(a), for a consideration equal to its market value at that time.
For the purposes of this Part:
(a) an issue or allotment of shares in a company constitutes an acquisition of the shares by the person to whom they were issued or allotted but does not constitute a disposal of the shares by the company;
(aa) an issue of units in a unit trust by the trustee of the unit trust constitutes an acquisition of the units by the person to whom they were issued but does not constitute a disposal of the units by the trustee of the unit trust;
(b) if:
(i) a person constructs or creates an asset; and
the person constructing or creating the asset is taken to have acquired, and to have commenced to own, the asset at the time applicable under subsection 160U(5) ; and
(ii) on its construction or creation, the asset is not vested in another person;
(c) if:
(i) a person constructs or creates an asset that is a form of corporeal property; and
the other person is taken to have acquired, and to have commenced to own, the asset at the time applicable under subparagraph 160U(6)(a)(i) or (b)(i).
(ii) on its construction or creation, the asset is vested in another person;
Subject to this Part (other than subsection (7) of this section), if:
(a) a person creates an asset that is not a form of corporeal property; and
(b) on its creation, the asset is vested in another person;
then subsections (6A) and (6B) apply.
(a) the person creating the asset is taken to have acquired, and to have commenced to own, the asset at the time applicable under subparagraph 160U(6)(a)(ii) or (b)(ii); and
(b) the person creating the asset is later taken to have disposed of the asset to the other person mentioned in paragraph (6)(b) of this section at the time applicable under subparagraph 160U(6)(a)(iii) or (b)(iii); and
(c) the person so taken to dispose of the asset is taken not to have paid or given any consideration, or incurred any costs or expenditure, referred to in any of paragraphs 160ZH(1)(a) to (d) (inclusive), (2)(a) to (d) (inclusive) and (3)(a) to (d) (inclusive) in respect of the asset; and
(d) paragraph 160ZD(2)(a) does not apply to that disposal of the asset.
Also, if subsection (6) applies:
(a) the other person mentioned in paragraph (6)(b) is taken to have acquired the asset from the person creating it, and to have commenced to own it, at the time applicable under subparagraph 160U(6)(a)(i) or (b)(i); and
(b) paragraph 160ZH(9)(a) does not apply to that acquisition of the asset.
Subject to this Part (other than subsection (7) of this section), subsection (6BB) applies if:
(a) a person creates an asset that is not a form of corporeal property; and
(b) on its creation, the asset is held by the person in the person's capacity as trustee of a trust estate; and
(c) at the time of that creation, no beneficial interest in the asset is held by a person in the person's capacity as a beneficiary of the trust estate; and
(d) the person has received consideration in respect of the creation of the asset.
(a) the person creating the asset is taken to have acquired, and to have commenced to own, the asset at the time applicable under subparagraph 160U(6)(a)(ii) or (b)(iv); and
(b) that person is taken not to have paid or given any consideration, or incurred any costs or expenditure, referred to in paragraphs 160ZH(1)(a) to (d) (inclusive), (2)(a) to (d) (inclusive) and (3)(a) to (d) (inclusive) in respect of the creation of the asset; and
(c) that person is taken to have disposed of the asset at the time applicable under subparagraph 160U(6)(a)(iii) or (b)(iv) and to have immediately re-acquired it; and
(d) the person is taken to have received in respect of the disposal of the asset, and to have paid in respect of the re-acquisition, the market value of the asset at the time of the disposal.
Subsections (6) and (6BA) apply to the creation of an asset:
(a) whether or not the asset is created out of, over or otherwise in connection with, an existing asset; and
(b) whether or not the person creating the asset owned or disposed of anything at the moment of creation of the asset.
In subsections (5) and (6):
"vest"
, in relation to an asset, means:
(a) in the case of an asset that is not a right - confer ownership of the asset on a person; or
(b) in the case of an asset that is a right - create the right in a person (whether or not conferring ownership of the asset on the person).
Without limiting the generality of subsection (2) but subject to the other provisions of this Part, where -
(a) either:
(i) an act or transaction has taken place in relation to an asset, whether or not affecting the asset; or
where, in a subparagraph (i) case in which the asset was affected or in any subparagraph (ii) case, it does not matter whether the asset was affected adversely or beneficially, or neither adversely nor beneficially; and
(ii) an event affecting an asset has occurred;
(b) the person who owned the asset at the time of the act, transaction or event has received, or is entitled to receive, an amount of money or other consideration by reason of the act, transaction or event (whether or not any asset was or will be acquired by the person paying the money or giving the other consideration) including, but not limited to, an amount of money or other consideration -
(i) in the case of an asset being a right - in return for refraining from exercising the right; or
(ii) for use or exploitation of the asset,
the act, transaction or event constitutes a disposal by the person who received, or is entitled to receive, the money or other consideration of an asset created by the disposal and, for the purposes of the application of this Part in relation to that disposal -
(c) the money or other consideration constitutes the consideration in respect of the disposal; and
(d) the person shall be deemed not to have paid or given any consideration, or incurred any costs or expenditure, referred to in paragraph 160ZH(1)(a) , (b), (c) or (d), (2)(a), (b), (c) or (d) or (3)(a), (b), (c) or (d) in respect of the asset; and
(e) the person is taken to have acquired and owned the asset immediately before the disposal.
Subsection (7), as in force before it was amended by the Taxation Laws Amendment Act (No. 4) 1992 , is taken not to have applied in relation to:
(a) an act or transaction that took place in relation to an asset during the period that commenced on 20 September 1985 and ended on 22 May 1986; or
(b) an event affecting an asset that occurred during that period;
if the requirement set out in subsection (7B) is met.
For the purposes of subsection (7A), the requirement is:
(a) if the person who received, or was entitled to receive, the amount of money or other consideration referred to in paragraph (7)(b) owned the asset when the act or transaction took place, or the event occurred - that the person acquired the asset before 20 September 1985; or
(b) in any other case - that the person who owned the asset when the act or transaction took place, or the event occurred, acquired the asset before 23 May 1986.
Where a taxpayer, being a resident, has, on or after 20 September 1985, ceased to be a resident, the taxpayer shall be deemed for the purposes of this Part -
(a) to have, at the time when the taxpayer ceased to be a resident (in this subsection referred to as the ``relevant time'' ), disposed of every asset that was owned by the taxpayer immediately before the relevant time, other than -
(i) a taxable Australian asset;
(ii) any other asset that was acquired by the taxpayer before 20 September 1985; or
(iii) an asset to which subsection (9), (10) or (11) applies; and
(b) to have so disposed of every such asset for a consideration equal to the market value of the asset at the relevant time. 160M(9) [Trust estate ceasing to be resident trust estate]
Where a resident trust estate has, on or after 20 September 1985, ceased to be a resident trust estate, the trustee of the trust estate shall be deemed for the purposes of this Part -
(a) to have, at the time when the resident trust estate ceased to be a resident trust estate (in this subsection referred to as the ``relevant time'' ), disposed of every asset that was, immediately before the relevant time, owned by the trustee as a trustee of that trust estate, other than -
(i) a taxable Australian asset; or
(ii) any other asset that was acquired by the trustee before 20 September 1985; and
(b) to have so disposed of every such asset for a consideration equal to the market value of the asset at the relevant time. 160M(10) [Unit trust ceasing to be resident unit trust]
Where a resident unit trust has, on or after 20 September 1985, ceased to be a resident unit trust, the trustee of the unit trust shall be deemed for the purposes of this Part -
(a) to have, at the time when the resident unit trust ceased to be a resident unit trust (in this subsection referred to as the``relevant time'' ), disposed of every asset that was, immediately before the relevant time, owned by the trustee as a trustee of that unit trust, other than -
(i) a taxable Australian asset; or
(ii) any other asset that was acquired by the trustee before 20 September 1985; and
(b) to have so disposed of every such asset for a consideration equal to the market value of the asset at the relevant time. 160M(11)
(Omitted by No 48 of 1991)
160M(11A) [Limits on deemed disposals]
Subsection (8) does not deem a taxpayer to have disposed of a particular asset at a time (in this subsection called the ``relevant time'' ) when the taxpayer ceased to be a resident if:
(a) the taxpayer is a natural person;
(b) during the period of 10 years immediately before the relevant time, the taxpayer was a resident for a total period of less than 5 years; and
(c) the asset:
(i) was owned by the taxpayer immediately before the occasion (or last occasion, as the case requires) on which the taxpayer became a resident before the relevant time; or
(ii) was acquired by the taxpayer as a beneficiary of the estate of a deceased person, or as a survivor of a joint tenancy, and was so acquired after the occasion (or last occasion, as the case requires) on which the taxpayer became a resident before the relevant time.
(a) but for this subsection, a taxpayer would be deemed by subsection (8) to have disposed of a particular asset at a time (in this subsection called the ``relevant time'' ) when the taxpayer ceased to be a resident;
(b) the taxpayer is a natural person; and
(c) the taxpayer has elected that this subsection apply in relation to all assets of the taxpayer to which subsection (8) would apply at the relevant time;
the following paragraphs apply:
(d) subsection (8) does not deem the taxpayer to have disposed of the asset at the relevant time;
(e) the asset shall be taken to be a taxable Australian asset until immediately after whichever of the following first occurs:
(i) the taxpayer disposes of the asset;
(ii) the taxpayer becomes a resident.
An election for the purposes of subsection (11B) shall be made on or before the date of lodgment of the return of income of the taxpayer for the year of income in which the relevant time referred to in that subsection occurred, or within such further time as the Commissioner allows.
Where a taxpayer, being a non-resident, has, on or after 20 September 1985, become a resident, every asset that was owned by the taxpayer immediately before the time when the taxpayer became a resident (in this subsection referred to as the ``relevant time'' ), other than:
(a) a taxable Australian asset;
(b) any other asset that was acquired by the taxpayer before 20 September 1985; or
(c) an asset to which subsection (13), (14) or (15) applies;
shall be deemed for the purposes of this Part to have been acquired by the taxpayer at the relevant time and to have been so acquired for a consideration equal to the market value of the asset at the relevant time.
160M(12A) [CFC becoming a resident]Where, at a particular time (in this section called the ``residence-change time'' ), a company that is a CFC ceases to be a resident of an unlisted country or a listed country and becomes a resident within the meaning of section 6 , then:
(a) subsection (12) does not apply; and
(b) subsections (12AA) and (12AB) apply.
For the purposes of the application of this Part, sections 411 to 417 (inclusive) have, subject to subsection (12AB), the same effect, in relation to every commencing day non-taxable Australian asset of the company owned by the company at the residence-change time, as they would have if the taxable income, instead of the attributable income, of the company were being calculated under those sections.
If any capital gain on a commencing day non-taxable Australian asset in respect of the period before the residence-change time was subject to tax in a listed country, then, for the purposes of the application of this Part, sections 411 to 417 (inclusive) have the same effect in relation to the asset as they would have if:
(a) the taxable income, instead of the attributable income, of the company were being calculated under those sections; and
(b) any reference in those sections relating to the eligible CFC's commencing day or the day following the eligible CFC's commencing day were a reference relating respectively to the residence-change time or a time immediately after the residence-change time.
In subsections (12A) to (12AB):
"30 June 1990 non-taxable Australian asset"
(Omitted by No 170 of 1995)
"attributable income"
has the same meaning as in Part X;
"CFC"
has the same meaning as in Part X;
commencing day
has the same meaning as in Subdivision C of Division
7
of Part
X
.
commencing day non-taxable Australian asset
has the same meaning as in Subdivision C of Division
7
of Part
X
.
"resident of a listed country"
has the same meaning as in Part X;
"resident of an unlisted country"
has the same meaning as in Part X;
"subject to tax"
has the same meaning as in Part X.
Where a trust estate, other than a resident trust estate, has, on or after 20 September 1985, become a resident trust estate, every asset that was, immediately before the time when the trust estate became a resident trust estate (in this subsection referred to as the ``relevant time'' ), owned by the trustee as a trustee of that trust estate, other than:
(a) a taxable Australian asset; or
(b) any other asset that was acquired by the trustee before 20 September 1985;
shall be deemed for the purposes of this Part to have been acquired by the trustee as the trustee of that trust estate at the relevant time and to have been so acquired for a consideration equal to the market value of the asset at the relevant time.
160M(13A) [Application of subsec (13) to a CFT]Subsection (13) does not apply where a trust estate becomes a resident trust estate if, immediately before it does so, it is a CFT, within the meaning of section 342 , because paragraph (a) of that section applies.
Where a unit trust, other than a resident unit trust, has, on or after 20 September 1985, become a resident unit trust, every asset that was, immediately before the time when the unit trust became a resident unit trust (in this subsection referred to as the ``relevant time'' ), owned by the trustee as a trustee of that unit trust, other than:
(a) a taxable Australian asset; or
(b) any other asset that was acquired by the trustee before 20 September 1985;
shall be deemed for the purposes of this Part to have been acquired by the trustee as the trustee of that unit trust at the relevant time and to have been so acquired for a consideration equal to the market value of the asset at the relevant time.
160M(14A) [Application of subsec (14) to a CFT]Subsection (14) does not apply where a unit trust becomes a resident unit trust if, immediately before it does so, it is a CFT, within the meaning of section 342 , because paragraph (a) of that section applies.
(Omitted by No 48 of 1991)
SECTION 160MA CERTAIN ASSET CREATION CASES NOT TO CONSTITUTE AN ACQUISITION OR DISPOSAL 160MA(1) Certain debts.
If a person creates a debt by borrowing money or obtaining credit from another person, neither subsection 160M(6) nor subsection 160M(7) applies to the creation of the debt, but the other person is taken to acquire the debt for the purposes of this Part.
160MA(2) Right to require Part IIIA disposal.(a) a person creates a right in another person to require the first person to do any thing; and
(b) the doing of the thing will constitute the disposal of an asset for the purposes of this Part;
then neither subsection 160M(6) nor subsection 160M(7) applies to the creation of the right.
160MA(3) Interpretive provision relating to paragraph (2)(b).In applying paragraph (2)(b), the exclusion from the definition of ``asset'' in section 160A of motor vehicles of a kind covered by paragraph 82AF(2)(a) , and interests in such motor vehicles, is to be ignored.
For the purposes of this Part but subject to the other provisions of this Part:
(a) the entire loss or destruction of an asset constitutes a disposal of the asset; and
(b) the loss or destruction of part of an asset constitutes a disposal of that part of the asset;
whether or not any amount of money or other consideration by way of compensation or otherwise is received as a result of or in respect of the loss or destruction.
(a) land on which a building is erected was acquired by a taxpayer before 20 September 1985;
(b) after the acquisition of the land by the taxpayer the building was demolished and a new building was constructed on the land in replacement of the demolished building; and
(c) if the new building were a separate asset from the land, the new building would be taken for the purposes of this Part to have been acquired by the taxpayer on or after 20 September 1985;
the new building shall be deemed for the purposes of this Part to be an asset separate from the land.
160P(2) [Construction of building on vacant land](a) land was acquired by a taxpayer before 20 September 1985;
(b) after the acquisition of the land by the taxpayer a building was constructed on the land; and
(c) if the building were a separate asset from the land, the building would be taken for the purposes of this Part to have been acquired by the taxpayer on or after 20 September 1985;
the building shall be deemed for the purposes of this Part to be an asset separate from the land.
160P(3) [Acquisition of adjacent land](a) land was acquired by a taxpayer before 20 September 1985; and
(b) on or after that date the taxpayer acquired land (whether or not a building was or is erected on that last-mentioned land) adjacent to the first-mentioned land;
the adjacent land shall be deemed for the purposes of this Part to be a separate asset from the first-mentioned land.
160P(4) [Building or improvement a separate asset]Where a building or other improvement of a capital nature made to land is treated for the purposes of this Act other than this Part as an asset separate from the land, the building or other improvement shall be deemed for the purposes of this Part to be a separate asset from the land.
160P(5) [Part of building a separate asset]Where an asset forming part of a building is treated for the purposes of this Act other than this Part as an asset separate from the building, the asset shall be deemed for the purposes of this Part to be a separate asset from the building.
160P(6) [Capital improvement to asset](a) an asset (other than a periodic roll-over asset) acquired by a taxpayer before 20 September 1985 has been disposed of on or after that date;
(b) an improvement of a capital nature to the asset was made after the taxpayer acquired the asset;
(c) if the improvement were a separate asset from the asset to which it was made:
(i) the improvement would be taken for the purposes of this Part to have been acquired by the taxpayer on or after 20 September 1985; and
(ii) subject to section 160Q , the indexed cost base to the taxpayer of the improvement would exceed $50,000; and
(d) the amount of the indexed cost base referred to in subparagraph (c)(ii) exceeds 5% of the consideration in respect of the disposal of the asset to which the improvement was made;
the improvement shall be deemed for the purposes of this Part to be an asset separate from the asset to which the improvement was made.
(a) a periodic roll-over asset (in this subsection called the ``actual asset'' ) acquired by a taxpayer before 20 September 1985 has been disposed of on or after that date;
(b) if it were assumed that:
(i) the actual asset; and
together constituted a single asset (in this subsection called the ``overall asset'' ), an act or thing done in relation to the actual asset or any of the predecessor assets after the taxpayer first acquired any of the predecessor assets would constitute an improvement of a capital nature to the overall asset;
(ii) all the predecessor assets of the actual asset;
(c) if the improvement were a separate asset from the overall asset:
(i) the improvement would be taken, for the purposes of this Part, to have been acquired by the taxpayer on or after 20 September 1985; and
(ii) the indexed cost base to the taxpayer of the improvement would exceed the amount applicable for the purposes of subparagraph (6)(c)(ii) in relation to the year of income in which the actual asset was disposed of; and
(d) the amount of the indexed cost base referred to in subparagraph (c)(ii) exceeds 5% of the consideration in respect of the disposal of the actual asset;
the improvement shall be taken, for the purposes of this Part, to be an asset separate from the actual asset and each of those predecessor assets.
On the disposal of an asset that is, by this section, deemed for the purposes of this Part to comprise two or more separate assets, the consideration in respect of the disposal of the first-mentioned asset shall be apportioned between the separate assets.
160P(8) [Single assets]Except as provided by this section, land, and any building or other improvement made to the land, shall be deemed for the purposes of this Part to be a single asset.
160P(9) [Predecessor assets]For the purposes of this section:
(a) an asset is a predecessor of a second asset if the second asset replaced the first-mentioned asset in circumstances of a kind referred to in a periodic roll-over provision; and
(b) where there is a series of acquisitions of assets such that each asset replaced a previously acquired asset in circumstances of a kind referred to in a periodic roll-over provision, each of the assets involved in the series (other than the last asset to be acquired) shall be taken to be a predecessor of the last asset to be acquired.
In this section:
"periodic roll-over asset"
means an asset to which a periodic roll-over provision applies;
"periodic roll-over provision"
means section
160ZWA
,
160ZZF
or 160ZZPE.
Subject to subsection (2), subparagraph 160P(6)(c)(ii) has effect in relation to a relevant year of income as if, for the reference in that subparagraph to $50,000, there were substituted a reference to an amount calculated by multiplying -
(a) in a case to which paragraph (b) does not apply - $50,000; or
(b) where subparagraph 160P(6)(c)(ii) has had effect in relation to a year of income or years of income preceding the relevant year of income as if a reference to another amount were substituted for the reference in that subsection to $50,000 or would have so had effect but for the operation of subsection (2) of this section - the substituted amount or the last substituted amount, or the amount or the last amount that would, but for the operation of subsection (2), have been so substituted, as the case may be,
by the factor ascertained in accordance with subsection (3).
160Q(2) [Substituted amount not more than $50,000]Subsection (1) does not have effect in relation to a relevant year of income where, if it did so have effect, the amount that would be substituted in subparagraph 160P(6)(c)(ii) would not exceed $50,000.
160Q(3) [Factor]The factor to be ascertained for the purposes of subsection (1) in relation to a relevant year of income is the number (calculated to 3 decimal places) ascertained by dividing the sum of -
(a) the index number in respect of the March quarter immediately preceding that relevant year of income; and
(b) the index numbers in respect of the 3 quarters that immediately preceded that quarter,
by the sum of -
(c) the index number in respect of the March quarter immediately preceding the year of income that next preceded that relevant year of income; and
(d) the index numbers in respect of the 3 quarters that immediately preceded that last-mentioned quarter. 160Q(4) [Substitution index number]
Subject to subsection (5), if at any time, whether before or after the commencement of this Part, the Australian Statistician has published or publishes an index number in respect of a quarter in substitution for an index number previously published by the Australian Statistician in respect of that quarter, the publication of the later index number shall be disregarded for the purposes of this section.
160Q(5) [Change of reference base by Statistician]If, at any time, whether before or after the commencement of this Part, the Australian Statistician has changed or changes the reference base for the Consumer Price Index, then, for the purposes of the application of this section after the change took place or takes place, regard shall be had only to index numbers published in terms of the new reference base.
160Q(6) [Rounding of decimal places]Where the factor ascertained in accordance with subsection (3) in relation to a relevant year of income would, if it were calculated to 4 decimal places, end with a number greater than 4, the factor ascertained in accordance with that subsection in relation to that relevant year of income shall be taken to be the factor calculated to 3 decimal places in accordance with that subsection and increased by 0.001.
160Q(7) [Notification]The Commissioner must publish by written notice before the commencement of each relevant year of income:
(a) the factor ascertained in accordance with subsection (3) (as affected by subsection (6)) in relation to that year of income; and
(b) the amount that is to be substituted in subparagraph 160P(6)(c)(ii) in relation to that year of income for improvements to which subsection 160P(6) applies.
[ CCH Note: The following table sets out the indexation factors and indexed cost base limits for the purposes of s 160P:
| Income year | Indexation factor | Indexed cost base limit | Source |
| 1997/98 | 1.020 | $89,992 | TD 97/12 |
| 1996/97 | 1.046 | $88,227 | TD 96/30 |
| 1995/96 | 1.025 | $84,347 | TD 95/23 |
| 1994/95 | 1.019 | $82,290 | TD 94/56 |
| 1993/94 | 1.009 | $80,756 | TD 93/123 |
| 1992/93 | 1.024 | $80,036 | Gazette GN 25, 24 June 1992 |
| 1991/92 | 1.064 | $78,160 | Gazette S 168, 25 June 1991 |
| 1990/91 | 1.080 | $73,459 | Gazette S 163, 22 June 1990 |
| 1989/90 | 1.072 | $68,018 | Gazette GN 22, 14 June 1989 |
| 1988/89 | 1.078 | $63,450 | Gazette GN 23, 29 June 1988 |
| 1988/89 | 1.078 | $63,450 | Gazette GN 23, 29 June 1988 |
| 1987/88 | 1.091 | $58,859 | Gazette S 149, 29 June 1987 |
| 1986/87 | 1.079 | $53,950 | Gazette S 317, 30 June 1986 ] |
Where, but for this subsection, this section would, by virtue of the preceding provisions of this section, have effect in relation to a relevant year of income as if, for the reference in subsection 160P(6) to $50,000, there were substituted a reference to another amount, being an amount that consists of a number of whole dollars and a number of cents (in this subsection referred to as the ``relevant number of cents'' ):
(a) in the case where the relevant number of cents is less than 50 - the other amount shall be reduced by the relevant number of cents; or
(b) in any other case - the other amount shall be increased by the amount by which the relevant number of cents is less than $1. 160Q(9) [Rounding to whole dollars]
Where, but for subsection (2), this section would, by virtue of the preceding provisions of this section, have effect in relation to a relevant year of income as if, for the reference in subsection 160P(6) to $50,000, there were substituted a reference to another amount, being an amount that consists of a number of whole dollars and a number of cents (in this subsection referred to as the ``relevant number of cents'' ), then, for the purposes of the application of paragraph (1)(b):
(a) in a case where the relevant number of cents is less than 50 - the other amount shall be reduced by the relevant number of cents; or
(b) in any other case - the other amount shall be increased by the amount by which the relevant number of cents is less than $1. 160Q(10) [``Relevant year of income''; ``index number'']
(a) a reference to a relevant year of income is a reference to the year of income in which the asset to which the improvement referred to in paragraph 160P(6)(b) relates was disposed of, being the year of income commencing on 1 July 1986 or a subsequent year of income; and
(b) a reference to an index number, in relation to a quarter, is a reference to the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of that quarter.
For the purposes of this Part, a reference to a disposal of an asset includes, unless the contrary intention appears, a reference to a disposal of part of an asset.
For the purposes of this Part, the transfer by way of security of an asset or of an interest or right in or over an asset, or the transfer of a subsisting interest or right by way of security in or over an asset (including a re-transfer on redemption of the security), does not constitute an acquisition or disposal of the asset.
160S(2) [Acquisition free of security, acquisition subject to security]For the purposes of this Part:
(a) an asset shall be treated as having been acquired free of any interest or right by way of security subsisting at the time of acquisition and as having been disposed of free of any such interest or right subsisting at the time of disposal; and
(b) where an asset is acquired subject to any such interest or right - the full amount of the liability thereby assumed by the person acquiring the asset forms part of the consideration for the acquisition of the asset by that person, and for the disposal of the asset by the person from whom it was acquired, in addition to any other consideration paid or given for the acquisition and disposal.
For the purposes of this Part, a disposal of an asset shall be deemed to have been a disposal of a taxable Australian asset if:
(a) the asset comprised land or a building situated in Australia;
(b) the asset has at any time been used by the taxpayer in carrying on a trade or business wholly or partly at or through a permanent establishment in Australia;
(c) the asset comprised a share, or an interest in a share, in a company that, in relation to the year of income of the company in which the disposal took place, was a resident of Australia and was a private company;
(d) the asset comprised a share, or an interest in a share, in a company that, in relation to the year of income of the company in which the disposal took place, was a resident of Australia and was not a private company and at any time during so much of the period of 5 years immediately preceding the disposal as occurred after 19 September 1985:
(i) the taxpayer or an associate of the taxpayer was the beneficial owner of; or
not less than 10%, by value, of the shares of the company (excluding any shares that carried no right to participate beyond a specified amount in a distribution of either profits or capital);
(ii) any associates of the taxpayer, or the taxpayer and any associate or associates of the taxpayer, together were the beneficial owners of;
(e) (Omitted by No 48 of 1991)
(f) the asset comprised an interest in a trust estate that was a resident trust estate in relation to the year of income in which the disposal took place;
(g) the asset comprised a unit of a unit trust that, in relation to the year of income of the unit trust in which the disposal took place, was a resident unit trust, and at any time during so much of the period of 5 years immediately preceding the time of the disposal as occurred after 19 September 1985 the taxpayer or an associate of the taxpayer was the beneficial owner of, or any associates of the taxpayer or the taxpayer and any associate or associates of the taxpayer together were the beneficial owners of, not less than 10% of the issued units of the unit trust;
(h) the asset comprised an option or right to acquire an asset referred to in a preceding paragraph of this section;
(j) the asset comprised a share in, or security of, a company and the following conditions are satisfied in relation to the acquisition of the asset by the taxpayer:
(i) the asset was received by the taxpayer as consideration in respect of the disposal (in this paragraph called the ``previous disposal'' ) of another asset by the taxpayer to the company;
(ii) the previous disposal took place after 28 January 1988;
(iii) section 160ZZN , 160ZZNA or 160ZZO applied in respect of the previous disposal;
(iv) at the time of the previous disposal, the taxpayer:
(A) was not a trustee of a trust estate and was not a resident of Australia; or
(B) was a trustee of a trust estate that was not a resident trust estate or of a unit trust that was not a resident unit trust;
(k) the following conditions are satisfied in relation to the acquisition of the asset by the taxpayer:
(i) the taxpayer acquired the asset as a result of a disposal (in this paragraph called the ``previous disposal'' ) in respect of which section 160ZZN or 160ZZO applied;
(ii) the previous disposal was by:
(A) another taxpayer who was not a trustee of a trust estate and was not a resident of Australia; or
(B) a trustee of a trust estate that was not a resident trust estate or of a unit trust that was not a resident unit trust;
(iii) the previous disposal took place after 28 January 1988 and on or before 25 May 1988;
(l) the following conditions are satisfied:
(i) there is a disposal of the asset because paragraph 160M(6A)(b) or subsection 160M(6BB) applies; and
(ii) the asset is not a taxable Australian asset under another paragraph of this section; and
(iii) the consideration in respect of the disposal of the asset was derived from a source in Australia or if there had been such consideration it would have been derived from such a source; or
(m) the following conditions are satisfied:
(i) there is a disposal of the asset because subsection 160M(7) applies; and
(ii) the asset referred to in paragraph 160M(7)(a) is a taxable Australian asset under another paragraph of this section.
If the consideration referred to in subparagraph (1)(l)(iii) is not of an income nature, then for the purpose of determining under that subparagraph whether the consideration was or would have been derived from a source in Australia, it is taken to be of an income nature.
Subject to the provisions of this Part other than this section, where an asset has been acquired or disposed of, the time of acquisition or disposal for the purposes of this Part shall be ascertained in accordance with this section.
160U(2) [Later subsections take precedence to earlier subsections]If the time of acquisition or disposal as ascertained under a subsection of this section is different from the time of acquisition or disposal as ascertained under a subsequent subsection of this section, the time of acquisition or disposal shall be taken to have been the time of acquisition or disposal as ascertained under that subsequent subsection.
160U(3) [Acquisition or disposal under contract]Where the asset was acquired or disposed of under a contract, the time of acquisition or disposal shall be taken to have been the time of the making of the contract.
160U(4) [Acquisition or disposal not under contract]Where the asset was acquired or disposed of otherwise than under a contract, the time of acquisition or disposal shall be taken to have been the time when the change in the ownership of the asset that constituted or gave rise to the acquisition or disposal occurred.
160U(5) [Deemed time of acquisition under subsec 160M(5)(b)]If paragraph 160M(5)(b) applies to the construction or creation of the asset, the asset is taken to have been acquired as mentioned in that paragraph when the construction of the asset commenced or when the work on, or work that resulted in, the creation of the asset commenced.
If paragraph 160M(5)(c) , 160M(6A)(a) or (b) or 160M(6B)(a) or subsection 160M(6BB) applies to the construction or creation of the asset:
(a) if the asset was constructed or created under a contract - the asset is taken:
(i) in a paragraph 160M(5)(c) or 160M(6B)(a) case - to have been acquired as mentioned in that paragraph at the time of making of the contract; and
(ii) in a paragraph 160M(6A)(a) or subsection 160M(6BB) case - to have been acquired as mentioned in that paragraph or subsection immediately before the time of making of the contract; and
(iii) in a paragraph 160M(6A)(b) or subsection 160M(6BB) case - to have been disposed of as mentioned in that paragraph or subsection at the time of making ofthe contract; and
(b) in any other case - the asset is taken:
(i) in a paragraph 160M(5)(c) or 160M (6B)(a) case - to have been acquired as mentioned in that paragraph at the time of the vesting referred to in paragraph 160M(5)(c) or in paragraph 160M(6)(b) , as the case requires; and
(ii) in a paragraph 160M(6A)(a) case - to have been acquired as mentioned in that paragraph immediately before the time of the vesting referred to in paragraph 160M(6)(b) ; and
(iii) in a paragraph 160M(6A)(b) case - to have been disposed of as mentioned in that paragraph at the time of the vesting referred to in paragraph 160M(6)(b) ; and
(iv) in a subsection 160M(6BB) case - to have been acquired as mentioned in paragraph 160M(6BB)(a) at the time of the creation referred to in paragraph 160M(6BA)(b) , and to have been disposed of as mentioned in paragraph 160M(6BB)(c) immediately after that time.
(a) a provision of this Part, other than a provision of section 160M ( ``the relevant section 160M provision'' ) referred to in subsection (5) or (6) of this section, applies to the construction or creation of an asset to deem there to have been an acquisition or disposal of the asset; and
(b) because the relevant section 160M provision does not apply, neither subsection (5) nor subsection (6) of this section applies; and
(c) the provision of this Part does not state the time at which the acquisition or disposal is taken to have occurred;
then the acquisition or disposal is taken to have occurred at the time that would have been applicable under subsection (5) or (6) of this section if the relevant section 160M provision had applied.
Where the acquisition or disposal of the asset occurred as a result of a transaction referred to in paragraph 160M(3)(d) , the time of acquisition or disposal shall be taken to have been the time when the use and enjoyment of the asset was first obtained by the person mentioned in that paragraph.
160U(8) [Compulsory acquisition]Where the asset was disposed of as a result of the exercise of a power of compulsory acquisition conferred by a law, the time of disposal shall be taken to have been the time when the earliest of the following events occurred:
(a) an amount or an asset by way of compensation for the acquisition was received;
(b) the person acquiring the asset became the owner of the asset;
(c) the person acquiring the asset entered on the asset under the powers conferred on the person by that law;
(d) the person acquiring the asset took possession of the asset under the powers conferred on the person by that law. 160U(9) [Loss or destruction]
Where the asset is taken to have been disposed of by reason of the loss or destruction of the asset, the time of disposal shall be taken to have been:
(a) if an amount is or amounts are, or an asset is or assets are, received in respect of the loss or destruction - the time when the amount or the first amount, or the asset or the first asset, was received; or
(b) in any other case - the time when the loss was discovered or the destruction occurred, as the case may be. 160U(10) [Amendment of assessment]
Section 170 does not prevent the amendment of an assessment at any time to give effect to subsection (3) or (8) where the time of an acquisition or disposal is taken to have been before the making of the assessment.
If an asset is held by a person as trustee for another person who is absolutely entitled to the asset as against the trustee, this Part applies as if the asset were vested in the other person and any acts of the trustee were the acts of the other person.
160V(1A) [Persons under legal disability]For the purposes of subsection (1), where a person holds an asset as trustee for another person, the other person is not taken not to be absolutely entitled to the asset as against the trustee merely because the other person is under a legal disability.
For the avoidance of doubt, nothing in subsection (1) has the effect that a change in the ownership of an asset under paragraph 160M(3)(a) or (aa) is not taken to have occurred.
(a) a person entitled to an asset by way of security or entitled to the benefit of a charge or encumbrance on an asset does any act in relation to the asset for the purpose of enforcing or giving effect to the security, charge or encumbrance; or
(b) a person appointed to enforce or give effect to a security in relation to an asset or to enforce or give effect to a charge or encumbrance on an asset does any act in relation to the asset for the purpose of enforcing or giving effect to the security, charge or encumbrance;
this Part applies as if the act were the act of the person who owned the asset that was subject to the security, charge or encumbrance.
Where an asset owned by a person:
(a) becomes vested, as a result of the bankruptcy of the person, in:
(i) the Official Trustee in Bankruptcy or a registered trustee; or
(ii) the holder of a similar office under the law of a foreign country;
(b) becomes vested in a trustee:
(i) under a deed of assignment or deed of arrangement made under Part X of the Bankruptcy Act 1966 or a similar instrument executed under the law of a foreign country; or
(ii) by virtue of a composition or scheme of arrangement approved under Part IV, or a composition accepted under Part X, of that Act or a similar arrangement with creditors under the law of a foreign country; or
(c) in the case of a person being a company, becomes vested:
(i) in the liquidator of the company under section 374 of the Companies Act 1981 or the corresponding law of a State or Territory; or
(ii) in the holder of a similar office under the law of a foreign country;
this Part applies as if the asset continued to be vested in the first-mentioned person and any act done in relation to the asset by the person in whom the asset so vested were the act of the first-mentioned person.
For the purposes of this Part, if:
(a) a taxpayer owns a share in a company as at a particular time (in this subsection called the ``test time'' ) after 11 November 1991; and
(b) there is a liquidator of the company; and
(c) at or after the test time, the liquidator makes a written declaration that the liquidator has reasonable grounds to believe that:
(i) if the share belongs to a particular class of shares in the company - there is no likelihood that the relevant class of shareholders in the company as at the test time will receive any distributions in the course of winding up the company; or
(ii) in any other case - there is no likelihood that the shareholders in the company as at the test time will receive any distributions in the course of winding up the company; and
(d) the taxpayer elects that this section applies in relation to the taxpayer and in relation to the share;
the taxpayer is taken:
(e) to have disposed of the share at the time the declaration was made for no consideration; and
(f) to have immediately re-acquired the share for no consideration. 160WA(2) [Election by taxpayer]
An election by a taxpayer under subsection (1) must be made by written notice given to the Commissioner on or before the date of lodgment of the taxpayer's return of income for the later of the following years of income:
(a) the year of income in which the declaration was made;
(b) the year of income in which this section commenced;
or within such further period as the Commissioner allows.
This section has effect subject to section 160Y .
160X(2) [Death not a disposal]An asset owned by a person shall not be taken, for the purposes of the application of this Part in relation to that person, to have been disposed of by that person by reason of the death of that person.
160X(3) [Position of legal personal representative, beneficiary]Where an asset that formed part of the estate of a deceased person has passed to the legal personal representative of the deceased person:
(a) if the asset subsequently passes to a beneficiary in that estate - the asset shall not thereby be taken, for the purposes of this Part, to have been disposed of by the legal personal representative; but
(b) if the asset is subsequently disposed of by the beneficiary - the cost base, the indexed cost base or the reduced cost base to the beneficiary of the asset for the purposes of this Part shall include any amount that would, if the legal personal representative had disposed of the asset at the time when the asset passed to the beneficiary, have been included in the cost base, the indexed cost base or the reduced cost base, as the case may be, of the asset to the legal personal representative as a result of the legal personal representative having incurred expenditure in respect of the asset. 160X(4) [Death before 20 September 1985]
Where a person died before 20 September 1985, any asset that formed part of the estate of the deceased person and passed to the legal personal representative of the deceased person or to a beneficiary in the estate of the deceased person shall be deemed, for the purposes of this Part, to have been acquired by the legal personal representative or the beneficiary before that date notwithstanding that the asset was transmitted or transferred to the legal personal representative or beneficiary on or after that date.
160X(5) [Death on or after 20 September 1985]Where an asset that formed part of the estate of a person who died on or after 20 September 1985 has passed to the legal personal representative of the deceased person or to a beneficiary in the estate of the deceased person:
(a) if:
(i) the deceased person acquired the asset before 20 September 1985; or
the asset shall be deemed, for the purposes of this Part, to have been acquired by the legal personal representative or the beneficiary on the date of the person's death and to have been so acquired for a consideration equal to the market value of the asset at the date of the person's death; or
(ii) the asset is a dwelling that was, immediately before the person's death, the person's sole or principal residence for the purposes of section 160ZZQ and was not, for the purposes of that section, then being used for the purpose of gaining or producing assessable income;
Note:
In certain cases, a dwelling may be taken to have been a person's sole or principal residence, and any use for the purpose of gaining or producing assessable income may be disregarded, for the purposes of section 160ZZQ: see subsection 160ZZQ(11) .
(b) in any other case - the asset shall be deemed, for the purposes of this Part, to have been acquired by the legal personal representative or the beneficiary on the date of the person's death and:
(i) for the purpose of ascertaining whether a capital gain accrued to the legal personal representative or the beneficiary in the event of a subsequent disposal of the asset by the legal personal representative or the beneficiary - to have been so acquired for a consideration equal to the amount that would have been the indexed cost base to the deceased person of the asset for the purposes of this Part if the deceased person had disposed of the asset immediately before his or her death;
(ii) for the purpose of ascertaining whether the legal personal representative or the beneficiary incurred a capital loss in the event of a subsequent disposal of the asset by the legal personal representative or the beneficiary - to have been so acquired for a consideration equal to the amount that would have been the reduced cost base to the deceased person of the asset for the purposes of this Part if the deceased person had disposed of the asset immediately before his or her death; and
(iii) in the case of an asset that was a personal-use asset of the deceased person - to be a personal-use asset of the legal personal representative or of the beneficiary, as the case may be.
If, in the case of an asset to which subparagraph (5)(b)(i) applies, the asset was disposed of by the legal personal representative or the beneficiary within 12 months after the day on which the asset was acquired by the deceased person, the reference in that subparagraph to the indexed cost base to the deceased person of the asset shall be construed as a reference to the cost base to the deceased person of the asset.
A person is a tax-exempt person in relation to the year of income for the purposes of this section if the person is a person whose income of the year of income is exempt from tax by virtue of a relevant exempting provision.
160Y(2) [Beneficiary is tax-exempt person](a) a person died on or after 20 September 1985;
(b) an asset that formed part of the estate of the deceased person and was acquired by thedeceased person on or after that date has passed to a beneficiary in the estate of the deceased person; and
(c) the beneficiary is:
(i) a tax-exempt person in relation to the year of income; or
(ii) the trustee of a complying superannuation fund , a complying ADF, or a PST, within the meaning of Part IX, in relation to the year of income;
section 160X does not apply in respect of the asset but subsections (3) and (4) of this section have effect.
(a) a person died after 2 April 1992; and
(b) an asset that formed part of the estate of the deceased person and was acquired by the deceased person on or after 20 September 1985 has passed to a beneficiary in the estate of the deceased person; and
(c) the deceased person was a resident; and
(d) the beneficiary is a non-resident; and
(e) the asset is not a taxable Australian asset;
section 160X does not apply in respect of the asset but subsections (3) and (4) of this section have effect.
The asset shall be deemed for the purposes of this Part to have been disposed of by the deceased person, and acquired by the beneficiary, immediately before the death of the person for a consideration equal to the market value of the asset at the date of the death.
160Y(4) [Asset passing from legal personal representative to beneficiary]If the asset passed from the legal personal representative of the deceased person to the beneficiary, then, on the subsequent disposal of the asset by the beneficiary, the cost base, the indexed cost base or the reduced cost base to the beneficiary of the asset for the purposes of this Part shall include any amount that would, if this section did not apply, have been included in that cost base, indexed cost base or reduced cost base, as the case may be, by virtue of paragraph 160X(3)(b) .
Subject to this Part, where an asset other than a personal-use asset has been disposed of during the year of income:
(a) if the consideration in respect of the disposal exceeds the indexed cost base to the taxpayer in respect of the asset - a capital gain equal to the excess shall be deemed for the purposes of this Part to have accrued to the taxpayer during the year of income and to have so accrued at the time of the disposal; or
(b) if the reduced cost base to the taxpayer in respect of the asset exceeds the consideration in respect of the disposal - a capital loss equal to the excess (less any amount by which that loss is reduced under subparagraph 245-90(2)(b)(i) of Schedule 2C). shall be deemed for the purposes of this Part to have been incurred by the taxpayer during the year of income and to have been so incurred at the time of the disposal.
Note:
The amount of a capital loss referred to in paragraph (1)(b) may be reduced under subsection 160ZZPR(2) or 160ZZPS (2).
Subject to subsection (3), where:
(a) a non-listed personal-use asset has been disposed of during the year of income; and
(b) the consideration in respect of the disposal exceeds the indexed cost base to the taxpayer in respect of the asset;
a capital gain equal to the excess shall be deemed for the purposes of this Part to have accrued to the taxpayer during the year of income.
160Z(3) [Disposal within 12 months of acquisition]If the disposal of an asset referred to in subsection (1) or (2) occurred within 12 months after the day on which the asset was acquired by the taxpayer, the reference in the subsection concerned to the indexed cost base to the taxpayer in respect of the asset shall be construed as a reference to the cost base to the taxpayer in respect of the asset.
160Z(4) [Date of acquisition of asset of deceased]The reference in subsection (3) to the day on which an asset was acquired by the taxpayer shall, if the asset formed part of the estate of a deceased person and passed to the taxpayer as the legal personal representative of the deceased person or as a beneficiary in the estate of the deceased person, or if the asset is an interest that was deemed to be acquired by a surviving joint tenant by virtue of section 160ZN , be construed as a reference to the day on which the asset was acquired by the deceased person.
The reference in subsection (3) to the day on which an asset was acquired by the taxpayer shall, if the asset was deemed to be acquired by the taxpayer by virtue of subsection 160ZL(2) or (3) , subsection 160ZM(2) or 160ZT (1A), paragraph 160ZZOA(1)(e) , subsection 160ZZRDJ(3) or (4) , 160ZZRDM(2) or (5) , or 160ZZRE(3) or (4) or by virtue of subparagraph 160ZZD(4)(a)(i) or (5)(a)(i) (including the subparagraph concerned as it applies by virtue of subsection 160ZZD(6) ), be construed as a reference to the day on which the asset was (apart from the subsection, paragraph or subparagraph concerned) acquired by the taxpayer.
Nothing in this Part operates to deem a capital gain to have accrued to a taxpayer during the year of income where the relevant disposal related to an asset that was used by the taxpayer solely for the purpose of producing eligible exempt income.
Nothing in this Part operates to deem a capital gain to have accrued to a taxpayer during the year of income where the relevant disposal related to an asset for which the taxpayer received consideration under firearms surrender arrangements.
Note:
Firearms surrender arrangements has the meaning given by subsection 6(1) .
Nothing in this Part operates to deem a capital loss to have been incurred in respect of the disposal of a personal-use asset but this subsection does not preclude a listed personal-use asset loss from being taken into account in accordance with section 160ZQ .
160Z(8) [Exempt taxpayer]A capital gain shall not be deemed for the purposes of this Part to have accrued to a taxpayer during the year of income if the taxpayer is a person whose income of the year of income is exempt from tax by virtue of a relevant exempting provision.
160Z(9) [No capital loss]A capital loss shall not be deemed for the purposes of this Part to have been incurred by a taxpayer during the year of income where:
(a) the taxpayer is a person whose income of the year of income is exempt from tax by virtue of a relevant exempting provision; or
(b) (Repealed by No 147 of 1997)
(c) the relevant disposal related to an asset that was used by the taxpayer solely for the purpose of producing eligible exempt income; or
(d) the relevant disposal was the expiry, surrender, forfeiture or assignment of a lease or sub-lease (other than a lease or sub-lease that was granted in perpetuity or for a period of not less than 99 years) that was not used by the lessee or sub-lessee wholly or principally for gaining or producing assessable income.
(Repealed by No 147 of 1997)
160Z(10) [``eligible exempt income'']
In this section:
"eligible exempt income"
means exempt income other than income to which section
23AH
,
23AI
,
23AJ
or
23AK
, paragraph
99B(2)(d)
or (e) or section
128D
applies.
(Omitted by No 48 of 1991)
160ZA(4) [Where amount otherwise assessable]
(a) but for this subsection a capital gain (in this subsection called the ``notional capital gain'' ) would be deemed for the purposes of this Part to have accrued to a taxpayer during the year of income in respect of the disposal of an asset; and
(b) as a result of the disposal of the asset an amount or amounts (in this subsection called the``included amount'' or the ``included amounts'' ) has or have been, or will be, included in the assessable income of the taxpayer in respect of any year of income under a provision of this Act other than this Part (other than an amount or amounts excluded by subsection (4A) or an amount or amounts included because of subsection 42-190(2) of the Income Tax Assessment Act 1997 as affected as mentioned in subsection 42-190(4) or (5) of that Act);
the following paragraphs have effect:
(c) if the notional capital gain exceeds the included amount or the sum of the included amounts - the amount of the capital gain that is deemed for the purposes of this Part to have accrued to the taxpayer during the year of income in respect of the disposal of the asset is an amount equal to the excess;
(d) if the notional capital gain does not exceed the included amount or the sum of the included amounts - no capital gain is deemed for the purposes of this Part to have accrued to the taxpayer during the year of income in respect of the disposal of the asset.
An amount is excluded from paragraph (4)(b) if it has been, or will be, included in the taxpayer's assessable income under a provision having effect where:
(a) the taxpayer recoups capital expenditure that was incurred in respect of the asset; and
(b) a deduction has been allowed or is allowable to the taxpayer in respect of the capital expenditure.
(a) apart from this subsection a capital gain (the ``notional capital gain'' ) would be taken for the purposes of this Part to have accrued during the year of income to a taxpayer that is the trustee of a superannuation fund in respect of the disposal of an asset; and
(b) the market value of the asset was taken into account in determining the fund's net previous income in respect of previous years of income under section 288A ;
the following paragraphs have effect:
(c) if the notional capital gain exceeds the amount that, apart from this subsection, would have been taken for the purposes of this Part to have accrued during the year of income to the taxpayer in respect of the disposal of the asset if the consideration in respect of the disposal had been equal to the market value referred to in paragraph (b) - the amount of the capital gain that is taken for the purposes of this Part to have accrued to the taxpayer during the year of income in respect of the disposal of the asset is an amount equal to the excess;
(d) in any other case - no capital gain is taken for the purposes of this Part to have accrued to the taxpayer during a year of income in respect of the disposal of the asset.
(a) apart from this subsection a capital gain (the ``notional capital gain'' ) would be taken for the purposes of this Part to have accrued during the year of income to a taxpayer that is the trustee of a superannuation fund in respect of the disposal of an asset; and
(b) the market value of the asset was taken into account in determining the fund's net previous income in respect of previous years of income under section 288B ;
the following paragraphs have effect:
(c) if the notional capital gain exceeds the amount that, apart from this subsection, would have been taken for the purposes of this Part to have accrued during the year of income to the taxpayer in respect of the disposal of the asset if the consideration in respect of the disposal had been equal to the market value referred to in paragraph (b) - the amount of the capital gain that is taken for the purposes of this Part to have accrued to the taxpayer during the year of income in respect of the disposal of the asset is an amount equal to the excess;
(d) in any other case - no capital gain is taken for the purposes of this Part to have accrued to the taxpayer during a year of income in respect of the disposal of the asset.
(a) apart from this subsection, a capital gain (in this subsection called the ``notional capital gain'' ) would be taken for the purposes of this Part to have accrued to a taxpayer during the year of income in respect of the disposal of an asset (in this subsection called the ``taxpayer's asset'' ); and
(b) the taxpayer's asset is the taxpayer's interest in a partnership asset of a partnership in which the taxpayer is a partner; and
(c) as a result of the disposal, an amount or amounts (in this subsection and subsection (6) called the ``included amount'' or the ``included amounts'' ) has or have been, or will be, included in the assessable income of the partnership of any year of income under a provision of this Act other than this Part (other than an amount or amounts excluded by subsection (5A) or an amount or amounts included because of subsection 42-190(2) of the Income Tax Assessment Act 1997 as affected as mentioned in subsection 42-190(4) or (5) of that Act);
the following provisions have effect:
(d) if the notional capital gain exceeds the partner's portion of the included amount or included amounts - the amount of the capital gain that is taken for the purposes of this Part to have accrued to the taxpayer during the year of income in respect of the disposal of the taxpayer's asset is an amount equal to the excess;
(e) if the notional capital gain does not exceed the partner's portion of the included amount or included amounts - no capital gain is taken for the purposes of this Part to have accrued to the taxpayer during the year of income in respect of the disposal of the taxpayer's asset.
An amount is excluded from paragraph (5)(c) if it has been, or will be, included in the partnership's assessable income under a provision having effect where:
(a) the partnership recoups capital expenditure that was incurred in respect of the asset; and
(b) a deduction has been allowed or is allowable to the partnership in respect of the capital expenditure.
A reference in subsection (5) to the partner's portion of the included amount or included amounts is a reference to so much of the individual interest of the partner in the net income, or the partnership loss, of the partnership as is attributable to the included amount or sum of the included amounts.
For the purposes of subsection (4) or (5), if a provision of this Act other than this Part has the effect that an amount that would otherwise be included in the assessable income of the taxpayer or partnership referred to in that subsection is not so included, or is only so included in part, then that provision of this Act is to be disregarded for the purposes of that subsection. This subsection is subject to subsection (7A).
Subsection (7) does not apply in relation to a dividend that is exempt from tax under section 23AJ to the extent that the dividend is:
(a) debited against a share capital account; or
(b) (Repealed by Act No 63 of 1998)
(c) debited against a reserve to the extent that it consists of profits from the revaluation of assets of a company that have not been disposed of by the company; or
(d) attributable, either directly or indirectly, to amounts that were transferred from an account or reserve of the company paying the dividend where the account or reserve is covered by one of the above paragraphs.
For the purposes of subsection (4), if an eligible termination payment (within the meaning of Subdivision AA of Division 2 of Part III ) is to be included in part in the assessable income of a taxpayer, then the whole of the payment is taken to be so included.
If:
(a) the disposal of an asset is covered by paragraph 160T(1)(b) , but not by any other paragraph of subsection 160T(1) ; and
(b) the taxpayer used the assets in the way described in that paragraph for only part of the period (the ``ownership period'' ) starting when the taxpayer acquired the asset and ending when the taxpayer disposed of the asset; and
(c) a capital gain has accrued to the taxpayer, or the taxpayer has incurred a capital loss, in respect of the disposal;
the amount of the capital gain, or of the capital loss, (as the case may be) is taken to be:
| Amount of the gain or loss
referred to in paragraph (c) |
× |
Number of days the asset was used
in the way described in paragraph 160T(1)(b) Number of days in the ownership period |
A capital gain shall not be taken to have accrued to a taxpayer by reason of the taxpayer having obtained a sum by way of compensation or damages for any wrong or injury suffered by the taxpayer to his or her person or in his or her profession or vocation and no such wrong or injury, or proceeding instituted or other act done or transaction entered into by the taxpayer in respect of such a wrong or injury, shall be taken to have resulted in the taxpayer having incurred a capital loss.
160ZB(2) [Betting, lottery winnings]A capital gain shall not be taken to have accrued to a taxpayer by reason of the taxpayer having received winnings from betting (including pool betting), a lottery or other form of gambling or a game or competition with prizes but this subsection does not apply in relation to an amount of money or other consideration received by a taxpayer as a result of the disposal of an asset obtained from betting (including pool betting), a lottery or other form of gambling or a game or competition with prizes.
A taxpayer shall not be taken to have incurred a capital loss as a result of any act done or transaction entered into by the taxpayer by way of betting (including pool betting) or participating in a lottery or other form of gambling or a game or competition with prizes.
A capital gain, to the extent to which it is attributable to currency exchange rate fluctuations, shall not be taken to have accrued to a taxpayer as a result of a contract where the taxpayer entered into, or acquired rights arising under, the contract for the sole purpose of eliminating or reducing the risk of adverse financial consequences that might result for the taxpayer, from currency exchange rate fluctuations, in relation to:
(a) a right acquired by the taxpayer before 20 September 1985 to receive money under another contract; or
(b) a liability acquired by the taxpayer to make a payment under another contract.
A capital loss, to the extent to which it is attributable to currency exchange rate fluctuations, shall not be taken to have been incurred by a taxpayer as a result of a contract where the taxpayer entered into the contract, or acquired rights arising under the contract, after 28 November 1986 for the sole purpose of eliminating or reducing the risk of adverse financial consequences that might result for the taxpayer, from currency rate fluctuations, in relation to:
(a) a right acquired by the taxpayer before 20 September 1985 to receive money under another contract; or
(b) a liability acquired by the taxpayer to make a payment under another contract.
(Omitted by No 224 of 1992)
160ZB(7) [Election under 1997 Act]
When an item already owned by a taxpayer becomes trading stock of the taxpayer:
(a) a capital gain does not accrue to the taxpayer; and
(b) the taxpayer does not make a capital loss;
if the taxpayer elects under paragraph 70-30(1)(a) of the Income Tax Assessment Act 1997 to be treated as having sold the item for its cost (as worked out under that section).
Subsections (1) and (2) do not apply for the purposes of assessments for the 1998-99 year of income or any later year of income.
See instead Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 .
This section has effect subject to Divisions 3A to 3C .
This subsection sets out how to work out, for the purposes of this Part, if a net capital gain accrues to a taxpayer in respect of a year of income and, if so, the amount of that net capital gain.
Calculating net capital gains
Step 1.
Add up all of the capital gains that accrued to the taxpayer during the year of income. The result is called the total capital gains .
Step 2.
Add up all of the capital losses incurred by the taxpayer during the year of income. The result is called the total capital losses .
Step 3.
Subtract the total capital losses from the total capital gains. (If the total capital losses exceed the total capital gains, no net capital gain accrues to the taxpayer in respect of the year of income.)
Step 4.
If there is a balance remaining after step 3, reduce it by applying net capital losses from previous years of income. (If this reduces the balance to nil, no net capital gain accrues to the taxpayer in respect of the year of income.)
Step 5.
If the balance is not reduced to nil in step 4, a net capital gain is taken to have accrued to the taxpayer in respect of the year of income. The balance after step 4 is the amount of the net capital gain.
For the purposes of this Part, a net capital loss is taken to have been incurred by a taxpayer in respect of a year of income if:
(a) the sum of any capital losses incurred by the taxpayer during the year of income;
exceeds:
(b) the sum of any capital gains that accrued to the taxpayer during the year of income.
The net capital loss is the excess.
Note:
The amount of a net capital loss may be reduced under subsection 160ZZPR(2) or 160ZZPS (2).
In working out if a net capital gain accrues where there are 2 or more net capital losses, those losses are to be applied in the orderin which the taxpayer incurred them.
A net capital loss can be applied only to the extent that it has not already been applied.
If all or part of a net capital loss cannot be applied in a year of income, the unapplied amount can be carried forward to be applied in the next year of income. This section sets out whether the unapplied amount of the net capital loss can be applied in the next year of income.
Example: At the start of a year of income, Patricia has net capital losses from previous years. From the year immediately before the year of income she has an available net capital loss of $300 and from the year prior to that she has an available net capital loss of $200. During the year of income, she accrues capital gains totalling $1,000 and incurs capital losses totalling $700.
The capital losses are deducted from the capital gains leaving a balance of $300.
This balance is reduced to nil by applying the available net capital losses in the order in which they were incurred. This leaves $200 of the loss from the previous year to be carried forward and extinguishes the net capital loss from the year before that.
There is no net capital gain or net capital loss for the year of income.
In spite of any other provision of this section, if, during a year of income, a taxpayer:
(a) has become a bankrupt; or
(b) not having become a bankrupt, has been released from any debts by the operation of an Act relating to bankruptcy;
then any net capital loss from an earlier year of income cannot be applied in determining whether a net capital gain accrued to the taxpayer in respect of the year of income or a later year of income.
(a) a taxpayer becomes a bankrupt, but the bankruptcy is later annulled; and
(b) disregarding the annulment, subsection (4A) applies to the bankruptcy; and
(c) the annulment occurred under section 74 of the Bankruptcy Act 1966 ; and
(d) under the composition or scheme of arrangement concerned, the taxpayer has been, will be or may be, released from any debts, from which he or she would have been released if he or she had been instead discharged from the bankruptcy;
then, for the purposes of subsection (4A), the annulment is disregarded.
(a) in a year of income (the loss year ), a taxpayer incurs a net capital loss that, because of subsection (4A), cannot be applied as mentioned in that subsection; and
(b) the Commissioner is satisfied that a debt incurred by the taxpayer was taken into account in working out the amount of the net capital loss; and
(c) in a year of income (the payment year ) after the loss year, the taxpayer pays an amount in respect of the debt; and
(d) apart from the operation of subsection (4A), an amount of the net capital loss (the denied amount ) would have been applied (if sufficient capital gains had accrued) in determining whether a net capital gain accrued to the taxpayer in the payment year;
then the taxpayer is taken to have incurred in the payment year a capital loss of the amount worked out under subsection (4D).
The amount of the capital loss is the smallest of the following:
(a) the amount paid in respect of the debt;
(b) so much of the debt as the Commissioner is satisfied was taken into account in working out the denied amount;
(c) the denied amount, reduced by the sum of any capital losses taken by subsection (4C) to have been incurred as a result of previous payments in respect of debts that the Commissioner was satisfied were taken into account in working out the denied amount.
If, apart from sections 245-125 to 245-135 in Schedule 2C, a taxpayer would be taken to have incurred a net capital loss in an earlier year of income, then, for the purposes of this section:
(a) if the effect of those sections is to reduce the amount of the loss to nil - the taxpayer is taken not to have incurred a net capital loss in that year of income; or
(b) if the effect of those sections is to reduce the amount of the loss to an amount greater than nil - the amount of the net capital loss incurred by the taxpayer in that year of income is taken to be the reduced amount.
A net capital loss that is to be taken to have been incurred by a taxpayer being a company in respect of a year of income cannot be applied in determining whether a net capital gain accrued to the taxpayer in a later year of income if, had the net capital loss been a tax loss, Subdivision 165-A or 175-A of the Income Tax Assessment Act 1997 would have prevented the taxpayer from deducting it in that later income year.
(a) at some time during the last day of a year of income, a company is not a PDF; and
(b) the company was a PDF throughout the last day of the previous year of income ( ``the final PDF year'' );
a net capital loss that the company is taken to have incurred in respect of the final PDF year is to be disregarded in ascertaining whether a net capital gain accrued to the company, or the company incurred a net capital loss, in the first-mentioned year.
However, subsection (6) does not apply to so much of the net capital loss as does not exceed the amount (if any) by which the total of:
(a) if the company is taken to have incurred a net capital loss in respect of the last year of income before the year of income at the start of which, or during which, it became a PDF - that net capital loss; and
(b) if the company incurred a capital loss or capital losses after that last year of income and before it became a PDF - that capital loss or those capital losses;
exceeds:
(c) if a capital gain or capital gains accrued to the company after that last year of income and before the year of income referred to in paragraph (6)(a) - that capital gain or the total of those capital gains; or
(d) otherwise - a nil amount.
The Commissioner may give a company a notice in accordance with section 160ZCB if the requirements of this section are met.
160ZCA(2) Company must have applied a net capital loss in certain circumstances.In determining in its return of income for the 1997-98 year of income whether a net capital gain accrued to the company, the company must have applied a net capital loss that is to be taken to have been incurred in the 1996-97 year of income where, under subsection 160ZC(5) , it would not have been allowed to apply the loss if it did not meet the condition in section 165-12 of the Income Tax Assessment Act 1997 , as applied on the assumption mentioned in subsection 160ZC(5) of this Act.
160ZCA(3) Role of family trust.The Commissioner must be satisfied that the company meets the conditions in section 165-12 of the Income Tax Assessment Act 1997 , as applied on the assumption mentioned in subsection 160ZC(5) of this Act, but it would not do so unless one or more trusts were family trusts (within the meaning of section 272-75 of Schedule 2F).
160ZCA(4) Non-resident trust.When the Commissioner gives the notice, for at least one of the family trusts:
(a) a trustee of the trust must be a non-resident; or
(b) the central management and control of the trust must be outside Australia. 160ZCA(5) When notice must be given.
The Commissioner must give the notice before the later of:
(a) 5 years after the 1997-98 year of income; and
(b) the end of the period during which the company is required by section 262A to retain records in relation to that year of income.
The notice that the Commissioner may give if the requirements of section 160ZCA are met must require the company to give the Commissioner specified information about conferrals of present entitlements to, and distributions (within the meaning of Subdivision 272-B of Schedule 2F) of, income and capital, since the start of the 1996-97 year of income by all of the family trusts meeting the requirements of paragraph 160ZCA(4)(a) or (b).
160ZCB(2) Company knowledge.The information need not be within the knowledge of the company at the time the notice is given.
160ZCB(3) Period for giving information.The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
160ZCB(4) Consequence of not giving the information.If the company does not give the information within the period or within such further period as the Commissioner allows, the company is not entitled, and is taken never to have been entitled, to apply the net capital loss.
160ZCB(5) No offences or penalties.To avoid doubt, subsection (4) does not cause the company to commit any offence or be liable to any penalty under Part VII for applying the net capital loss in the company's return.
The Commissioner may give a company a notice in accordance with section 160ZCD if the requirements of this section are met.
160ZCC(2) Net capital loss must have been applied in certain circumstances.In determining whether a net capital gain accrued to the company for the 1997-98 year of income, a net capital loss that is to be taken to have been incurred in respect of the 1996-97 year of income must have been applied, where subsection 160ZC(5) would have prevented it from being applied but for the application of subsection 175-10(2) or 175-15(2) of the Income Tax Assessment Act 1997 , as applied on the assumption mentioned in subsection 160ZC(5) of this Act.
160ZCC(3) Role of family trust.A family trust (within the meaning of section 272-75 of Schedule 2F) must have been:
(a) one of the continuing shareholders mentioned in subsection 175-10(2) of the Income Tax Assessment Act 1997 , as applied on the assumption mentioned in subsection 160ZC(5) of this Act; or
(b) the person who had the shareholding interest mentioned in subsection 175-15(2) of the Income Tax Assessment Act 1997 , as so applied;
as the case requires.
160ZCC(4) Non-resident trust.When the Commissioner gives the notice:
(a) a trustee of the family trust must be a non-resident; or
(b) the central management and control of the family trust must be outside Australia. 160ZCC(5) When notice must be given.
The Commissioner must give the notice before the later of:
(a) 5 years after the 1997-98 year of income; and
(b) the end of the period during which the company is required by section 262A to retain records in relation to that year of income.
The notice that the Commissioner may give if the requirements of section 160ZCC are met must require the company to give the Commissioner specified information about conferrals of present entitlements to, and distributions (within the meaning of Subdivision 272-B of Schedule 2F) of, income and capital by the family trust since the start of the 1996-97 year of income.
160ZCD(2) Company knowledge.The information need not be within the knowledge of the company at the time the notice is given.
160ZCD(3) Period for giving information.The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
160ZCD(4) Consequence of not giving the information.If the company does not give the information within the period or within such further period as the Commissioner allows, the net capital loss cannot be applied.
160ZCD(5) No offences or penalties.To avoid doubt, subsection (4) does not cause the company to commit any offence or be liable to any penalty under Part VII for previously applying the net capital loss in the company's return.
The Commissioner may give the company a notice in accordance with section 160ZCF if the requirements of subsections (2) to (5) of this section are met.
160ZCE(2) Company must have applied a net capital loss in certain circumstances.In determining in its return of income for the 1997-98 year of income whether a net capital gain accrued to the company, the company must have applied a net capital loss that is to be taken to have been incurred in the 1996-97 year of income where, under subsection 160ZC(5) , it would not have been allowed to apply the loss if it did not meet the condition in section 165-215 of the Income Tax Assessment Act 1997 , as applied on the assumption mentioned in subsection 160ZC(5) of this Act.
160ZCE(3) Information about non-fixed trust.In order to determine whether it meets the condition, the Commissioner must need information about a non-fixed trust mentioned in subsection 165-215(5) of the Income Tax Assessment Act 1997 , as applied on the assumption mentioned in subsection 160ZC(5) of this Act.
160ZCE(4) Non-resident trust.When the Commissioner gives the notice:
(a) a trustee of the non-fixed trust must be a non-resident; or
(b) the central management and control of the non-fixed trust must be outside Australia. 160ZCE(5) When notice must be given.
The Commissioner must give the notice before the later of:
(a) 5 years after the 1997-98 year of income; and
(b) the end of the period during which the company is required by section 262A to retain records in relation to that year of income.
The notice that the Commissioner may give if the requirements of subsections 160ZCE(2) to (5) are met must require the company to give the Commissioner specified information that is relevant in determining whether the requirements of subsection 165-215(5) of the Income Tax Assessment Act 1997 , as applied on the assumption mentioned in subsection 160ZC(5) of this Act, are satisfied in relation to the non-fixed trust mentioned in subsections 160ZCE(3) and (4).
160ZCF(2) Company knowledge.The information need not be within the knowledge of the company at the time the notice is given.
160ZCF(3) Period for giving information.The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
160ZCF(4) Consequence of not giving the information.If the company does not give the information within the period or within such further period as the Commissioner allows, the company is taken not to meet, and never to have met, the condition mentioned in subsection 160ZCE(2).
160ZCF(5) No offences or penalties.To avoid doubt, subsection (4) does not cause the company to commit any offence or be liable to any penalty under Part VII for applying the net capital loss in the company's return.
Subject to this Part, for the purposes of this Part, the consideration in respect of a disposal of an asset is:
(a) if the taxpayer has received or is entitled to receive an amount or amounts of money as a result of or in respect of the disposal - that amount or the sum of those amounts;
(b) if the taxpayer has received or is entitled to receive property other than money as a result of or in respect of the disposal - the market value of that property at the time of the disposal; or
(c) if the taxpayer has received or is entitled to receive both an amount or amounts of money and property other than money as a result of or in respect of the disposal - the sum of that amount or those amounts and the market value of that property at the time of the disposal. 160ZD(2) [No consideration, inadequate or excessive consideration]
Subject to subsection (2B), if a taxpayer has disposed of an asset and:
(a) there is no consideration in respect of the disposal;
(b) the whole or a part of the consideration received by the taxpayer in respect of the disposal cannot be valued; or
(c) the amount that would, but for this paragraph, be taken to be the consideration received by the taxpayer in respect of the disposal is greater or less than the market value of the asset at the time of the disposal and, in the case where the asset was disposed of to another person, the taxpayer and that other person were not dealing with each other at arm's length in connection with the disposal;
the taxpayer shall be deemed to have received as consideration in respect of the disposal an amount equal to the market value of the asset at the time of the disposal.
For the purposes of the application of subsection (2) to the disposal of an asset otherwise than to another person, the market value of the asset at the time of the disposal is the amount that would have been the market value at that time if that disposal did not occur and was never proposed to occur.
Subsection (2) does not apply in relation to a disposal of an asset constituted by:
(a) the expiry, loss or destruction of the asset; or
(b) the cancellation of the asset where it is a statutory licence (within the meaning of subsection 160ZZPE(4) ) and there is no consideration in respect of the disposal.
Subsection (2) does not apply by virtue of paragraph (a) of that subsection in relation to a disposal where another provision of this Part (however expressed) deems no consideration to have been received in respect of the disposal.
160ZD(4) [Where consideration relates partly to disposal of an asset]Where any consideration paid or given in respect of a transaction relates in part only to the disposal of a particular asset, so much of that consideration as may reasonably be attributed to the disposal of the asset shall be taken to relate to the disposal of the asset.
160ZD(5) [Decrease in value of asset of company, partnership, trust](a) a decrease has taken place in the market value of a personal-use asset that is owned by a company or is the property of a trust estate;
(b) a disposal takes place of shares in the company or in a company that is related to the company or of an interest in the trust estate; and
(c) the amount that, under the preceding provisions of this section, would be the consideration in respect of the disposal is less than the amount (in this subsection referred to as the ``notional amount'' ) that, but for the decrease,would, under those provisions, be that consideration,
the consideration in respect of the disposal shall be deemed to be the notional amount.
This section has effect subject to Division 16J of Part III .
For the purposes of this Part but subject to subsection (2), if the consideration in respect of a disposal of a non-listed personal-use asset would, but for this section, be less than $10,000, the consideration in respect of that disposal of that asset shall be deemed to be $10,000.
Where there is a disposal of a non-listed personal-use asset (in this subsection referred to as the ``relevant asset'' ) that formed part of another non-listed personal-use asset (in this subsection referred to as the ``original asset'' ), subsection (1) does not apply in relation to the disposal but the consideration in respect of the disposal of the relevant asset shall be deemed to be whichever is the greater of the following amounts:
(a) the amount that would, but for this section, be the consideration in respect of the disposal;
(b) the amount that bears to $10,000 the same proportion as the amount that would, but for section 160ZG , be the indexed cost base to the taxpayer of the relevant asset bears to the amount that would, but for that section, have been the indexed cost base to the taxpayer of the original asset if the whole of the original asset had been disposed of at the time of the disposal of the relevant asset.
Subject to subsection (3), where the whole or a part of the consideration in respect of the disposal of an asset has not been, and is not likely to be, received by the taxpayer, this Part (other than subsection 160ZD(2) ) applies as if there were no consideration in respect of the disposal or the consideration in respect of the disposal did not include that part of the consideration, as the case may be, and the debt that arose in relation to or by reason of the disposal shall be deemed not to be an asset to which this Part applies.
160ZF(2) [Non-receipt attributable to act of taxpayer]Subsection (1) does not apply where the non-receipt or likely non-receipt by the taxpayer of the whole or part of the consideration is attributable to an act or thing done or omitted to be done by the taxpayer or by an associate of the taxpayer or the taxpayer has not taken all reasonable action to secure payment of the consideration or the unpaid part of the consideration.
160ZF(3) [Consideration subsequently received]If, after the making in respect of the taxpayer of an assessment for the purposes of which subsection (1) has been applied, the consideration or part of the consideration is received by the taxpayer, that subsection shall be deemed not to have been applicable, or not to have been applicable in relation to that part of the consideration, as the case may be.
160ZF(4) [Amendment of assessments]Nothing in section 170 prevents the amendment of an assessment for the purpose of giving effect to this section.
Where:
(a) either:
(i) because of Division 17, this Part does not apply to the disposal of an asset by a person (in this section called the ``transferor'' ) to another person (in this section called the ``transferee'' ); or
(ii) because of Division 17, in its application in accordance with Division 7 of Part X, this Part does not apply, for the purpose of calculating the attributable income of a company under that Division in relation to any taxpayer, to the disposal of an asset by the CFC (in this section also called the ``transferor'' ) to another person (in this section also called the ``transferee'' ); and
(b) section 47A applies in relation to the disposal of the asset to deem the transferor to have paid a dividend to the transferee; and
(c) either:
(i) the whole or part of the deemed dividend is included in the assessable income of the transferee under section 44 ; or
(ii) an amount in respect of the deemed dividend is included in the assessable income of another taxpayer under section 458 or 459 ; and
(d) the transferee subsequently disposes of the asset;
then, for the purposes of this Part, the consideration in respect of the subsequent disposal is taken to be reduced by the lesser of:
(e) the amount of the deemed dividend; and
(f) the amount of any capital gain that, disregarding Division 17, would have accrued to the transferor:
(i) where subparagraph (a)(i) applies - under this Part; or
in respect of the disposal referred to in subparagraph (a)(i) or (ii) if the consideration in respect of the disposal had been equal to the market value of the asset at the time of that disposal.
(ii) where subparagraph (a)(ii) applies - under this Part in its application for the purpose of calculating the attributable income of the transferor in relation to the taxpayer;
(a) because a company has, at a particular time (in this section called the ``residence-change time'' ), ceased to be a resident of an unlisted country and become a resident of a listed country, an amount is or has been included in a taxpayer's assessable income under section 457 (including under that section because of paragraph 58(1)(d) of the Taxation Laws Amendment (Foreign Income) Act 1990 ); and
(aa) subsection 457(3) does not apply to the change of residence; and
(b) the company later disposes (which disposal is in this section called the ``actual disposal'' ) of a taxable Australian asset (in this section called the ``eligible asset'' ) that it has held since the residence-change time;
then the consideration in respect of the actual disposal of the eligible asset is, for the purposes of this Part, adjusted in accordance with this section.
(a) the result of making the assumption, in subparagraph 457(2)(a)(i) of this Act or in paragraph 58(2)(a) of the Taxation Laws Amendment (Foreign Income) Act 1990 , that all of the company's assets were disposed of at the residence-change time for a consideration equal to their market value was:
(i) to increase, by a particular amount (in this section called the ``DP creation/increase amount'' ), the amount that would otherwise be the distributable profits referred to in that subparagraph or paragraph; or
(ii) to create distributable profits of a particular amount (in this section also called the ``DP creation/increase amount'' ) where there would otherwise not be distributable profits; and
(b) if the eligible asset had been disposed of by the company at the residence-change time for its market value at that time, the company would have made a profit (in this section called the ``eligible asset profit'' ) on the disposal;
then the consideration in respect of the actual disposal of the eligible asset by the company is reduced by the amount calculated using the formula:
|
Eligible asset profit
Total asset profits |
× | DP creation/increase amount |
where:
`` Eligible asset profit '' means the amount of the eligible asset profit;
`` Total asset profits '' means the amount that would result if:
`` DP creation/increase amount '' means the DP creation/increase amount.
160ZFB(3) [Increase of consideration](a) the result of making the assumption, in subparagraph 457(2)(a)(i) of this Act or in paragraph 58(2)(a) of the Taxation Laws Amendment (Foreign Income) Act 1990 , that all of the company's assets were disposed of at the residence-change time for a consideration equal to their market value was to reduce (including to nil), by an amount (in this section called the ``DP reduction amount'' ), the amount that would otherwise be the distributable profits referred to in that subparagraph or paragraph; and
(b) if the eligible asset had been disposed of by the company at the residence-change time for its market value at that time, the company would have made a loss (in this section called the ``eligible asset loss'' ) on the disposal;
then the consideration in respect of the actual disposal of the eligible asset by the company is increased by the amount calculated using the formula:
|
Eligible asset loss
Total asset losses |
× | DP reduction amount |
where:
`` Eligible asset loss '' means the amount of the eligible asset loss;
`` Total asset losses '' means the amount that would result if:
`` DP reduction amount '' means the DP reduction amount.
160ZFB(4) [Definitions]In this section:
"resident of a listed country"
has the same meaning as in Part X;
"resident of an unlisted country"
has the same meaning as in Part X.
For the purposes of this Part but subject to subsection (2), if the indexed cost base to a taxpayer of a non-listed personal-use asset would, but for this section, be less than $10,000, the indexed cost base to the taxpayer of that asset shall be deemed to be $10,000.
Where a non-listed personal-use asset (in this subsection referred to as the ``relevant asset'' ) that formed part of another non-listed asset (in this subsection referred to as the ``original asset'' ) is disposed of by a taxpayer, subsection (1) does not apply in relation to the disposal but the indexed cost base to the taxpayer of the relevant asset shall be deemed to be whichever is the greater of the following amounts:
(a) the amount that would, but for this section, be the indexed cost base to the taxpayer of the relevant asset;
(b) the amount that bears to $10,000 the same proportion as the amount ascertained under paragraph (a) bears to the amount that would, but for this section, have been the indexed cost base to the taxpayer of the original asset if the whole of the original asset had been disposed of at the time of the disposal of the relevant asset.
For the purposes of this Part but subject to subsection (4), if the cost base to a taxpayer of a non-listed personal-use asset would, but for this section, be less than $10,000, the cost base to the taxpayer of that asset shall be deemed to be $10,000.
Where a non-listed personal-use asset (in this subsection referred to as the ``relevant asset'' ) that formed part of another non-listed personal-use asset (in this subsection referred to as the ``original asset'' ) is disposed of by a taxpayer, subsection (3) does not apply in relation to the disposal but the cost base to the taxpayer of the relevant asset shall be deemed to be whichever is the greater of the following amounts:
(a) the amount that would, but for this section, be the cost base to the taxpayer of the relevant asset;
(b) the amount that bears to $10,000 the same proportion as the amount ascertained under paragraph (a) bears to the amount that would, but for this section, have been the cost base to the taxpayer of the original asset if the whole of the original asset had been disposed of at the time of the disposal of the relevant asset.
Subject to the following provisions of this section, for the purposes of this Part, the cost base to a taxpayer of an asset is the sum of:
(a) the amount of any consideration in respect of the acquisition of the asset;
(b) the amount of the incidental costs to the taxpayer of the acquisition of the asset;
(ba) except where the asset is a personal-use asset of the taxpayer - the amount of the non-capital costs to the taxpayer of the ownership of the asset;
(c) the amount of any expenditure of a capital nature incurred by the taxpayer to the extent to which it was incurred for the purpose of enhancing the value of the asset and is reflected in the state or nature of the asset at the time of disposal of the asset;
(d) the amount of any expenditure of a capital nature incurred by the taxpayer to the extent to which it was incurred in establishing, preserving or defending the taxpayer's title to, or a right over, the asset; and
(e) the amount of the incidental costs to the taxpayer of the disposal of the asset.
Note:
Section 160ZJA affects the meaning of the amount of any consideration or the amount of any expenditure.
Subject to the following provisions of this section, for the purposes of this Part, the indexed cost base to a taxpayer of an asset is the sum of:
(a) the indexed amount of any consideration in respect of the acquisition of the asset;
(b) the indexed amount of the incidental costs to the taxpayer of the acquisition of the asset;
(ba) except where the asset is a personal-use asset of the taxpayer - the amount of the non-capital costs to the taxpayer of the ownership of the asset;
(c) the indexed amount of any expenditure of a capital nature incurred by the taxpayer to the extent to which it was incurred for the purpose of enhancing the value of the asset and is reflected in the state or nature of the asset at the time of disposal of the asset;
(d) the indexed amount of any expenditure of a capital nature incurred by the taxpayer to the extent to which it was incurred in establishing, preserving or defending the taxpayer's title to, or a right over, the asset; and
(e) the indexed amount of the incidental costs to the taxpayer of the disposal of the asset.
Note:
Section 160ZJB affects the meaning of the amount of any consideration or the amount of any expenditure.
Subject to the following provisions of this section, for the purposes of this Part, the reduced cost base to a taxpayer of an asset is the sum of:
(a) the reduced amount of any consideration in respect of the acquisition of the asset;
(b) the reduced amount of the incidental costs to the taxpayer of the acquisition of the asset;
(c) the reduced amount of any expenditure of a capital nature incurred by the taxpayer to the extent to which it was incurred for the purpose of enhancing the value of the asset and is reflected in the state or nature of the asset at the time of disposal of the asset;
(d) the reduced amount of any expenditure of a capital nature incurred by the taxpayer to the extent to which it was incurred in establishing, preserving or defending the taxpayer's title to, or a right over, the asset; and
(e) the reduced amount of the incidental costs to the taxpayer of the disposal of the asset.
Note:
Section 160ZK affects the meaning of the reduced amount of any consideration, the reduced amount of incidental costs, or the reduced amount of any expenditure.
If the relevant cost base of an asset is taken to be reduced under Subdivision 245-E of Schedule 2C in its application to the year of income in which the disposal of the asset occurs or a previous year of income, the reference in subsection (1), (2) or (3) to the sum of the amounts referred to in that subsection is to be treated as a reference to that sum as so taken to be reduced.
Subject to the following provisions of this section, for the purposes of this Part, the consideration in respect of the acquisition of an asset is:
(a) if the taxpayer has paid or is required to pay an amount or amounts of money in respect of the acquisition - that amount or the sum of those amounts;
(b) if the taxpayer has given or is required to give property other than money in respect of the acquisition - the market value of that property at the time of the acquisition; or
(c) if the taxpayer has given or is required to give both an amount or amounts of money and property other than money in respect of the acquisition - the sum of that amount or those amounts and the market value of that property at the time of the acquisition. 160ZH(5) [Incidental costs - acquisition of assets]
Subject to subsection (6), a reference in subsection (1), (2) or (3) to the incidental costs to a taxpayer of the acquisition of an asset is a reference to any expenditure incurred by the taxpayer to the extent to which it was incurred in connection with the acquisition, being:
(a) fees, commission or remuneration for the professional services of a surveyor, valuer, auctioneer, accountant, broker, agent, consultant or legal adviser;
(b) costs of transfer, including stamp duty or other similar duty;
(c) costs of advertising to find a seller; or
(d) costs in relation to the making of any valuation or apportionment under or for the purposes of this Part in respect of the acquisition;
but excluding any expenditure incurred by way of fees or commission for professional advice that:
(e) concerns the operation of this Act; and
(f) was not provided by a recognised tax adviser (as defined by section 995-1 of the Income Tax Assessment Act 1997 ).
The incidental costs to a taxpayer of the acquisition of an asset do not include any amount referred to in paragraph (5)(a), (b), (c) or (d) that has been allowed or is allowable as a deduction to the taxpayer in respect of any year of income.
160ZH(6A) [Non-capital costs]Subject to subsection (6B), a reference in subsection (1) or (2) to the non-capital costs to a taxpayer of the ownership of an asset is a reference to any expenditure of a non-capital nature incurred by the taxpayer to the extent to which it was incurred:
(a) by way of interest on a loan taken out to finance the acquisition of the asset; or
(b) in connection with the continuing ownership of the asset, for example:
(i) expenditure on repairs to, or maintenance of, the asset; or
(ii) premiums to insure the asset; or
(iii) if the asset is land - rates or land tax.
The non-capital costs to a taxpayer of the ownership of an asset do not include any amount that has been allowed or is allowable as a deduction to the taxpayer in respect of any year of income.
Subject to subsections (7A) and (8), a reference in subsection (1), (2) or (3) to the incidental costs to a taxpayer of the disposal of an asset is a reference to any expenditure incurred by the taxpayer to the extent to which it was incurred in connection with the disposal, being:
(a) fees, commission or remuneration for the professional services of a surveyor, valuer, auctioneer, accountant, broker, agent, consultant or legal adviser;
(b) costs of transfer, including stamp duty or other similar duty;
(c) costs of advertising to find a buyer; or
(d) costs in relation to the making of any valuation or apportionment under or for the purposes of this Part in respect of the disposal;
but excluding any expenditure incurred by way of fees or commission for professional advice that:
(e) concerns the operation of this Act; and
(f) was not provided by a recognised tax adviser (as defined by section 995-1 of the Income Tax Assessment Act 1997 ).
Subject to subsection (8), if the disposal of an asset is taken to have occurred under paragraph 160M(6A)(b) or subsection 160M(6BB) because of the application of subsection 160M(6) or (6BA) in relation to the creation of the asset, a reference in subsection (1), (2) or (3) of this section to the incidental costs to a taxpayer of the disposal of the asset is a reference to expenditure described in subsection (7B).
For the purposes of subsection (7A), the expenditure is any expenditure incurred by the taxpayer to the extent to which it was incurred in connection with the creation of the asset, being:
(a) fees, commission or remuneration for the professional services of a surveyor, valuer, auctioneer, accountant, broker, agent, consultant or legal adviser; or
(b) costs of registration of any instrument, including stamp duty or other similar duty; or
(c) costs of advertising to find a buyer; or
(d) costs in relation to the making of any valuation or apportionment under or for the purposes of this Part in respect of the creation of the asset;
but excluding any expenditure incurred by way of fees or commission for professional advice that:
(e) concerns the operation of this Act; and
(f) was not provided by a recognised tax adviser (as defined by section 995-1 of the Income Tax Assessment Act 1997 ).
The incidental costs to a taxpayer of the disposal of an asset do not include any amount referred to in paragraph (7)(a), (b), (c) or (d), or (7B)(a), (b), (c) or (d), that has been allowed or is allowable as a deduction to the taxpayer in respect of any year of income.
For the purposes of the application of subsection (1), (2) or (3) in determining the cost base, the indexed cost base or the reduced cost base to a taxpayer of an asset, if:
(a) the taxpayer acquired the asset from another person (not being an acquisition resulting from the doing by that other person of an act or thing that did not constitute a disposal of the asset by that other person for the purposes of this Part) and did not pay or give any consideration in respect of the acquisition; or
(b) the whole or a part of the consideration paid or given by the taxpayer in respect of the acquisition cannot be valued; or
(c) both of the following subparagraphs apply:
(i) the amount that would, but for this paragraph, be taken to be the consideration paid or given by the taxpayer in respect of the acquisition was:
(A) if the taxpayer acquired the asset as a result of the disposal of the asset by another person - greater or less than the market value of the asset at the time of the acquisition; or
(B) if the taxpayer acquired the asset as a result of the doing by another person of an act or thing that did not constitute a disposal of the asset by that other person for the purposes of this Part - greater than the market value of the asset at the time of the acquisition;
(ii) the taxpayer and the person from whom the taxpayer acquired the asset were not dealing with each other at arm's length in connection with the acquisition;
the taxpayer shall be deemed to have paid or given as consideration in respect of the acquisition of the asset an amount equal to the market value of the asset at the time of the acquisition.
Subsection (9) does not apply by virtue of paragraph (a) of that subsection in relation to an acquisition by a taxpayer where another provision of this Part (however expressed) deems no consideration to have been paid or given by the taxpayer in respect of the acquisition.
160ZH(11) [Recouped expenditure]In determining the cost base, the indexed cost base or the reduced cost base to a taxpayer of an asset, account shall not be taken of the amount or value of any part of the consideration paid or given by the taxpayer, or of the amount of any costs or expenditure incurred by the taxpayer, in respect of which the taxpayer has been recouped, or is entitled to be recouped, by any person.
160ZH(12) [Merged assets, split assets, changed assets]If, in the case of the happening of any of the following events without any change in the beneficial ownership of the asset or assets concerned, that is to say -
(a) two or more assets having been merged or an asset having been divided into two or more assets; or
(b) an asset having been changed in whole or in part into an asset of a different nature,
the value of an asset as it existed after the happening of the relevant event (in subsections (13) and (14) referred to as the ``relevant asset'' ) is in whole or in part derived from or otherwise attributable to an asset as it existed immediately before the happening of the relevant event (in subsections (13) and (14) referred to as the ``original asset'' ), then subsections (13) and (14) have effect.
160ZH(13) [Cost base etc includes part of cost base of original asset]For the purpose of determining the cost base, the indexed cost base or the reduced cost base to a taxpayer of the relevant asset on the disposal of that asset, any amount that would have been included in the cost base, the indexed cost base or the reduced cost base, as the case may be, to the taxpayer of the original asset if -
(a) the relevant event had not happened;
(b) the original asset had been disposed of at the time of the relevant event; and
(c) this Part had been in force and applied in relation to the disposal,
shall, to such extent as is reasonable, be included in the cost base, the indexed cost base or the reduced cost base, as the case may be, to the taxpayer of the relevant asset.
160ZH(14) [Original asset continues in existence]If the original asset continued in existence to any extent after the happening of the relevant event -
(a) for the purpose of determining the cost base, the indexed cost base or the reduced cost base to the taxpayer of the original asset as so continuing in existence in the event of the disposal of that asset, the amount that would, if the relevant event had not happened, be that cost base, indexed cost base or reduced cost base, as the case may be, shall be reduced by any amount that, by virtue of the application of subsection (13) in relation to the original asset, is included in the cost base, indexed cost base or reduced cost base, as the case may be, to the taxpayer of the relevant asset; and
(b) to the extent (if any) to which it is necessary to apply this paragraph for the purpose of determining the cost base, the indexed cost base or the reduced cost base to the taxpayer of the original asset as so continuing in existence in the event of the disposal of that asset before the disposal of the relevant asset, the amount that would, if the relevant event had not happened, be that cost base, indexed cost base or reduced cost base shall be reduced by any amount that would have been included in the cost base, the indexed cost base or the reduced cost base, as the case may be, to the taxpayer of the relevant asset by virtue of subsection (13) if the relevant asset had been disposed of immediately before the disposal of the original asset.
Where part of an asset is disposed of, each amount (in this subsection referred to as the ``relevant amount'' ) that, under section 160ZH, is attributable to the asset shall be apportioned as follows:
(a) in respect of the part that is disposed of there shall be attributed so much of the relevant amount as bears to the relevant amount the same proportion as the amount of the consideration in respect of the disposal bears to the sum of the amount of that consideration and the market value of the part that remains undisposed of; and
(b) the remainder of the relevant amount shall be attributed to the part that remains undisposed of. 160ZI(2) [Circumstances where no apportionment required]
Subsection (1) shall not be taken as requiring the apportionment of an amount that, on the facts, is wholly attributable to the part of an asset that is disposed of, or is wholly attributable to the part of the asset that remains undisposed of.
In this section, ``index number'' , in relation to a quarter, means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of that quarter.
[ CCH Note: The index numbers for each quarter, extracted from official publications of the Australian Bureau of Statistics, commencing with the September 1985 quarter, are reproduced in the table below. The numbers in parentheses reflect the index numbers published before the change in the CPI reference base used from the March 1992 quarter.
Subject to subsection (3), if at any time, whether before or after the commencement of this Part, the Australian Statistician has published or publishes an index number in respect of a quarter in substitution for an index number previously published by the Australian Statistician in respect of that quarter, the publication of the later index number shall be disregarded for the purposes of this section.
160ZJ(3) [Change by Statistician of reference base]If at any time, whether before or after the commencement of this Part, the Australian Statistician has changed or changes the reference base for the Consumer Price Index, then, for the purposes of the application of this section after the change took place or takes place, regard shall be had only to index numbers published in terms of the new reference base.
160ZJ(3A) [Indexed amount of consideration]Where, in respect of an asset, a taxpayer has paid or given or is required to pay or give any consideration referred to in paragraph 160ZH(2)(a), the indexed amount of the consideration in respect of the acquisition of the asset is the amount or the total of the amounts calculated as follows:
(a) if the taxpayer acquired the asset:
(i) as a result of the doing by a person of an act that did not constitute a disposal of the asset for the purposes of this Part; or
the indexed amount of so much of the consideration as was required to be paid to the person referred to in subparagraph (i) (in this paragraph called the ``relevant consideration'' ) is the sum of the amounts ascertained under whichever of the following subparagraphs is or are applicable:
(ii) from a person to whose acquisition of the asset subparagraph (i) or this subparagraph applied;
(iii) where the whole or a part of the amount of the relevant consideration was paid or given at or before the time of the acquisition - that amount, or that part of that amount, as the case may be, multiplied by the factor ascertained in accordance with subsections (5) and (6) in relation to that amount or that part of that amount;
(iv) where the whole or a part of the amount of the relevant consideration was paid or given at a later time - that amount or that part of that amount, as the case may be, multiplied by the factor ascertained in accordance with subsections (5A) and (6) in relation to that amount or that part of that amount;
and the indexed amount of the remainder of the consideration is the amount of that remainder multiplied by the factor ascertained in accordance with subsections (5) and (6) in relation to that amount; and
(v) where the whole or a part of the amount of the relevant consideration has not been paid or given - that amount or that part of that amount;
(b) if the taxpayer did not acquire the asset as mentioned in paragraph (a), the indexed amount of the consideration is the amount of the consideration multiplied by the factor ascertained in accordance with subsections (5) and (6) in relation to that amount.
Where, in respect of an asset, a taxpayer has incurred any costs referred to in paragraph 160ZH(2)(b) or (e) or any expenditure referred to in paragraph 160ZH(2)(c) or (d), the reference in paragraph 160ZH(2)(b) or (e) to the indexed amount of the costs, or the reference in paragraph 160ZH(2)(c) or (d) to the indexed amount of the expenditure, in relation to the asset is a reference to the amount of the costs or the amount of the expenditure, as the case may be, multiplied by the factor ascertained in accordance with subsections (5) and (6) in relation to that amount.
The factor to be ascertained for the purposes of subparagraph (3A)(a)(iii), paragraph (3A)(b) or subsection (4) in relation to an amount of consideration, an amount of costs or an amount of expenditure is:
(a) the number (calculated to 3 decimal places) ascertained by dividing the index number in respect of the quarter of the year in which the asset was disposed of by the taxpayer by the index number in respect of the quarter of the year in which the liability to pay or give the consideration arose, the costs were incurred or the expenditure was incurred, as the case may be; or
(b) the number 1;
whichever is the higher number.
The factor to be ascertained for the purposes of subparagraph (3A)(a)(iv) in relation to an amount of consideration is:
(a) the number (calculated to 3 decimal places) ascertained by dividing the index number in respect of the quarter of the year in which the asset was disposed of by the taxpayer by the index number in respect of the quarter of the year in which that amount of consideration was paid or given; or
(b) the number 1;
whichever is the higher number.
Where the factor ascertained in accordance with subsection (5) or (5A) in relation to any amount would, if it were calculated to 4 decimal places, end with a number greater than 4, that factor is to be taken to be the factor calculated to 3 decimal places in accordance with that subsection and increased by 0.001.
A reference in subsection 160ZH(1) to the amount of any consideration or the amount of any expenditure, in respect of an asset (other than the taxpayer's interest in a partnership asset of a partnership in which the taxpayer is a partner) is a reference to the sum of:
(a) the amount of the consideration or the amount of the expenditure, as the case may be (as worked out under section 160ZH ); and
(b) any amount that is included in the assessable income of the taxpayer of any year of income by virtue of a provision of this Act other than this Part the effect of which is to reverse a deduction covered by paragraph (c) or subparagraph (d)(iii);
reduced by:
(c) any part of the consideration or of the expenditure that has been allowed or is allowable as a deduction to the taxpayer in respect of any year of income; and
(d) for the purpose of the reference in paragraphs 160ZH(1)(a), (c) and (d):
(i) any amount of expenditure in relation to the asset that, apart from subsections 124ZB(4) and 124ZG(5), would have been allowed or allowable under Division 10C or 10D of Part III as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income; and
(ii) any amount that, apart from subsection 388-55(3) of the Income Tax Assessment Act 1997 , would have been allowed or allowable under Subdivision 387-A or 387-B of that Act as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income; and
(iii) any amount of expenditure that, apart from paragraph 43-70(2)(h) of the Income Tax Assessment Act 1997 , would have been allowed or allowable under Division 43 of that Act as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income; and
160ZJA(2) [Amounts included]
(iv) any other expenditure that is capital expenditure by the taxpayer or any other person in respect of the asset that has been allowed or is allowable as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income.
The reference in paragraph (1)(b) to an amount that is included in the assessable income of a taxpayer includes a reference to an amount:
(a) that is taken by subsection 60(1A) of this Act to be so included for the asset for the purposes of subsection 60(1) ; or
(b) that is treated as being deducted for depreciation of another asset under section 42-285 or 42-290 of the Income Tax Assessment Act 1997 ; or
(c) that, apart from roll-over relief under sections 58 , 73E , 122JAA , 122JG , 123BBA , 123BF , 124AMAA , 124GA , 124JD and 124PA , would have been included in assessable income; or
(d) that, apart from Subdivision 41-A of the Income Tax Assessment Act 1997 (Common rule 1 - roll-over relief for related entities), would have been included in assessable income;
However, it does not include an amount included in a taxpayer's assessable income under Division 243 of the Income Tax Assessment Act 1997 .
The reference in paragraph (1)(c) to an amount that has been allowed or is allowable as a deduction does not include an amount allowed under Division 243 of the Income Tax Assessment Act 1997 .
160ZJA(3) [Partnerships]
A reference in subsection 160ZH(1) to the amount of any consideration or the amount of any expenditure, in respect of an asset (the taxpayer's asset ), being a taxpayer's interest in a partnership asset of a partnership in which the taxpayer is a partner, is a reference to the sum of:
(a) the amount of the consideration or the amount of the expenditure, as the case may be (as worked out under section 160ZH ); and
(b) any amount that is included in the assessable income of the partnership or of the taxpayer of any year of income by virtue of a provision of this Act other than this Part the effect of which is to reverse a deduction covered by paragraph (c) or subparagraph (d)(iii);
reduced by:
(c) any part of the consideration or of the expenditure that has been allowed or is allowable as a deduction to the partnership or the taxpayer in respect of any year of income; and
(d) for the purpose of the reference in paragraphs 160ZH(1)(a), (c) and (d):
(i) any amount of expenditure in relation to the asset that, apart from subsections 124ZB(4) and 124ZG(5), would have been allowed or allowable under Division 10C or 10D of Part III as a deduction to the partnership or the taxpayer, after the acquisition of the asset, in respect of any year of income; and
(ii) any amount that, apart from subsection 388-55(3) of the Income Tax Assessment Act 1997 , would have been allowed or allowable under Subdivision 387-A or 387-B of that Act as a deduction to the partnership or the taxpayer, after the acquisition of the asset, in respect of any year of income; and
(iii) any amount of expenditure that, apart from paragraph 43-70(2)(h) of the Income Tax Assessment Act 1997 , would have been allowed or allowable under Division 43 of that Act as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income; and
160ZJA(4) [Partnership income]
(iv) any other expenditure that is capital expenditure by the partnership, taxpayer or any other person in respect of the asset that has been allowed or is allowable as a deduction to the partnership or the taxpayer, after the acquisition of the asset, in respect of any year of income.
The reference in paragraph (3)(b) to an amount that is included in the assessable income of the partnership or the taxpayer includes a reference to an amount:
(a) that is taken by subsection 60(1A) of this Act to be so included for the asset for the purposes of subsection 60(1) ; or
(b) that is treated as being deducted for depreciation of another asset under section 42-285 or 42-290 of the Income Tax Assessment Act 1997 ; or
(c) that, apart from roll-over relief under sections 58 , 73E , 122JAA , 122JG , 123BBA , 123BF , 124AMAA , 124GA , 124JD and 124PA , would have been included in assessable income; or
(d) that, apart from Subdivision 41-A of the Income Tax Assessment Act 1997 (Common rule 1 - roll-over relief for related entities), would have been included in assessable income.
A reference in subsection 160ZH(2) to the indexed amount of any consideration or the indexed amount of any expenditure, in respect of an asset (other than the taxpayer's interest in a partnership asset of a partnership in which the taxpayer is a partner) is a reference to the sum of:
(a) the indexed amount of the consideration or the indexed amount of the expenditure (as worked out under sections 160ZH and 160ZJ ), as the case may be; and
(b) any amount that is included in the assessable income of the taxpayer of any year of income by virtue of a provision of this Act other than this Part the effect of which is to reverse a deduction covered by paragraph (c) or subparagraph (d)(iii);
reduced by:
(c) any part of the consideration or of the expenditure that has been allowed or is allowable as a deduction to the taxpayer in respect of any year of income; and
(d) for the purpose of the reference in paragraphs 160ZH(2)(a), (c) and (d):
(i) any amount of expenditure in relation to the asset that, apart from subsections 124ZB(4) and 124ZG(5), would have been allowed or allowable under Division 10C or 10D of Part III as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income; and
(ii) any amount that, apart from subsection 388-55(3) of the Income Tax Assessment Act 1997 , would have been allowed or allowable under Subdivision 387-A or 387-B of that Act as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income; and
(iii) any amount of expenditure that, apart from paragraph 43-70(2)(h) of the Income Tax Assessment Act 1997 , would have been allowed or allowable under Division 43 of that Act as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income; and
160ZJB(2) [Amounts included]
(iv) any other expenditure that is capital expenditure by the taxpayer or any other person in respect of the asset that has been allowed or is allowable as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income.
The reference in paragraph (1)(b) to an amount that is included in the assessable income of a taxpayer includes a reference to an amount:
(a) that is taken by subsection 60(1A) of this Act to be so included for the asset for the purposes of subsection 60(1) ; or
(b) that is treated as being deducted for depreciation of another asset under section 42-285 or 42-290 of the Income Tax Assessment Act 1997 ; or
(c) that, apart from roll-over relief under sections 58 , 73E , 122JAA , 122JG , 123BBA , 123BF , 124AMAA , 124GA , 124JD and 124PA , would have been included in assessable income; or
(d) that, apart from Subdivision 41-A of the Income Tax Assessment Act 1997 (Common rule 1 - roll-over relief for related entities), would have been included in assessable income.
However, it does not include an amount included in a taxpayer's assessable income under Division 243 of the Income Tax Assessment Act 1997 .
The reference in paragraph (1)(c) to an amount that has been allowed or is allowable as a deduction does not include an amount allowed under Division 243 of the Income Tax Assessment Act 1997 .
A reference in subsection 160ZH(2) to the indexed amount of any consideration or the indexed amount of any expenditure, in respect of an asset (the taxpayer's asset ), being a taxpayer's interest in a partnership asset of a partnership in which the taxpayer is a partner, is a reference to the sum of:
(a) the indexed amount of the consideration or the indexed amount of the expenditure (as worked out under sections 160ZH and 160ZJ), as the case may be; and
(b) any amount that is included in the assessable income of the partnership or of the taxpayer of any year of income by virtue of a provision of this Act other than this Part the effect of which is to reverse a deduction covered by paragraph (c) or subparagraph (d)(iii);
reduced by:
(c) any part of the consideration or of the expenditure that has been allowed or is allowable as a deduction to the partnership or the taxpayer in respect of any year of income; and
(d) for the purpose of the reference in paragraphs 160ZH(2)(a), (c) and (d):
(i) any amount of expenditure in relation to the asset that, apart from subsections 124ZB(4) and 124ZG(5), would have been allowed or allowable under Division 10C or 10D of Part III as a deduction to the partnership or the taxpayer, after the acquisition of the asset, in respect of any year of income; and
(ii) any amount that, apart from subsection 388-55(3) of the Income Tax Assessment Act 1997 , would have been allowed or allowable under Subdivision 387-A or 387-B of that Act as a deduction to the partnership or the taxpayer, after the acquisition of the asset, in respect of any year of income; and
(iii) any amount of expenditure that, apart from paragraph 43-70(2)(h) of the Income Tax Assessment Act 1997 , would have been allowed or allowable under Division 43 of that Act as a deduction to the taxpayer, after the acquisition of the asset, in respect of any year of income; and
160ZJB(4) [Partnership income]
(iv) any other expenditure that is capital expenditure by the partnership, taxpayer or any other person in respect of the asset that has been allowed or is allowable as a deduction to the partnership or the taxpayer, after the acquisition of the asset, in respect of any year of income.
The reference in paragraph (3)(b) to an amount that is included in the assessable income of the partnership or the taxpayer includes a reference to an amount:
(a) that is taken by subsection 60(1A) of this Act to be so included for the asset for the purposes of subsection 60(1) ; or
(b) that is treated as being deducted for depreciation of another asset under section 42-285 or 42-290 of the Income Tax Assessment Act 1997 ; or
(c) that, apart from roll-over relief under sections 58, 73E, 122JAA, 122JG, 123BBA, 123BF, 124AMAA, 124GA, 124JD and 124PA, would have been included in assessable income; or
(d) that, apart from Subdivision 41-A of the Income Tax Assessment Act 1997 (Common rule 1 - roll-over relief for related entities), would have been included in assessable income.
Subject to subsection (1B), a reference in subsection 160ZH(3) to the reduced amount of any consideration, the reduced amount of incidental costs, or the reduced amount of any expenditure, in respect of an asset (other than the taxpayer's interest in a partnership asset of a partnership in which the taxpayer is a partner) is a reference to the sum of -
(a) the amount of the consideration, the amount of the costs or the amount of the expenditure, as the case may be, reduced by any part of the consideration, of the costs or of the expenditure that:
(i) has been allowed or is allowable as a deduction to the taxpayer; or
(ii) would, but for section 61 of this Act, have been so allowable; or
(iii) would be taken into account under paragraph (b) of the definition of undeducted cost in section 42-175 of the Income Tax Assessment Act 1997 ; or
(iv) would be taken into account under paragraph 58-80(c) or 58-145(5)(b) of the Income Tax Assessment Act 1997 ; and
(b) any amount that, as a result of the disposal of the asset by the taxpayer, is included in the assessable income of the taxpayer of any year of income by virtue of a provision of this Act other than this Part and is attributable to the part of the consideration, the part of the costs or the part of the expenditure, as the case may be, that was allowed or is allowable as a deduction.
The reference in paragraph (1)(a) to any part of the consideration, of the costs or of the expenditure that has been allowed or is allowable as a deduction to the taxpayer in respect of any year of income includes:
(a) an amount that, apart from subsections 124ZB(4) and 124ZG(5), would have been so allowed or allowable under Division 10C or 10D of Part III of this Act; and
(b) an amount that, apart from paragraph 43-70(2)(h) of the Income Tax Assessment Act 1997 , would have been so allowed or allowable under Division 43 of that Act; and
(c) an amount that, apart from subsection 388-55(3) of the Income Tax Assessment Act 1997 , would have been so allowed or allowable under Subdivision 387-A or 387-B of that Act.
If the asset is a share, the amount worked out under subsection (1) is to be reduced by any rebatable dividend adjustment that arises in relation to the share (see subsection (5)).
The reference in paragraph (1)(b) to an amount that is included in the assessable income of a taxpayer includes a reference to an amount:
(a) that is taken by subsection 60(1A) of this Act to be so included for the asset for the purposes of subsection 60(1) ; or
(b) that is treated as being deducted for depreciation of another asset under section 42-285 or 42-290 of the Income Tax Assessment Act 1997 .
Subject to subsection (3B), a reference in subsection 160ZH(3) to the reduced amount of any consideration, the reduced amount of incidental costs, or the reduced amount of any expenditure, in respect of an asset (in this subsection called the ``taxpayer's asset'' ), being a taxpayer's interest in a partnership asset of a partnership in which the taxpayer is a partner, is a reference to the sum of:
(a) the amount of the consideration, the amount of the costs or the amount of the expenditure, as the case may be, reduced by any part of the consideration, of the costs or of the expenditure that:
(i) has been allowed or is allowable as a deduction to the partnership; or
(ii) would, but for section 61 of this Act, have been so allowable; or
(iii) would be taken into account under paragraph (b) of the definition of undeducted cost in section 42-175 of the Income Tax Assessment Act 1997 ; or
(iv) would be taken into account under paragraph 58-80(c) or 58-145(5)(b) of the Income Tax Assessment Act 1997 ; and
(b) any amount that, as a result of the disposal of the taxpayer's asset by the taxpayer, is included in the assessable income of the partnership of any year of income by virtue of a provision of this Act other than this Part and is attributable to the part of the consideration, the part of the costs or the part of the expenditure, as the case may be, that was allowed or is allowable as a deduction.
The reference in paragraph (3)(a) to any part of the consideration, of the costs or of the expenditure that has been allowed or is allowable as a deduction to the partnership in respect of any year of income includes:
(a) an amount that, apart from subsections 124ZB(4) and 124ZG(5), would have been so allowed or allowable under Division 10C or 10D of Part III of this Act; and
(b) an amount that, apart from paragraph 43-70(2)(h) of the Income Tax Assessment Act 1997 , would have been so allowed or allowable under Division 43 of that Act.
If the asset is a share, the amount worked out under subsection (3) is to be reduced by any rebatable dividend adjustment that arises in relation to the share (see subsection (5)).
The reference in paragraph (3)(b) to an amount that is included in the assessable income of the partnership includes a reference to an amount:
(a) that is taken by subsection 60(1A) of this Act to be so included for the asset for the purposes of subsection 60(1) ; or
(b) that is treated as being deducted for depreciation of another asset under section 42-285 or 42-290 of the Income Tax Assessment Act 1997 .
A rebatable dividend adjustment arises in relation to a share (the ``RDA share'' ) if:
(a) under an arrangement, a company makes a distribution to the holder of the RDA share; and
(b) an amount (the ``attributable amount'' ), being the whole or a part of the distribution, could reasonably be taken to be attributable to profits that were derived by the company before the holder acquired the RDA share; and
(c) the holder of the RDA share is entitled to a rebate of tax (the ``dividend rebate'' ) in the holder's assessment for a year of income under section 46 or 46A in respect of an amount (the ``dividend amount'' ) being so much of the distribution as is a dividend; and
(d) the holder of the RDA share is, at any time during the period in which the arrangement is made or carried out, a controller of the company or an associate of a controller of the company.
The amount of a rebatable dividend adjustment arising in relation to the share under subsection (5) is:
|
Attributable
amount |
× |
Amount of the dividend rebate
Dividend General company amount × tax rate |
In this section:
"associate"
has the same meaning as in section
160ZZRN
;
"controller"
has the same meaning as in section
160ZZRN
.
Where a company pays an amount that is not a dividend to a taxpayer in respect of shares in the company acquired by the taxpayer after 19 September 1985 (not being a payment in respect of the disposal of the shares), the following provisions of this section have effect for the purposes of this Part.
Subject to subsection (4), where, if the taxpayer had disposed of the shares at the time of the payment, the indexed cost base to the taxpayer in respect of the shares would have exceeded the amount of the payment, the taxpayer shall be deemed to have disposed of the shares at that time for a consideration equal to the amount of that indexed cost base and to have immediately re-acquired the shares -
(a) for the purpose of ascertaining whether a capital gain accrued to the taxpayer in the event of a subsequent disposal of the shares by the taxpayer - for a consideration equal to the amount by which that indexed cost base exceeded the amount of the payment; or
(b) for the purpose of ascertaining whether the taxpayer incurred a capital loss in the event of a subsequent disposal of the shares by the taxpayer -
(i) if, had the taxpayer disposed of the shares at the time of the payment, the reduced cost base to the taxpayer in respect of the shares would have exceeded the amount of the payment - for a consideration equal to the excess; or
160ZL(3) [Index cost base not exceeding payment]
(ii) if, had the taxpayer disposed of the shares at the time of the payment, the reduced cost base to the taxpayer in respect of the shares would not have exceeded the amount of the payment - without having paid or given any consideration in respect of the re-acquisition.
Where, if the taxpayer had disposed of the shares at the time of the payment, the indexed cost base to the taxpayer in respect of the shares would not have exceeded the amount of the payment -
(a) the taxpayer shall be deemed -
(i) to have disposed of the shares at that time for a consideration equal to the amount of that indexed cost base; and
(ii) to have immediately re-acquired the shares without having paid or given any consideration for the re-acquisition; and
(b) if the amount of the payment would have exceeded that indexed cost base - a capital gain equal to the excess shall be deemed to have accrued to the taxpayer at the time of the payment. 160ZL(4) [Disposal within 12 months of acquisition of shares]
If the taxpayer disposed of the shares (otherwise than because of the application of this section) within 12 months after the taxpayer acquired the shares (otherwise than because of the application of this section), subsections (2) and (3) have effect as if the references in those subsections to the indexed cost base to the taxpayer in respect of the shares were references to the cost base to the taxpayer in respect of those shares.
(Omitted by No 170 of 1995)
SECTION 160ZLA 160ZLA MEANING OF ``REBATABLE DIVIDEND ADJUSTMENT'' FOR PURPOSES OF SECTIONS 160ZA AND 160ZL
(Repealed by No 170 of 1995)
Where the trustee of a trust pays an amount to a taxpayer that is not assessable income of the taxpayer in respect of an interest or units in the trust, being an interest or units acquired by the taxpayer after 19 September 1985, (not being a payment in respect of the disposal of the interest or units), the following provisions of this section have effect for the purposes of this Part.
Sections 23AI and 23AK and paragraphs 99B(2)(d) and (e) are to be disregarded in determining whether an amount is assessable income of the taxpayer for the purposes of subsection (1) of this section.
Subject to subsection (4), the taxpayer shall be deemed to have disposed of the interest or units at the time of the payment for a consideration equal to the amount of the indexed cost base to the taxpayer in respect of the interest or units, and to have immediately re-acquired the interest or units:
(a) for the purpose of ascertaining whether a capital gain accrued to the taxpayer in the event of a subsequent disposal of the interest or units by the taxpayer:
(i) if, had the taxpayer disposed of the interest or units at the time of the payment, the indexed cost base to the taxpayer in respect of the interest or units would have exceeded the amount of the adjusted payment - for a consideration equal to the excess; or
(ii) if, had the taxpayer disposed of the interest or units at the time of the payment, the indexed cost base to the taxpayer in respect of the interest or units would not have exceeded the amount of the adjusted payment - without having paid or given any consideration in respect of the re-acquisition; or
(b) for the purpose of ascertaining whether the taxpayer incurred a capital loss in the event of a subsequent disposal of the interest or units by the taxpayer:
(i) if, had the taxpayer disposed of the interest or units at the time of the payment, the reduced cost base to the taxpayer in respect of the interest or units would have exceeded the amount of the payment - for a consideration equal to the excess; or
(ii) if, had the taxpayer disposed of the interest or units at the time of the payment, the reduced cost base to the taxpayer in respect of the interest or units would not have exceeded the amount of the payment - without having paid or given any consideration in respect of the re-acquisition.
Subject to subsection (4), where, if the taxpayer had disposed of the interest or units at the time of the payment, the amount of the adjusted payment would have exceeded the indexed cost base to the taxpayer in respect of the interest or units, a capital gain equal to the excess shall be deemed to have accrued to the taxpayer at the time of the payment.
In subsections (2) and (3):
"adjusted payment"
means so much of the amount of the payment as is attributable to none of the following:
(a) a deduction allowed under Division 10C or 10D of Part III or under Division 43 of the Income Tax Assessment Act 1997 ;
(b) income that is exempt from income tax because of section 124ZM or 124ZN (which exempt income arising from shares in a PDF);
(c) consideration in respect of a disposal of shares in a company that is a PDF at the time of the disposal;
(d) an amount that, because of section 159GZZZZE (which relates to infrastructure borrowings), is not included in assessable income.
If the taxpayer disposed of the interest or units (otherwise than because of the application of this section) within 12 months after the taxpayer acquired the interest or units (otherwise than because of the application of this section), subsections (2) and (3) have effect as if the references in those subsections to the indexed cost base to the taxpayer in respect of the interest or units were references to the cost base to the taxpayer in respect of the interest or units.
Subject to subsection (2), where an asset is owned by persons as joint tenants:
(a) this Part applies as if those persons owned the asset as tenants in common in equal shares;
(b) if one of the joint tenants dies and the interest of the deceased person in the asset was acquired by the deceased person before 20 September 1985 - the interest of the deceased person in the asset shall be deemed, for the purposes of this Part, to have been acquired by the survivor, or if there are 2 or more survivors, by those survivors in equal shares, on the date of the deceased person's death and to have been so acquired for a consideration equal to the market value of the interest at the date of the deceased person's death;
(c) if one of the joint tenants dies and the interest of the deceased person in the asset was acquired by the deceased person on or after 20 September 1985 - the interest of the deceased person in the asset shall be deemed, for the purposes of this Part, to have been acquired by the survivor or, if there are 2 or more survivors, by those survivors in equal shares, on the date of the deceased person's death and the interest so acquired by a surviving joint tenant shall be deemed to have been acquired -
(i) for the purpose of ascertaining whether a capital gain accrued to the survivor in the event of a subsequent disposal of the interest by the survivor - for a consideration equal to the amount that would have been the indexed cost base to the deceased person of the interest for the purposes of this Part if the deceased person had disposed of the interest immediately before his or her death; or
(ii) for the purpose of ascertaining whether the survivor incurred a capital loss in the event of a subsequent disposal of the interest by the survivor - for a consideration equal to the amount that would have been the reduced cost base to the deceased person of the interest for the purposes of this Part if the deceased person had disposed of the interest immediately before his or her death; and
(d) if, in the case of an interest to which subparagraph (1)(c)(i) applies, the interest was disposed of by the survivor within 12 months after the day on which the interest was acquired by the deceased person, the reference in that subparagraph to the indexed cost base to the deceased person of the interest shall be construed as a reference to the cost base to the deceased person of the interest.
Except where the contrary intention appears, this Part applies in relation to two or more persons who own an asset in the capacity of trustees of the one trust estate as if those persons were a single person.
A company that has not had the same ownership and control during the year of income, and has not satisfied the same business test, works out its net capital gain or net capital loss in respect of the year of income under this Division.
The tests for finding out whether a company has maintained the same owners, and the same business test, are set out in Divisions 3B, 3C, 3CB, 3CC and 3CD.
This Division does not apply for the purposes of assessments for the 1998-99 year of income or any later year of income.
See instead Subdivision 165-CB of the Income Tax Assessment Act 1997 .
A company must calculate its net capital gain or net capital loss under this Division unless:
(a) there are persons who had more than a 50% stake in the company during the whole of the year of income; or
(b) there is only part of the year of income (a part that started at the start of the year of income) during which the same persons had more than a 50% stake in the company, but the company satisfies the same business test for the rest of the year of income (the same business test period ). 160ZNB(2) [Business test]
For the purposes of paragraph (1)(b), apply the same business test to the business that the company carried on immediately before the time (the
test time
) when that part ended.
Note:
For the same business test: see Division 3C.
(a) there are persons who had more than 50% of the voting power in the company during the whole of a period (the ownership test period ) consisting of the year of income or a part of it; and
(b) there are persons who had rights to more than 50% of the company's dividends during the whole of the ownership test period; and
(c) there are persons who had rights to more than 50% of the company's capital distributions during the whole of the ownership test period;
those persons had more than a 50% stake in the company during the ownership test period.
160ZNC(2) [Does condition apply]To work out whether a condition in subsection (1) was satisfied during the ownership test period, apply the primary test for that condition unless subsection (3) requires the alternative test to be applied.
Note:
For the primary tests: see subsections 160ZNH(1), 160ZNI(1) and 160ZNJ(1).
160ZNC(3) [Alternative test]Apply the alternative test for that condition if one or more other companies beneficially owned shares, or interests in shares, in the company at any time during the ownership test period.
Note:
For the alternative tests: see subsections 160ZNH(2), 160ZNI(2) and 160ZNJ(2).
A company must calculate its net capital gain or net capital loss under this Division if, during the year of income, a person begins to control, or becomes able to control, the voting power in the company (whether directly, or indirectly through one or more interposed entities) for the purpose, or for the purposes including the purpose, of:
(a) getting some benefit or advantage in relation to how this Act applies; or
(b) getting such a benefit or advantage for someone else. 160ZND(2) [Satisfying test for rest of year]
However, the person's control of the voting power, or ability to control it, does not require the company to calculate its net capital gain or net capital loss under this Division if the company satisfies the same business test for the rest of the year of income (the same business test period ).
160ZND(3) [Application]Apply the same business test to the business that the company carried on immediately before the time (the
test time
) when the person began to control that voting power, or became able to control it.
Note:
For the same business test: see Division 3C.
Divide the year of income into periods and treat each period as a year of income as follows.
160ZNE(2) [First period]The first period starts at the start of the year of income. Each later period starts immediately after the end of the previous period.
160ZNE(3) [Last period]The last period ends at the end of the year of income. Each period (except the last) ends at the earlier of:
(a) the latest time that would result in persons having more than a 50% stake in the company during the whole of the period; or
(b) the earliest time when a person begins to control, or becomes able to control, the voting power in the company (whether directly, or indirectly through one or more interposed entities) for the purpose, or for purposes including the purpose, of:
(i) getting some benefit or advantage to do with how this Act applies; or
160ZNE(4) [Successive periods]
(ii) getting such a benefit or advantage for someone else.
However, what would otherwise be 2 or more successive periods are treated as a single period if the company satisfies the same business test for all of them, considered as a single period (the
same business test period
). Apply the same business test to the business the company carried on immediately before the end of the first of the periods (the
test time
).
Note:
For the same business test: see Division 3C.
160ZNE(5) [Calculate gain or loss]Treat each period as if it were a year of income and work out the notional net capital gain or notional net capital loss in respect of that period.
The company has a notional net capital gain in respect of a period if the sum of the capital gains that accrued to the company in the period exceeds the sum of the capital losses that were incurred by the company in the period.
160ZNF(2) [Loss]On the other hand, if the sum of those capital losses exceeds the sum of those capital gains, the company has a notional net capital loss in respect of the period.
160ZNF(3) [Where no notional net capital loss]If the company has a notional net capital loss in respect of
none
of the periods in the year of income, this Division has no further application, and the company's net capital gain in respect of the year of income is calculated in the usual way.
Note:
The usual way of working out a net capital gain is set out in section 160ZC.
160ZNF(4) [When part of net capital gain accrues]For the purposes of this section, so much of an amount included in the company's assessable income of the year of income under section 97 or 98A as is a capital gain that forms part of a net capital gain is taken to have accrued to the company in a period so far as the amount is reasonably related to the period.
(a) the company's notional net capital gains in respect of any of the periods in the year of income; and
(b) so much of any amounts included in the company's assessable income of the year of income under section 97 or 98A as are capital gains that form part of a net capital gain, so far as the amounts are not reasonably related to a period;
exceeds the sum of any net capital losses incurred by the company in respect of earlier years of income that may be applied in respect of the year of income under section 160ZC , the excess is taken to be a net capital gain that accrued to the company in respect of the year of income.
160ZNG(2) [Net capital loss]The sum of the company's notional net capital losses in respect of any of the periods in the year of income is taken to be a net capital loss that was incurred by the company in respect of the year of income.
Applying the primary test: if there are persons who, at all times during the ownership test period, beneficially own (between them) shares that carry (between them) the right to exercise more than 50% of the voting power in the company, those persons have more than 50% of the voting power in the company during that period.
160ZNH(2) The alternative test.Applying the alternative test: if it is the case, or it is reasonable to assume, that there are persons (none of them companies) who between them control, or are able to control, the voting power in the company at all times during the ownership test period (whether directly, or indirectly through one or more interposed entities), those persons have more than 50% of the voting power in the company during that period.
Applying the primary test: if there are persons who, at all times during the ownership test period, beneficially own (between them) shares that carry (between them) the right to receive more than 50% of any dividends that the company may pay, those persons have rights to more than 50% of the company's dividends during that period.
160ZNI(2) The alternative test.Applying the alternative test: if it is the case, or it is reasonable to assume, that there are persons (none of them companies) who, at all times during the ownership test period, have between them the right to receive for their own benefit (whether directly, or indirectly through one or more interposed entities), more than 50% of any dividends that the company may pay, those persons have rights to more than 50% of the company's dividends during that period.
Applying the primary test: if there are persons who, at all times during the ownership test period, beneficially own (between them) shares that carry (between them) the right to receive more than 50% of any distribution of capital of the company, those persons have rights to more than 50% of the company's capital distributions during that period.
160ZNJ(2) The alternative test.Applying the alternative test: if it is the case, or it is reasonable to assume, that there are persons (none of them companies) who, at all times during the ownership test period, have between them the right to receive for their own benefit (whether directly, or indirectly through one or more interposed entities), more than 50% of any distribution of capital of the company, those persons have rights to more than 50% of the company's capital distributions during that period.
A person need not beneficially own exactly the same shares at all times during the ownership test period for the primary test for a condition to be satisfied.
160ZNK(2) [Private or public company]A private company must satisfy the primary test for a condition in order for the test to be satisfied. A public company is taken to satisfy the primary test if it is reasonable to assume that the test is satisfied.
To avoid doubt, a test for a condition can be satisfied by one person.
For the purposes of a test, the Commissioner may treat a person as not having beneficially owned particular shares at a particular time during the ownership test period if the conditions in subsections (2) and (3) are met.
160ZNM(2) [Conditions to be met]Before or during the year of income an arrangement must have been entered into that in any way (directly or indirectly) related to, affected, or depended for its operation on:
(a) the beneficial interest in the shares, or the value of that beneficial interest; or
(b) a right carried by, or relating to, the shares; or
(c) the exercise of such a right. 160ZNM(3) [Condition of purpose]
The arrangement must also have been entered into for the purpose, or for purposes including the purpose, of eliminating or reducing a liability of an entity to pay income tax for a year of income.
For the purposes of a test, shares are taken never to have carried particular rights during the year of income if the Commissioner is satisfied that:
(a) the shares stopped carrying those rights after the year of income; or
(b) the shares will or may stop carrying those rights after the year of income;
because of:
(c) the company's constitution as in force at some time during the year of income; or
(d) an arrangement entered into before or during the year of income.
For the purposes of a test, shares are taken to have carried particular rights at all times during the year of income if the Commissioner is satisfied that:
(a) the shares started to carry those rights after the year of income; or
(b) the shares will or may start to carry those rights after the year of income;
because of:
(c) the company's constitution as in force at some time during the year of income; or
(d) an arrangement entered into before or during the year of income.
For the purposes of a test, a person who beneficially owns redeemable shares at a time during the year of income, is taken not to own the shares beneficially at that time.
Sections 160ZNM , 160ZNN , 160ZNO and 160ZNP do not affect how shares, and rights carried by shares, are counted for the purposes of determining:
(a) the total voting power in the company; or
(b) the total dividends that the company may pay; or
(c) the total distributions of capital of the company.
For the purposes of a test, after a person dies, shares that the person owned beneficially at the time of death are taken to continue to be owned beneficially by the person so long as:
(a) they are owned by the trustee of the person's estate; or
(b) they are owned beneficially by someone who received them as a beneficiary of the estate.
For the purposes of a test, an entity is not prevented from:
(a) beneficially owning shares in a company; or
(b) having the right to exercise, controlling, or being able to control, voting power in a company; or
(c) having the right to receive any dividends that a company may pay; or
(d) having the right to receive any distribution of capital of a company;
merely because:
(e) the company is or becomes:
(i) an externally-administered body corporate within the meaning of the Corporations Law (as set out in section 82 of the Corporations Act 1989 ); or
(ii) an entity with a similar status, under the Companies Code of the relevant State or a foreign law, to an externally-administered body corporate; or
(f) either:
(i) a provisional liquidator is appointed to the company under section 472 of the Corporations Law (as set out in section 82 of the Corporations Act 1989 ); or
160ZNRA(2) [Stakeholder company rights]
(ii) a person with a similar status, under the Companies Code of the relevant State or a foreign law, to a provisional liquidator is appointed to the company.
For the purposes of a test, a company (the stakeholding company ) is not prevented from:
(a) beneficially owning shares in another company, or any other interest in another entity; or
(b) having the right to exercise, controlling, or being able to control, voting power in another company or any other entity; or
(c) having the right to receive any dividends that another company or any other entity may pay; or
(d) having the right to receive any distribution of capital of another company or any other entity;
merely because:
(e) the stakeholding company is or becomes:
(i) an externally-administered body corporate within the meaning of the Corporations Law (as set out in section 82 of the Corporations Act 1989 ); or
(ii) an entity with a similar status, under the Companies Code of the relevant State or a foreign law, to an externally-administered body corporate; or
(f) either:
(i) a provisional liquidator is appointed to the stakeholding company under section 472 of the Corporations Law (as set out in section 82 of the Corporations Act 1989 ); or
(ii) a person with a similar status, under the Companies Code of the relevant State or a foreign law, to a provisional liquidator is appointed to the stakeholding company.
The company satisfies the same business test if throughout the same business test period it carries on the same business as itcarried on immediately before the test time.
160ZNS(2) [Where certain income derived]However, the company does not satisfy the same business test if, at any time during the same business test period, it derives assessable income from:
(a) a business of a kind that it did not carry on before the test time; or
(b) a transaction of a kind that it had not entered into in the course of its business operations before the test time. 160ZNS(3) [Business operations]
The company also does not satisfy the same business test if, before the test time, it:
(a) started to carry on a business it had not previously carried on; or
(b) in the course of its business operations, entered into a transaction of a kind that it had not previously entered into;
and did so for the purpose, or for purposes including the purpose, of being taken to have carried on throughout the same business test period the same business as it carried on immediately before the test time.
160ZNS(4) [Where certain expenditure incurred]The company also does not satisfy the test if, at any time during the same business test period, it incurs expenditure:
(a) in carrying on a business of a kind that it did not carry on before the test time; or
(b) as a result of a transaction of a kind that it had not entered into in the course of its business operations before the test time.
This Division modifies the way in which the rules in Division 3A apply to a listed public company (and also its 100% subsidiaries). It makes it easier for the company to comply with those rules.
If the company has maintained the same owners as between certain points of time, it does not need to prove it has maintained the same owners throughout the periods in between.
The tests for finding out whether the company has maintained the same owners are set out in Divisions 3CB, 3CC and 3CD.
This Division modifies the way Division 3A applies to a company that is a listed public company at all times during the year of income (the
test period
).
Note 1:
Division 3A is about when a company must calculate its net capital gain or net capital loss for the year of income in a special way.
Note 2:
This Division also modifies how Division 3A applies to a 100% subsidiary of a listed public company: see section 160ZNSD .
Note 3:
A company can choose that this Division is not to apply to it: see section 160ZNSE .
160ZNSB(2) No abnormal trading.If there is no abnormal trading in shares in the listed public company during the test period, it is taken to have met the condition in paragraph 160ZNB(1)(a) (which is about there being persons having more than a 50% stake in it during the whole of the year of income).
160ZNSB(3) Abnormal trading, but substantial continuity of ownership.If there
is
abnormal trading, but there is substantial continuity of ownership of the company as between the start of the test period and the time of each abnormal trading, the company is also taken to have met the condition in paragraph
160ZNB(1)(a)
.
Note:
See section 160ZNSG to work out whether there is substantial continuity of ownership.
160ZNSB(4) Abnormal trading without substantial continuity of ownership.If there is abnormal trading, and there is no substantial continuity of ownership of the company as between the start of the test period and the time of the abnormal trading, the company is taken to have failed to meet the condition in paragraph 160ZNB(1)(a) .
160ZNSB(5) Satisfies the same business test.However, if the company satisfies the same business test for the rest of the year of income (the
same business test period
) after the first abnormal trading covered by subsection (4), it is taken to have satisfied the condition in paragraph
160ZNB(1)(b)
(which is about the company carrying on the same business).
Note:
For the same business test: see Division 3C.
160ZNSB(6) [Business to which test is applied]Apply the same business test to the business that the company carried on immediately before the time of the first abnormal trading (the test time ) covered by subsection (4).
If the listed public company must calculate its net capital gain or net capital loss for the year of income under Division 3A, then, in dividing the year of income into periods, apply subsection (2) instead of subsection 160ZNE(3).
160ZNSC(2) [When period ends]The last period ends at the end of the year of income. Each period (except the last) ends at the earlier of:
(a) the earliest time when there is an abnormal trading in shares in the listed public company (except one covered by subsection (3)); or
(b) the earliest time when a person begins to control, or becomes able to control, the voting power in the listed public company (whether directly, or indirectly through one or more interposed entities) for the purpose, or for purposes including the purpose, of:
(i) getting some benefit or advantage to do with how this Act applies; or
160ZNSC(3) [Working out end of period]
(ii) getting such a benefit or advantage for someone else.
In working out when a period ends, disregard an abnormal trading if there is substantial continuity of ownership of the company as between the start of the period and the time of the abnormal trading.
Note:
See section 160ZNSG to work out whether there is substantial continuity of ownership.
This Division also modifies the way Division 3A applies to a company that is
not
a listed public company, but only if the conditions in subsections (2) and (3) are met.
Note:
Division 3A is about when a company must calculate its net capital gain or net capital loss for the year of income in a special way.
160ZNSD(2) [Subsidiary]The company (the subsidiary ) must be a 100% subsidiary of another company (the holding company ) at all times during the subsidiary's year of income.
160ZNSD(3) [Listing]Also, the holding company must be a listed public company at all times during that year of income.
160ZNSD(4) [Where conditions met]If the conditions are met, then, for the purposes of applying Division 3A to the subsidiary, this Division applies to the subsidiary as if:
(a) the subsidiary were itself a listed public company at all times during the year of income; and
(b) an abnormal trading in shares in the holding company during the year of income were an abnormal trading in shares in the subsidiary.
(Divisions 3CB, 3CC and 3CD apply to the subsidiary in the same way and for the same purpose).
The listed public company or subsidiary can choose that Division 3A is to apply to it for the year of income without the modifications made by this Division.
160ZNSE(2) [When choice is made]The company must choose on or before the day it lodges its return under section 161 , 162 or 163 for the year of income, or before a later day if the Commissioner allows.
This Division has the tests to work out whether a listed public company has maintained the same owners as between different times.
Divisions 3CC and 3CD have rules that make it easier for the company to satisfy these ownership tests.
Note:
The rules in this Division also apply to a company that is a 100% subsidiary of a listed public company: see section 160ZNSD .
There is substantial continuity of ownership of the listed public company as between the start of the test period and another time in the test period if (and only if) the conditions in this section are met.
160ZNSG(2) Voting power.There must be persons (none of them companies) who had more than 50% of the voting power in the listed public company at the start of the test period. Also, those persons must have had more than 50% of the voting power in the listed public company immediately after the other time in the test period.
Note:
To work out who had more than 50% of the voting power: see section 160ZNSH.
160ZNSG(3) Rights to dividends.There must be persons (none of them companies) who had rights to more than 50% of the listed public company's dividends at the start of the test period. Also, those persons must have had rights to more than 50% of the listed public company's dividends immediately after the other time in the test period.
Note:
To work out who had rights to more than 50% of the listed public company's dividends: see section 160ZNSI .
160ZNSG(4) Rights to capital distributions.There must be persons (none of them companies) who had rights to more than 50% of the listed public company's capital distributions at the start of the test period. Also, those persons must have had rights to more than 50% of the listed public company's capital distributions immediately after the other time in the test period.
Note:
To work out who had rights to more than 50% of the listed public company's capital distributions: see section 160ZNSJ .
160ZNSG(5) When to apply the test.To work out whether a condition in this section was satisfied at a time (the ownership test time ), apply the ownership test for that condition.
If it is the case, or it is reasonable to assume, that there are persons (none of them companies) who, at the ownership test time, between them control, or are able to control, the voting power in the listed public company (whether directly, or indirectly through one or more interposed entities), those persons have more than 50% of the voting power in the listed public company at that time.
If it is the case, or it is reasonable to assume, that there are persons (none of them companies) who, at the ownership test time, have between them the right to receive for their own benefit (whether directly, or indirectly through one or more interposed entities), more than 50% of any dividends that the listed public company may pay, those persons have rights to more than 50% of the listed public company's dividends at that time.
If it is the case, or it is reasonable to assume, that there are persons (none of them companies) who, at the ownership test time, have between them the right to receive for their own benefit (whether directly, or indirectly through one or more interposed entities), more than 50% of any distribution of capital of the listed public company, those persons have rights to more than 50% of the listed public company's capital distributions at that time.
The rules in these sections also apply for the purposes of an ownership test in this Division:
(a) 160ZNL (which is about how an ownership test can be satisfied by a single person);
(b) 160ZNN (which treats some shares as never having carried rights);
(c) 160ZNO (which treats some shares as always having carried rights);
(d) 160ZNP (which disregards redeemable shares);
(e) 160ZNQ (which is about how other rules do not affect how shares or rights are counted);
(f) 160ZNR (which deals with deaths of beneficial owners);
(g) 160ZNRA (which deals with companies in liquidation).
The rule in section 160ZNM (which is about arrangements affecting beneficial ownership of shares) also applies for the purposes of an ownership test in this Division as if the reference to a particular time during the ownership test period were a reference to the ownership test time.
This Division has rules that make it easier for the listed public company to satisfy the ownership tests in Division 3CB.
All shareholdings of less than 1% in the company are treated as if they were held by a single notional entity. This means that the company does not have to trace through to the persons who beneficially own those shares.
A similar rule applies if another listed public company is interposed between the company and those persons. All shareholdings of less than 1% in the interposed company are treated as if they were held by a different single notional entity. This means that the company does not have to trace through the interposed company to the persons who beneficially own those shares in the interposed company.
Note 1:
The rules in this Division also apply to a company that is a 100% subsidiary of a listed public company: see section 160ZNSD.
Note 2:
The rules in this Division do not apply if they would hide a failure by the company to maintain the same owners: see sections 160ZNSR and 160ZNSS.
This Division modifies how the ownership tests are applied to the listed public company (the head company ) if the company has:
(a) voting shareholdings of less than 1%; or
(b) dividend shareholdings of less than 1%; or
(c) capital shareholdings of less than 1%.
Note:
For the ownership tests: see sections 160ZNSH , 160ZNSI and 160ZNSJ .
This Division also modifies how the ownership tests are applied to the head company if another listed public company (the
interposed company
) meets the conditions in subsections (2) and (3).
Note:
For the ownership tests: see sections 160ZNSH , 160ZNSI and 160ZNSJ .
160ZNSN(2) [Interposition]The interposed company must be interposed between the head company and persons (none of them companies) who:
(a) control (orare able to control) voting power in the head company indirectly through the interposed company; or
(b) have the right to receive, for their own benefit and indirectly through the interposed company, any dividends the head company may pay; or
(c) have the right to receive, for their own benefit and indirectly through the interposed company, any distributions of capital of the head company. 160ZNSN(3) [Required shareholdings]
The interposed company must have:
(a) voting shareholdings of less than 1%; or
(b) dividend shareholdings of less than 1%; or
(c) capital shareholdings of less than 1%.
The ownership tests in sections 160ZNSH , 160ZNSI and 160ZNSJ are applied to the head company as if, at the ownership test time, a single notional entity (the notional shareholder ):
(a) directly controlled the voting power in the head company that is carried by each voting shareholding of less than 1% in the company at that time; and
(b) had the right to receive, for its own benefit and directly:
(i) any dividends the head company may pay in respect of each dividend shareholding of less than 1% in the company at that time; and
(ii) any distributions of capital of the head company in respect of each capital shareholding of less than 1% in the company at that time; and
(c) were a person (other than a company). 160ZNSO(2) Notional shareholder of the interposed company.
The tests are also applied to the head company as if, at the ownership test time, for each interposed company, a different single notional entity (the notional shareholder ):
(a) directly controlled the voting power in the interposed company that is carried by each voting shareholding of less than 1% in the interposed company at that time; and
(b) had the right to receive, for its own benefit and directly:
(i) any dividends the interposed company may pay in respect of each dividend shareholding of less than 1% in the interposed company at that time; and
(ii) any distributions of capital of the interposed company in respect of each capital shareholding of less than 1% in the interposed company at that time; and
(c) were a person (other than a company). 160ZNSO(3) Persons who actually control or have rights are taken not to.
The tests are also applied to the head company as if, at the ownership test time:
(a) the persons (other than companies) who control (or are able to control) the voting power in the head company or interposed company (whether directly, or indirectly through one or more interposed entities) that is carried by each voting shareholding of less than 1% in the company had nothad that control; and
(b) the persons (other than companies) who have the right to receive for their own benefit (whether directly, or indirectly through one or more interposed entities):
(i) any dividends that the head company or interposed company may pay in respect of each dividend shareholding of less than 1% in the company; and
had not had that right.
(ii) any distributions of capital of the head company or interposed company in respect of each capital shareholding of less than 1% in the company;
If the ownership test time is after the start of the test period and:
(a) the voting power in the head company or interposed company that the notional shareholder controls at that time;
is greater than:
(b) the voting power in the company that the notional shareholder controlled at the start of that period;
the notional shareholder is taken to control voting power in the company at that time only to the extent that it controlled it at the start of that period.
160ZNSP(2) Minimum percentage of rights to dividends and capital.If the ownership test time is after the start of the test period and:
(a) the percentage of the dividends or distributions of capital of the head company or interposed company that the notional shareholder has the right to receive at that time;
is greater than:
(b) the percentage (the lower percentage ) of the dividends or distributions of capital of the company that the notional shareholder had the right to receive at the start of that period;
the notional shareholder is taken to have the right to receive the lower percentage of the dividends or distributions of capital at that time.
If all the shares in the head company or interposed company of which an entity is the registered holder at the ownership test time carry (between them) less than 1% of the voting power in the company, those shares (except shares that are part of a substantial shareholding) constitute a voting shareholding of less than 1% in the company at that time.
160ZNSQ(2) Meaning of dividend shareholding of less than 1%.If all the shares in the head company or interposed company of which an entity is the registered holder at the ownership test time carry (between them) the right to receive less than 1% of any dividends that the company may pay, those shares (except shares that are part of a substantial shareholding) constitute a dividend shareholding of less than 1% in the company at that time.
160ZNSQ(3) Meaning of capital shareholding of less than 1%.If all the shares in the head company or interposed company of which an entity is the registered holder at the ownership test time carry (between them) the right to receive less than 1% of any distribution of capital of the company, those shares (except shares that are part of a substantial shareholding) constitute a capital shareholding of less than 1% in the company at that time.
This Division does not apply unless, at the ownership test time, all the voting shares in the head company carry (between them):
(a) the right to receive more than 75% of any dividends the head company may pay; and
(b) the right to receive more than 75% of any distributions of capital of the head company.
This Division does not apply for the purposes of section 160ZNSB if the Commissioner considers it reasonable to assume that the head company would not meet the conditions in that section if it were not for the rules in this Division.
Note:
The conditions in section 160ZNSB require the listed public company to maintain the same owners at each ownership test time during the test period.
This Division has rules that make it easier for the listed public company to satisfy the ownership tests in Division 3CB.
The company does not have to trace through any complying superannuation funds, complying approved deposit funds or special companies that are interposed between the company and persons who control any of the voting power in the company or have rights to its dividends or capital.
Note:
The rules in this Division also apply to a company that is a 100% subsidiary of a listed public company: see section 160ZNSD .
This section modifies how the ownership test in section 160ZNSH (about control of voting) is applied to the listed public company if:
(a) a superannuation fund, approved deposit fund or special company is interposed, at the ownership test time, between persons (none of them companies) and the listed public company; and
(b) at the ownership test time, those persons control (or are able to control) any of the voting power in the listed public company indirectly through the fund or special company (or through entities including it); and
(c) the fund or special company is a complying superannuation fund, complying approved deposit fund or special company at all times during the year of income of the listed public company in which the ownership test time occurs. 160ZNSU(2) If fund or special company has more than 50 members.
If the fund or special company has more than 50 members, the test is applied as if, at the ownership test time, the fund or special company were a person (other than a company) who controlled the voting power in the listed public company that those persons control (or are able to control).
160ZNSU(3) If fund or special company has 50 members or less.However, if the fund or special company has 50 members or less, the test is applied as if, at the ownership test time, each member were a person (other than a company) who controlled an equal proportion of the voting power in the listed public company that those persons control (or are able to control).
160ZNSU(4) Persons who actually control are taken not to control.The test is applied as if, at the ownership test time, the voting power in the listed public company that those persons control (or are able to control) were not controlled by them (except as provided by subsection (3)).
This section modifies how the ownership test in section 160ZNSI (about dividend rights) or 160ZNSJ (about capital rights) is applied to the listed public company if:
(a) a superannuation fund, approved deposit fund or special company is interposed, at the ownership test time, between persons (none of them companies) and the listed public company; and
(b) at the ownership test time, those persons have the right to receive for their own benefit, and indirectly through the fund or special company (or through entities including it):
(i) a percentage of any dividends that the listed public company may pay; or
(ii) a percentage of any distributions of capital of the listed public company; and
(c) the fund or special company is a complying superannuation fund, complying approved deposit fund or special company at all times during the year of income of the listed public company in which the ownership test time occurs. 160ZNSV(2) If fund or special company has more than 50 members.
If the fund or special company has more than 50 members, the test is applied as if, at the ownership test time, the fund or special company were a person (other than a company) who had the right to receive, for the person's own benefit, that percentage of those dividends or distributions of capital of the listed public company.
160ZNSV(3) If fund or special company has 50 members or less.However, if the fund or special company has 50 members or less, the test is applied as if, at the ownership test time, each member were a person (other than a company) who had the right to receive, for the person's own benefit, an equal proportion of those dividends or distributions of capital.
160ZNSV(4) Persons who actually control are taken not to have it.The test is applied as if, at the ownership test time, the persons (other than companies) who have the right to receive that percentage of those dividends or distributions of capital did not have that right (except as provided by subsection (3)).
This Division does not apply for the purposes of assessments for the 1998-99 year of income or any later year of income.
See instead Division 175 of the Income Tax Assessment Act 1997 .
The Commissioner may disallow capital losses of a company (or parts of them) for a year of income if:
(a) a capital gain accrued to the company and some or all of the capital gain (the injected capital gain ) would not have accrued if the company had not incurred those capital losses; and
(b) the capital gain accrued in that year of income.
The disallowed capital losses and parts of capital losses may exceed the amount of the injected capital gain.
Note:
The disallowance may result in a net capital loss for the year of income (see section 160ZNX ).
160ZNT(2) [When Commissioner cannot disallow]The Commissioner cannot disallow the capital losses or parts of the capital losses if the continuing shareholders will benefit from the accrual of the injected capital gain to an extent that the Commissioner thinks fair and reasonable having regard to their respective shareholding interests in the company.
160ZNT(3) [References to losses]A reference to disallowing a capital loss or a part of a capital loss for a year of income is a reference to determining that a capital loss or a part of a capital loss, as the case may be, is not to be applied in determining whether a net capital gain has accrued, or a net capital loss is incurred, in respect of the year of income.
160ZNT(4) [Continuing shareholders]The continuing shareholders are the individuals who have shareholding interests in the company both immediately before the injected capital gain accrued, and immediately afterwards.
(a) disallow a deduction of a company for a year of income to the extent that the company would not have incurred the loss, outgoing or expenditure that the deduction is for; or
(b) disallow a capital loss of a company for a year of income to the extent that the company would not have incurred the capital loss;
if some or all of a capital gain that accrued to it in the year of income had not accrued.
Note:
The disallowance may result in a loss or a net capital loss for the year of income (see sections 160ZNW and 160ZNX ).
160ZNU(2) [Deduction or capital loss that cannot be disallowed]The Commissioner cannot disallow any of the deduction or capital loss if:
(a) the continuing shareholders will benefit from any profit or advantage that has arisen or might arise directly or indirectly from the incurring of the loss, outgoing or expenditure or of the capital loss, as the case may be; and
(b) the Commissioner thinks that the extent to which they will benefit is fair and reasonable having regard to their respective shareholding interests in the company. 160ZNU(3) [References]
A reference to disallowing a capital loss or a part of a capital loss for a year of income is a reference to determining that a capital loss or a part of a capital loss, as the case may be, is not to be applied in determining whether a net capital gain has accrued, or a net capital loss is incurred, in respect of the year of income.
160ZNU(4) [Continuing shareholders]The continuing shareholders are the individuals who had shareholding interests in the company both immediately before the loss, outgoing or expenditure, or the capital loss, as the case may be, was incurred, and immediately afterwards.
The Commissioner may disallow a deduction or a capital loss of a company if:
(a) a person (other than the company) has obtained or will obtain a tax benefit in connection with a scheme; and
(b) the scheme would not have been entered into or carried out if the company had not incurred some or all (the available expense ) of:
(i) the loss, outgoing or expenditure that the deduction is for; or
as the case may be.
(ii) the capital loss;
However, the deduction or capital loss may be disallowed only to the extent of the available expense.
160ZNV(2) [Where capital gains accrue]The Commissioner may disallow deductions or capital losses of a company (or parts of them) if:
(a) a person has obtained or will obtain a tax benefit in connection with a scheme; and
(b) the scheme would not have been entered into or carried out if some or all (the available capital gains ) of the capital gains that accrued to the company had not accrued:
(i) before it incurred the losses, outgoings or expenditure that the deductions were for, or the capital losses, as the case may be; and
(ii) in the same year of income as it incurred them.
The disallowed deductions or capital losses and parts of deductions or capital losses may exceed the amount of the available capital gains.
Note:
The disallowance may result in a loss or a net capital loss for the year of income (see sections 160ZNW and 160ZNX ).
160ZNV(3) [Where shareholding interest]The Commissioner cannot disallow under this section if:
(a) the person who has obtained or will obtain the tax benefit had a shareholding interest in the company at some time during the year of income; and
(b) the Commissioner considers the tax benefit to be fair and reasonable having regard to that shareholding interest. 160ZNV(4) [References]
A reference to disallowing a capital loss or a part of a capital loss for a year of income is a reference to determining that a capital loss or a part of a capital loss, as the case may be, is not to be applied in determining whether a net capital gain has accrued, or a net capital loss is incurred, in respect of the year of income.
160ZNV(5) [Interpretation]An expression means the same in this section as in Part IVA.
If a company has a taxable income for a year of income because the Commissioner disallows under this Division deductions of the company for the year of income (or parts of them), the company may also have a loss for the year of income.
160ZNW(2) [Calculating loss]The company's loss for the income year is calculated as follows.
160ZNW(3) [Total disallowances]Total what the Commissioner has disallowed under this Division.
160ZNW(4) [Exempt income]If the company has exempt income for the year of income, subtract its net exempt income.
160ZNW(5) [Remainder]Any amount remaining is the company's
loss
for the year of income.
Note:
For the allowance of the loss as a deduction in later years of income see subsection 50C(2) .
If a company has a net capital gain for a year of income because the Commissioner disallows under this Division capital losses of the company for the year of income (or parts of them), the company may also have a net capital loss in respect of the year of income.
160ZNX(2) [Total losses]The company's net capital loss in respect of the year of income is the total of the amounts of the capital losses that the Commissioner has disallowed under this Division.
Note:
To find out how the net capital loss is applied in determining whether the company has a net capital gain in a later year of income, see section 160ZC .
This section does not apply for the purposes of assessments for the 1998-99 year of income or any later year of income.
See instead Division 102 of the Income Tax Assessment Act 1997 .
Where a net capital gain accrued to a taxpayer in respect of the year of income, the assessable income of the taxpayer of the year of income includes that net capital gain.
160ZO(2) [Net capital loss taken into account]A net capital loss that was incurred by a taxpayer in respect of a year of income shall be taken into account in accordance with section 160ZC but is not otherwise allowable to the taxpayer as a deduction under this Act in respect of any year of income.
An amount of a net capital loss cannot be transferred under this section in the 1998-99 year of income or a later year of income.
Note:
To work out whether a company can transfer a net capital loss to another company in the 1998-99 year of income or a later year of income: see Subdivision 170-B of the Income Tax Assessment Act 1997 .
For the purposes of this section, a company shall be taken to be a group company in relation to another company in relation to a year of income if -
(a) one of the companies was a subsidiary of the other company; or
(b) each of the companies was a subsidiary of the same company,
during the whole of that year of income or, if either or both of those companies was not or were not in existence during part of that year of income, during that part of that year of income during which both companies were in existence.
160ZP(2) [Subsidiary company]For the purposes of this section, a company (in this subsection referred to as the ``subsidiary company'' ) shall be taken to be the subsidiary of another company (in this subsection referred to as the ``holding company'' ) during a period (in this subsection referred to as the ``relevant period'' ), being the whole or a part of a year of income, if -
(a) at all times during the relevant period, all the shares in the subsidiary company were beneficially owned by -
(i) the holding company;
(ii) a company that is, or two or more companies each of which is, a subsidiary of the holding company; or
(iii) the holding company and a company that is, or two or more companies each of which is, a subsidiary of the holding company; and
(b) no person was in a position during any part of the relevant period, or would become in a position after the relevant period, to affect rights of the holding company or of a subsidiary of the holding company in relation to the subsidiary company. 160ZP(3) [Sub-subsidiaries]
For the purposes of this section, where a company is a subsidiary of another company (including a company that is such a subsidiary by virtue of another application or other applications of this subsection), every company that is a subsidiary of the first-mentioned company shall be taken to be a subsidiary of that other company.
160ZP(4) [Position to affect rights]For the purposes of subsection (2), a person shall be taken to be in a position during a year of income, or a part of a year of income, to affect any rights of a company in relation to another company if, during the year of income, or that part of the year of income, that person has a right, power or option (whether by virtue of any provision in the constituent document of either of those companies, by virtue of any agreement or otherwise) to acquire those rights or do an act or thing that would prevent the first-mentioned company from exercising those rights for its own benefit or receiving any benefits accruing by reason of those rights.
160ZP(5) [``agreement'']In subsection (4), ``agreement'' means an agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.
160ZP(6) [Company in existence]Subject to subsections (6A) and (6B), for the purposes of this section, a company shall be taken to be in existence if it has been incorporated and has not been dissolved.
For the purposes of subsection (1), where:
(a) at a time (in this subsection called the ``acquisition time'' ) in the year of income commencing on 1 July 1985 or in a subsequent year of income, one or more companies acquired all the shares in another company (in this subsection called the ``shelf company'' ) from the shareholders in the shelf company; and
(b) the shelf company was dormant, within the meaning of Part VI of the Companies Act 1981 , throughout the period (in this subsection called the ``dormant period'' ) commencing on the day on which the shelf company was incorporated and ending at the acquisition time;
the shelf company shall be taken not to have been in existence during the dormant period.
For the purposes of subsection (1), where:
(a) at a time (in this subsection called the ``issue time'' ) in the year of income commencing on 1 July 1985 or in a subsequent year of income, a company (in this subsection called the ``shelf company'' ) issued shares (in this subsection called the ``newly issued shares'' ) to another company or companies;
(b) immediately before the issue time, a person or persons held other shares in the shelf company;
(c) immediately after the issue time, the shelf company redeemed all the shares in the shelf company other than the newly issued shares; and
(d) the shelf company was dormant, within the meaning of Part VI of the Companies Act 1981, throughout the period (in this subsection called the ``dormant period'' ) commencing on the day on which the shelf company was incorporated and ending immediately before the issue time;
the shelf company shall be taken not to have been in existence during the dormant period.
Subject to this section, subsection (7AAA) applies if:
(a) a company that is a resident other than a prescribed dual resident (the loss company ) is taken to have incurred a net capital loss for a year of income (the loss year );
(b) a net capital gain accrued, or would but for the operation of this section have accrued, to a company that is a resident other than a prescribed dual resident (in this section referred to as the ``gain company'' ) in respect of a year of income (in this section referred to as the ``gain year'' ) that is either the loss year or a later year of income;
(baa) if the gain year is after the loss year - the net capital loss has been applied in determining whether a net capital gain accrued to the loss company in respect of the gain year or would have been so applied if sufficient capital gains had accrued to the loss company during the gain year;
(ba) the loss company is not a dual resident investment company in relation to the loss year nor in relation to the gain year;
(c) the loss company and the gain company agree that the whole or a part of the net capital loss (the transferred amount ) will be transferred from the loss company to the gain company;
(d) in a case where the loss year is the same year of income as the gain year - the loss company is a group company in relation to the gain company in relation to the loss year; and
(e) in a case where the gain year is a year of income after the loss year - the loss company is a group company in relation to the gain company in relation to the loss year and the gain year and in relation to any year of income commencing after the end of the loss year and ending before the commencement of the gain year.
(a) the net capital loss of the loss company for the loss year is reduced by the transferred amount; and
(b) for the purposes of the application of this Part in determining whether a net capital gain accrued to the gain company in respect of the gain year, the transferred amount is taken to be:
(i) if the gain year is the same year of income as the loss year, the gain company is not required to calculate a net capital gain or net capital loss under Division 3A in respect of the gain year and the gain company is not required to calculate a net capital loss under Division 3D in respect of the gain year - a capital loss incurred by the gain company during the gain year; or
(ii) if the gain year is a year of income after the loss year - a net capital loss for the gain company for the loss year.
In determining for the purposes of subparagraph (7AAA)(b)(i) whether a company is required to calculate a net capital gain or a net capital loss under Division 3A in respect of the gain year, disregard subsection 160ZNF(3) .
In determining for the purposes of subparagraph (7AAA)(b)(i) whether Division 3D would require the gain company to calculate a net capital loss in respect of the gain year, assume the gain company incurred a capital loss equal to the transferred amount during the gain year.
An agreement made under paragraph (7)(c) must be:
(a) in writing and signed by the public officer of each of the gain company and the loss company; and
(b) made on or before the date of lodgment of the return of income of the gain company for the gain year or within such further time as the Commissioner allows.
Subject to subsection (7B), where an amount is specified in an agreement made by the loss company and the gain company under paragraph (7)(c) transferring the whole or a part of a capital loss to the gain company:
(a) if, at the end of the gain year:
(i) no company that is a group company in relation to the loss company in relation to the gain year held shares in the loss company that were acquired by that group company after 19 September 1985; and
this section has effect as if the agreement had not been made; or
(ii) the loss company was not, in respect of any loan made to the loss company, indebted to a company that is a group company in relation to the loss company in relation to the gain year in respect of an indebtedness that commenced to be owed after 19 September 1985;
(b) if paragraph (a) does not apply and the amount specified in the agreement exceeds the sum of:
(i) if any company or companies (in this subparagraph called the ``parent company'' or ``parent companies'' ) which, or each of which, is a group company in relation to the loss company in relation to the gain year held, at the end of the gain year, shares in the loss company that were acquired by the parent company or parent companies after 19 September 1985 - the amount that, if the shares were disposed of at the end of the gain year, would have been the cost base to the parent company, or the sum of the cost bases to the parent companies, as the case may be, of the shares; and
the amount specified in the agreement is taken to be reduced by the excess.
(ii) if, at the end of the gain year, the loss company was, in respect of a loan or loans made to the loss company, indebted to a company or companies (in this subparagraph called the ``creditor company'' or ``creditor companies'' ) which, or each of which, is a group company in relation to the loss company in relation to the gain year, being an indebtedness that commenced to be owed to the creditor company or creditor companies after 19 September 1985 - the amount that, if the debt or debts were disposed of at the end of the gain year, would have been the cost base to the creditor company or the sum of the cost bases to the creditor companies, as the case may be, of the debt or debts;
Subsection (7A) does not apply in relation to an agreement made by the loss company and the gain company under paragraph (7)(c) if the gain company is a subsidiary of the loss company.
The maximum amount transferred cannot exceed the amount obtained by deducting:
(a) any amount that has been, or will be, transferred under an agreement previously made under paragraph (7)(c) by any company transferring the whole or a part of a net capital loss to the gain company in the gain year;
from:
(b) the net capital gain that accrued, or would but for the operation of this section have accrued, to the gain company in respect of the gain year.
If the gain year is a year of income after the loss year, the maximum amount transferred can also not exceed the amount mentioned in subsection 160ZC(3B) as the unapplied amount that can be carried forward to be applied in the year of income after the gain year.
If the amount specified in an agreement exceeds the maximum amount that the loss company can transfer to the gain company in the gain year, only that maximum amount is taken to have been transferred.
One reason why an agreement might specify more than can be transferred is that an assessment has been amended since the agreement.
Where 2 or more net capital losses of the loss company are able to be transferred under this section, those net capital losses may be transferred only in the order in which they were incurred.
The Commissioner may, at any time, amend an assessment of the gain company to give effect to subsection (8B) where the net capital loss or part of the net capital loss was not taken to have been incurred by the loss company. The Commissioner may do so despite section 170 (amendment of assessments).
If the loss company is required to calculate a net capital loss in respect of the loss year under Division 3A or Division 3D, no part of a net capital loss incurred by that company in respect of that year is capable of being specified in an agreement under paragraph (7)(c).
(Repealed by No 147 of 1997)
160ZP(9B) [Capital losses incurred by PDF]
If the loss company was a PDF throughout the last day of the loss year, no part of the net capital loss incurred by that company in respect of that year can be specified in a notice under paragraph (7)(c).
However, subsection (9B) does not apply to so much of the net capital loss as does not exceed the amount (if any) by which the total of:
(a) if the loss company is taken to have incurred a net capital loss in respect of the last year of income before the year of income at the start of which, or during which, it became a PDF - that net capital loss; and
(b) if the loss company incurred a capital loss or capital losses after that last year of income and before it became a PDF - that capital loss or those capital losses;
exceeds:
(c) if a capital gain or capital gains accrued to the loss company after that last year of income and before the end of the loss year - that capital gain or the total of those capital gains; or
(d) otherwise - a nil amount.
Where the loss company makes an agreement in accordance with paragraph (7)(c) in relation to a part or parts of a net capital loss incurred by the loss company, that company must not make a further agreement in accordance with that paragraph in relation to that net capital loss that purports to specify in relation to a company another part of that net capital loss that exceeds the amount obtained by deducting from the amount of that net capital loss the amount of that part of that net capital loss, or the sum of the amounts of those parts of that net capital loss, specified in the first-mentioned agreement.
If the loss company is a shareholder in the gain company and receives any consideration from the gain company for the whole or a part of a net capital loss incurred by the loss company being treated under subsection (7AAA) as a capital loss or a net capital loss incurred by the gain company:
(a) a capital gain does not accrue to the loss company because of the receipt of the consideration; and
(b) the consideration is not taken to be income derived by the loss company.
If the gain company gives any consideration to the loss company for the whole or a part of a net capital loss incurred by the loss company being treated under subsection (7AAA) as a capital loss or a net capital loss incurred by the gain company:
(a) the gain company does not incur a capital loss because of the giving of the consideration; and
(b) the consideration is not an allowable deduction to the gain company.
(a) an amount has been specified by the loss company in an agreement under paragraph (7)(c); and
(b) either:
(i) a company (in this subsection called a ``parent company'' ) that is a group company in relation to the loss company in relation to the gain year holds shares in another company that is such a group company, being shares that were acquired by the parent company after 19 September 1985; or
(ii) a company (in this subsection called a ``creditor company'' ) that is a group company in relation to the loss company in relation to the gain year is owed a debt by another company that is such a group company in respect of a loan made to that other company, being a debt that commenced to be owed to the creditor company after 19 September 1985; and
(c) either:
(i) the other company referred to in subparagraph (b)(i) or (ii), as the case may be, is the loss company; or
(ii) the money paid to acquire the shares or the money lent, as the case may be, has indirectly, through one or more interposed companies, trusts or partnerships, been applied in the acquisition of shares in the loss company by a company that is a group company in relation to the loss company in relation to the gain year or in the making of a loan to the loss company by a company that is such a group company;
the cost base, the indexed cost base or the reduced cost base, as the case may be, to the parent company of the shares or to the creditor company of the debt is reduced by such amount as is appropriate having regard to any consideration referred to in subsection (12) and to the direct or indirect interest of the parent company or creditor company in the loss company.
(a) an amount has been specified by the loss company in an agreement under paragraph (7)(c); and
(b) either:
(i) a company (the ``parent company'' ) that is a group company in relation to the gain company in relation to the gain year holds shares in another company that is such a group company, being shares that were acquired by the parent company after 19 September 1985; or
(ii) a company (the ``creditor company'' ) that is a group company in relation to the gain company in relation to the gain year is owed a debt by another company that is such a group company in respect of a loan made to that other company, being a debt that commenced to be owed to the creditor company after 19 September 1985; and
(c) either:
(i) the other company referred to in subparagraph (b)(i) or (ii), as the case may be, is the gain company; or
(ii) the money paid to acquire the shares or the money lent, as the case may be, has indirectly, through one or more interposed companies, trusts or partnerships, been applied in the acquisition of shares in the gain company by a company that is a group company in relation to the gain company in relation to the gain year or in the making of a loan to the gain company by a company that is such a group company;
the cost base, the indexed cost base or the reduced cost base, as the case may be, to the parent company of the shares or to the creditor company of the debt is increased by such amount as is appropriate having regard to any consideration referred to in subsection (12) and to the direct or indirect interest of the parent company or creditor company in the gain company.
The amount of the increase under subsection (14) in the cost base, the indexed cost base or the reduced cost base, as the case may be, to the parent company of the shares, or to the creditor company of the debt, is not to exceed the increase in the market value of the shares or the debt that results from the capital loss, or the net capital loss, being taken to have been incurred by the gain company.
The provisions of Subdivision 170-C of the Income Tax Assessment Act 1997 (so far as they relate to the transfer of net capital losses) are to be disregarded in applying the provisions of this section where the relevant agreement referred to in paragraph (7)(c) was made before 22 February 1999.
Section 160ZPA continues to have effect (with such modifications as are necessary) for the purposes of working out capital gains and capital losses under Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 .
Subject to subsection (3), if a company has incurred or incurs any eligible rollover losses and paragraphs (2)(a) and (b) do not apply:
(a) if:
(i) any of the eligible rollover losses was incurred in the 1995-96 year of income or an earlier year of income; and
(ii) the company incurred a net capital loss in the 1995-96 year of income; and
the net capital loss is reduced by the sum of the unused amounts; and
(iii) there are one or more unused amounts for that year of income in respect of the eligible rollover losses;
(b) if:
(i) any of the eligible rollover losses was incurred or is incurred in the 1996-97 year of income or any later year of income; and
the eligible rollover loss is reduced so that it equals the lesser amount, or is reduced to nil, as the case requires.
(ii) assuming section 160ZZO had not applied to the rollover disposal mentioned in paragraph (4)(a), the eligible rollover loss would have been a lesser amount or there would have been no eligible rollover loss;
Note:
The expressions eligible rollover loss , net capital loss and unused amount are defined in subsections (4), (8) and (6) respectively.
160ZPA(2) Operative provision - second case.Subject to subsection (3), if:
(a) a company has incurred any eligible rollover losses in the 1996-97 year of income or an earlier year of income; and
(b) the company furnished its return for the 1996-97 year of income before 3 pm, by legal time in the Australian Capital Territory, on 29 April 1997;
the following apply:
(c) if:
(i) the company incurred a net capital loss in the 1995-96 year of income; and
(ii) there are one or more unused amounts for that year of income in respect of the eligible rollover losses; and
then, for the purpose of any application of Step 4 in working out whether a net capital gain accrued to the company in respect of the 1997-98 or any later year of income, the net capital loss incurred in the 1995-96 year of income, or so much of the net capital loss as was not applied as mentioned in subparagraph (iii), is reduced by the sum of the unused amounts; and
(iii) if, in the company's return for the 1996-97 year of income, Step 4 in subsection 160ZC(1) was applied in working out whether a net capital gain accrued to the company in respect of that year of income - there is some of the net capital loss incurred in the 1995-96 year of income that has not been applied in accordance with Step 4;
(d) if the company incurred a net capital loss in the 1996-97 year of income and any of the eligible rollover losses was also incurred in that year of income - the net capital loss is reduced by the unused amount, for that year of income, in respect of the eligible rollover losses incurred in that year of income. 160ZPA(3) Commissioner to reduce amount under subsection (1) or (2).
(a) the whole or part of the net capital loss of the company, or of an eligible rollover loss of the company, is reduced under subsection (1) or (2); and
(b) the Commissioner, on application by the company, determines that it is fair and reasonable that the amount should not be so reduced, or should be reduced by a lesser amount, having regard to the following:
(i) whether the company has disposed of, or is likely to dispose of, the interest, right or debt mentioned in paragraph (4)(c);
(ii) the extent to which any eligible rollover losses incurred by the company are related, directly or indirectly, to any other capital losses incurred, or that may be incurred, by the company or any other company that is related to the company;
(iii) the respective amounts of the losses mentioned in subparagraph (ii);
(iv) the content and timing of any information provided to the Commissioner by the company in the application or otherwise;
(v) any other matter that the Commissioner considers relevant;
the amount is not so reduced, or is reduced by the lesser amount.
160ZPA(4) Eligible rollover loss.A capital loss incurred by a company (the loss company ) in a year of income in respect of the disposal (the loss disposal ) of an asset is an eligible rollover loss if:
(a) the loss company acquired the asset from another company (the transferor ) and section 160ZZO applied to the disposal (the rollover disposal ) constituting the acquisition by the loss company; and
(b) if section 160ZZO had not applied to the rollover disposal, there would have been no capital loss or a smaller capital loss; and
(c) when the rollover disposal took place, the loss company:
(i) had an interest (see subsection (7)) either directly, or indirectly through successive interests in interposed companies, in the transferor; or
(ii) was owed a debt by the transferor or had a right to acquire an interest in the transferor; or
(iii) had an interest either directly, or indirectly through successive interests in interposed companies, in a company, partnership or trust to which the transferor owed a debt or that had a right to acquire an interest in the transferor; and
(d) the loss company:
(i) acquired the interest mentioned in subparagraph (c)(i) or (iii) or the right mentioned in subparagraph (c)(ii); or
after 19 September 1985; and
(ii) began to be owed the debt mentioned in subparagraph (c)(ii);
(e) immediately after the rollover disposal, the market value of the interest, right or debt was less than its reduced cost base or what would be its reduced cost base if the interest, right or debt were an asset to whose disposal this Part applied; and
(f) the rollover disposal took place before 3 pm, by legal time in the Australian Capital Territory, on 29 April 1997; and
(g) the loss disposal took place no more than 5 years after the rollover disposal. 160ZPA(5) Exclusion for small businesses and manufacturing business assets.
However, a capital loss is not an eligible rollover loss if:
(a) the requirement in subsection 160ZZPP(4) (which relates to the net value of the transferee's assets etc.) would be satisfied at the time of the loss disposal, assuming the loss company were the taxpayer mentioned in that section; or
(b) the asset is plant, machinery, or a building, used in a manufacturing business:
(i) by the transferor immediately before the rollover disposal; and
160ZPA(6) Unused amount of all eligible rollover losses incurred in a particular year of income.
(ii) by the loss company for a period of at least 12 months that commences immediately after the rollover disposal.
The unused amount , for a year of income (the test year ), of all of the eligible rollover losses incurred by a company in a particular year of income (being the test year or an earlier year of income) is:
(a) if the company did not incur a net capital loss in the test year - nil; or
(b) if the test year is the one in which the company incurred the eligible rollover losses, and the company incurred a net capital loss in that year of income - the amount by which:
exceeds:
(i) the net capital loss;
(ii) the amount that would be the net capital loss assuming section 160ZZO had not applied to any of the rollover disposals concerned or, if there would be no net capital loss on that assumption, nil; or
(c) if the test year is after the one in which the company incurred the eligible rollover losses, and the company incurred a net capital loss in the test year - the amount worked out by reducing the unused amount, for the previous year of income, of the eligible rollover losses by the amount calculated using the formula:
Note 1:
If the test year is e.g. 2 years after the year of income in which the eligible rollover losses were incurred, it will be necessary first to apply subsection (6) to work out the unused amount for the year in which the losses were incurred, then to work out the unused amount for the next year of income and finally to work out the unused amount for the test year. This will involve applying more than one of the paragraphs in the subsection.
Note 2:
The operative provisions (subsections (1) and (2)) refer to the sum of the unused amounts, for e.g. 1995-96, in relation to eligible rollover losses. To work out the sum, it is first necessary to apply subsection (6) separately to the eligible rollover losses incurred in each year of income in order to work out, for 1995-96, the unused amount of each, and then to add together all of the unused amounts.
160ZPA(7) Interest.In this section:
interest
means a share in a company or an interest in the income or capital of a partnership or trust.
For the purposes of this section, a company's net capital loss is worked out after applying section 160ZP if:
(a) the agreement mentioned in that section was made; and
(b) the gain year mentioned in that section ended;
before 3 pm, by legal time in the Australian Capital Territory, on 29 April 1997. Otherwise it is worked out before applying section 160ZP .
160ZPA(9) 160ZP transfer amount.For the purposes of this section, if a company's net capital loss for a year of income is worked out in accordance with subsection (8) after applying section 160ZP, the company has a 160ZP transfer amount for the year of income equal to the sum of the amounts by which its net capital loss for the year of income is deemed to be reduced under subsection 160ZP(7) .
Subject to subsection (2), where a listed personal-use asset has been disposed of during the year of income:
(a) if the consideration in respect of the disposal exceeds the indexed cost base to the taxpayer in respect of the asset - a listed personal-use asset gain equal to the excess shall be deemed for the purposes of this section to have accrued to the taxpayer during the year of income; or
(b) if the reduced cost base to the taxpayer in respect of the asset exceed the consideration in respect of the disposal - a listed personal-use asset loss equal to the excess shall be deemed for the purposes of this section to have been incurred by the taxpayerduring the year of income. 160ZQ(2) [Disposal within 12 months of acquisition]
If the disposal occurred within 12 months after the day on which the asset was acquired by the taxpayer, the reference in subsection (1) to the indexed cost base to the taxpayer in respect of the asset shall be construed as a reference to the cost base to the taxpayer in respect of the asset.
160ZQ(3) [Date of acquisition of asset of deceased estate]The reference in subsection (2) to the day on which an asset was acquired by a taxpayer shall, if the asset formed part of the estate of a deceased person and passed to the taxpayer as the legal personal representative of the deceased person or as a beneficiary in the estate of the deceased person, be construed as a reference to the day on which the asset was acquired by the deceased person.
160ZQ(4) [Disposal consideration increased by sec 160ZD(5)](a) the amount that is deemed for the purposes of this Part to be the consideration in respect of a disposal of an asset is increased because of the operation of subsection 160ZD(5) ;
(b) the amount of the increase (in this subsection referred to as the ``relevant increase'' ) was attributable in whole or in part to a decrease in the market value of a listed personal-use asset; and
(c) as a result of the relevant increase:
(i) a capital gain that would not otherwise have accrued to a taxpayer accrued to the taxpayer during a year of income;
(ii) the amount of a capital gain that accrued to a taxpayer during a year of income is greater than it would otherwise have been;
(iii) a taxpayer has not incurred during a year of income a capital loss that the taxpayer would otherwise have incurred; or
(iv) the amount of a capital loss that a taxpayer incurred during a year of income is less than it would otherwise have been,
the taxpayer shall be deemed to have incurred, during the year of income referred to in whichever of the subparagraphs of paragraph (c) is applicable, a listed personal-use asset loss equal to so much of the relevant increase as was attributable to the decrease in the market value of the listed personal-use asset.
160ZQ(5) [Circumstances in which net listed personal-use asset loss incurred]For the purposes of this section, a net listed personal-use asset loss shall be taken to have been incurred by a taxpayer in respect of the year of income if:
(a) where no listed personal-use asset gain accrued to the taxpayer during the year of income - the taxpayer incurred a listed personal-use asset loss or listed personal-use asset losses during the year of income or incurred a net listed personal-use asset loss in respect of the immediately preceding year of income; or
(b) where a listed personal-use asset gain or listed personal-use asset gains accrued to the taxpayer during the year of income:
(i) if the taxpayer incurred a listed personal-use asset loss or listed personal-use asset losses during the year of income but did not incur a net listed personal-use asset loss in respect of the immediately preceding year of income - that listed personal-use asset loss or the sum of those listed personal-use asset losses;
(ii) if the taxpayer did not incur a listed personal-use asset loss during the year of income but incurred a net listed personal-use asset loss in respect of the immediately preceding year of income - that net listed personal-use asset loss; or
exceeded the listed personal-use asset gain or the sum of the listed personal-use asset gains that accrued to the taxpayer during the year of income. 160ZQ(6) [Amount of net listed personal-use asset loss]
(iii) if the taxpayer incurred a listed personal-use asset loss or listed personal-use asset losses during the year of income and incurred a net listed personal-use asset loss in respect of the immediately preceding year of income - the sum of that listed personal-use asset loss or those listed personal-use asset losses and that net listed personal-use asset loss,
The amount of the net listed personal-use asset loss that, by virtue of subsection (5), is to be taken for the purposes of this section to have been incurred by a taxpayer in respect of the year of income is an amount equal to:
(a) in a case to which paragraph (5)(a) applies:
(i) if the taxpayer incurred a listed personal-use asset loss or listed personal-use asset losses during the year of income and did not incur a net listed personal-use asset loss in respect of the immediately preceding year of income - that listed personal-use asset loss or the sum of those listed personal-use asset losses;
(ii) if the taxpayer did not incur a listed personal-use asset loss during the year of income but incurred a net listed personal-use asset loss in respect of the immediately preceding year of income - that net listed personal-use asset loss; or
(iii) if the taxpayer incurred a listed personal-use asset loss or listed personal-use asset losses during the year of income and incurred a net listed personal-use asset loss in respect of the immediately preceding year of income - the sum of that listed personal-use asset loss or those listed personal-use asset losses and that net listed personal-use asset loss; or
(b) in a case to which paragraph (5)(b) applies - the excess referred to in that paragraph. 160ZQ(6A) [Reduced loss under commercial debt forgiveness provisions]
If, apart from sections 245-125 to 245-135 in Schedule 2C, a taxpayer would be taken to have incurred a net listed personal-use asset loss in the immediately preceding year of income, then, for the purposes of this section:
(a) if the effect of those sections is to reduce the amount of the loss to nil - the taxpayer is taken not to have incurred a net listed personal-use asset loss in that year of income; or
(b) if the effect of those sections is to reduce the amount of the loss to an amount greater than nil - the amount of the net listed personal-use asset loss incurred by the taxpayer in that year of income is taken to be the reduced amount.
For the purposes of this Part, where:
(a) a listed personal-use asset gain or listed personal-use asset gains accrued to the taxpayer during the year of income; and
(b) the taxpayer did not incur a listed personal-use asset loss during the year of income and did not incur a net listed personal-use asset loss in respect of the immediately preceding year of income,
a capital gain equal to the amount of the listed personal-use asset gain or the sum of the listed personal-use asset gains shall be taken for the purposes of this Part to have accrued to the taxpayer during the year of income.
160ZQ(8) [Listed personal-use asset gain and loss]For the purposes of this Part, where:
(a) a listed personal-use asset gain or listed personal-use asset gains accrued to the taxpayer during the year of income;
(b) the taxpayer incurred a listed personal-use asset loss or listed personal-use asset losses during the year of income or incurred a net listed personal-use asset loss in respect of the immediately preceding year of income; and
(c) that listed personal-use asset gain or the sum of those listed personal-use asset gains exceeded:
(i) where the taxpayer incurred a listed personal-use asset loss or listed personal-use asset losses during the year of income but did not incur a net listed personal-use asset loss in respect of the immediately preceding year of income - that listed personal-use asset loss or the sum of those listed personal-use asset losses;
(ii) where the taxpayer did not incur a listed personal-use asset loss during the year of income but incurred a net listed personal-use asset loss in respect of the immediately preceding year of income - that net listed personal-use asset loss; or
(iii) where the taxpayer incurred a listed personal-use asset loss or listed personal-use asset losses during the year of income and incurred a net listed personal-use asset loss in respect of the immediately preceding year of income - the sum of that listed personal-use asset loss or those listed personal-use asset losses and that net listed personal-use asset loss,
a capital gain equal to the excess referred to in paragraph (c) shall be taken for the purposes of this Part to have accrued to the taxpayer during the year of income.
In this Division, ``lease'' includes a sub-lease.
For the purposes of this Part, the grant of a lease of property shall not be taken to constitute the disposal of part of the property but shall be deemed to constitute the disposal by the lessor to the lessee of an asset (that is to say, the lease) created by the lessor for a consideration equal to the premium paid or payable for the grant of the lease.
160ZS(2) [Cost base of lease of property]Notwithstanding section 160ZH , the cost base to a taxpayer of a lease of property granted by the taxpayer comprises the amounts of expenditure incurred by the taxpayer in respect of the grant of the lease and does not include any other amounts, and the indexed cost base and the reduced cost base shall be ascertained accordingly.
(a) either of the following subparagraphs applies:
(i) after 16 November 1988, a taxpayer (in this section called the ``lessor'' ) who holds an estate in fee simple (in this section called the ``freehold interest'' ) grants a lease (in this section called the ``new lease'' ) of the whole or a part of the area to which the freehold interest relates;
(ii) after 16 November 1988, a taxpayer (in this section also called the ``lessor'' ) who holds a lease of land (in this section called the ``head lease'' ) grants a sublease (in this section also called the ``new lease'' ) of the whole or a part of the area to which the head lease relates; and
(b) the new lease is an eligible long term lease; and
(c) the lessor makes an election in accordance with subsection (2) that this section apply in relation to the grant of the new lease;
the following provisions have effect for the purposes of this Part:
(d) section 160ZS does not apply in relation to the lessor in relation to the grant of the new lease;
(e) subsections 160ZT(1), (1A) and (1B) do not apply in relation to the lessor in relation to the new lease;
(f) this subsection (other than paragraph (n)) is to be disregarded for the purposes of the application of this Part (including section 160ZS and subsections 160ZT(1), (1A) and (1B)) in relation to the lessee under the new lease;
(g) the lessor is to be taken, at the time of the grant of the new lease, to have disposed of:
(i) in a case where the area to which the new lease relates is only part of the area to which the freehold interest or head lease relates:
(A) the part of the freehold interest or head lease that corresponds to that area; and
(B) any building or other improvement that is taken to be an asset separate from the freehold interest or head lease and that is in that area; or
(ii) in a case where the area to which the new lease relates is the whole of the area to which the freehold interest or head lease relates:
(A) the freehold interest or head lease; and
(B) any building or other improvement that is taken to be an asset separate from the freehold interest or head lease and that is in that area;
(h) the consideration received by the lessor in respect of each of those disposals is whichever is the greatest of the following:
(i) so much of the market value of the freehold interest or head lease, immediately before the grant of the new lease, as is attributable to the area, building or improvement concerned;
(ii) so much of the market value of the freehold interest or head lease, immediately before the grant of the new lease, (ascertained on the assumption that the grant of the new lease was never proposed to take place) as is attributable to the area, building or improvement concerned;
(iii) so much of the premium paid or payable for the grant of the new lease as is attributable to the area, building or improvement concerned;
(j) the lessor is to be taken to have immediately re-acquired each asset, or part of an asset, disposed of without having paid or given any consideration in respect of the re-acquisition;
(k) in determining the cost base, indexed cost base or reduced cost base to the lessor of a re-acquired asset or part of an asset, no account is to be taken of any liability that arose before the re-acquisition or any costs or expenditure that were incurred before the re-acquisition;
(m) any expenditure incurred by the lessor in obtaining:
(i) the consent of the lessee to the variation or waiver of any of the terms of the new lease; or
is to be taken, for the purposes of ascertaining the cost base, the indexed cost base or the reduced cost base to the lessor of the re-acquired asset covered by sub-subparagraph (g)(i)(A) or (ii)(A), to be expenditure to which paragraph 160ZH(1)(c), (2)(c) or (3)(c), as the case may be, applies;
(ii) the forfeiture or surrender of the new lease;
(n) if the new lease relates to one or more units of property for which depreciation is or was allowable to the lessor under section 54 of this Act or Division 42 (Depreciation) of the Income Tax Assessment Act 1997 in respect of any year of income:
(i) the new lease is not to be taken to relate to any such unit of property; and
(ii) the lessor is to be taken, in addition to granting the new lease, to have granted a separate lease of each such unit of property; and
(iii) the lessor is not to be taken to have disposed of any such unit of property because of paragraph (g); and
(iv) in determining the market value or premium mentioned in subparagraph (h)(i), (ii) or (iii), any such unit of property is to be disregarded.
An election for the purposes of subsection (1) must be made on or before the date of lodgment of the lessor's return of income for the later of the following years of income:
(a) the year of income in which the grant of the new lease took place;
(b) the year of income in which this section commenced;
or within such further period as the Commissioner allows.
The new lease is an eligible long term lease if, and only if:
(a) the new lease was granted for a term of at least 50 years; and
(b) at the time the new lease was granted, it was reasonable to expect that the new lease would continue for at least 50 years; and
(c) the terms of the new lease are substantially the same as:
(i) if the new lease is a sublease - the terms of the head lease; or
160ZSA(4) [Reference to building]
(ii) if the new lease is not a sublease - the terms applying to the lessor in respect of the land to which the new lease relates.
A reference in this section to a building includes a reference to a part of a building.
For the purposes of this Part, if the lessor under a lease of property incurs expenditure in obtaining the consent of the lessee to the variation or waiver of any of the terms of the lease, the lessor is taken to have incurred a capital loss equal to the amount of that expenditure.
For the purposes of this Part, if:
(a) the lessor under a lease of property incurs expenditure in obtaining the consent of the lessee to the variation or waiver of any of the terms of the lease; and
(b) the lessee receives an amount (in this subsection called the ``consent amount'' ) from the lessor in respect of the giving by the lessee of consent to the variation or waiver; and
(c) the lease was acquired by the lessee on or after 20 September 1985;
then:
(d) if, assuming that the lessee had disposed of the lease at the time the waiver or variation was made, the indexed cost base to the lessee of the lease would not have exceeded the consent amount - the lessee is taken:
(i) to have disposed of the lease at that time for a consideration equal to the consent amount; and
(ii) to have immediately re-acquired the lease for no consideration; or
(e) if, assuming that the lessee had disposed of the lease at the time the waiver or variation was made, the indexed cost base to the lessee of the lease would have exceeded the consent amount - the lessee is taken to have disposed of the lease at that time for a consideration equal to the amount of that indexed cost base and to have immediately re-acquired the lease:
(i) for the purpose of ascertaining whether a capital gain accrued to the lessee in the event of a subsequent disposal of the lease by the lessee - for a consideration equal to the amount by which that indexed cost base exceeded the consent amount; or
(ii) for the purpose of ascertaining whether the lessee incurred a capital loss in the event of a subsequent disposal of the lease by the lessee - for a consideration equal to the amount by which the amount that, if the lessee had disposed of the lease at the time the waiver or variation was made, would have been the reduced cost base to the lessee in respect of the lease exceeds the consent amount.
If the lessee disposed of the lease (otherwise than because of the application of subsection (1A)) within 12 months after the lessee acquired the lease (otherwise than because of the application of subsection (1A)), subsection (1A) has effect as if the references in that subsection to the indexed cost base to the lessee in respect of the lease were references to the cost base to the lessee in respect of the lease.
For the purposes of this Part, if the lessee under a lease of property incurs expenditure in obtaining the consent of the lessor to the variation or waiver of any of the terms of the lease -
(a) that expenditure shall be deemed to be expenditure of a capital nature incurred for the purpose of enhancing the value of the lease; and
(b) any amount received by the lessor in respect of the giving by the lessor of consent to the variation or waiver shall be deemed to be consideration received in respect of the disposal by the lessor of the right to consent to the variation or waiver.
Where a lease has been renewed or extended, the renewal or extension shall be deemed for the purposes of this Part to have constituted the grant by the lessor of a fresh lease that took effect at the time immediately after the time when the first-mentioned lease would, but for the renewal or extension, have expired.
For the purposes of this Part, the consideration for the disposal of an asset constituted by a lease, being a disposal by way of the expiry, forfeiture or surrender of the lease, includes any amount paid or payable by the lessor to the lessee upon the disposal in respect of expenditure of a capital nature incurred by the lessee in making improvements to the property that was the subject of the lease.
160ZV(2) [Subsequent disposal by owner]If an asset, being property that was the subject of a lease in respect of the expiry, forfeiture or surrender of which an amount was paid or payable by the lessor to the lessee as mentioned in subsection (1), is subsequently disposed of in whole or in part by the owner, the amount so paid or payable shall be deemed, for the purpose of ascertaining the cost base, the indexed cost base or the reduced cost base to the owner of the asset or part of the asset so disposed of, to be expenditure to which paragraph 160ZH(1)(c) , (2)(c) or (3)(c), as the case may be, applies.
(a) the lessee under a lease of land acquires the reversionary interest of the lessor in the land; and
(b) section 160ZWA does not apply in respect of that acquisition;
the following provisions of this section have effect for the purposes of this Part.
If the lease was granted in perpetuity or for a term of not less than 99 years, the former lessee shall be deemed to have acquired the asset constituted by the merger of the lease and the reversionary interest at the time when the lease was granted, or assigned, to the former lessee and to have paid as consideration for the acquisition of that asset the sum of any premium paid by the former lessee for the grant or assignment of the lease and any amount paid for the acquisition of the reversionary interest.
160ZW(3) [Other leases]In the case of a lease to which subsection (2) does not apply -
(a) where the former lessee acquired the lease, whether by grant or assignment, before 20 September 1985, the former lessee shall be deemed to have acquired the asset constituted by the merger of the lease and the reversionary interest at the time when the merger took place and to have paid as consideration for the acquisition an amount equal to the market value of that asset at that time; or
(b) where the former lessee acquired the lease, whether by grant or assignment, on or after 20 September 1985, the former lessee shall be deemed to have acquired the asset constituted by the merger of the lease and the reversionary interest at the time when the merger took place and to have paid as consideration for the acquisition the sum of any premium paid by the former lessee for the grant or assignment of the lease and any amount paid for the acquisition of the reversionary interest.
(a) at a particular time, one or more Crown leases (in this section called the ``original Crown leases'' ) owned by a taxpayer expire or are surrendered;
(b) one or more fresh Crown leases (in this section called the ``new Crown leases'' ) or one or more freehold interests, or both, is or are granted to the taxpayer by way of any one or more of the following:
(i) the renewal of the original Crown leases, where the renewal is (whether by law, custom or otherwise) wholly or principally attributable to the taxpayer's prior ownership of the original Crown leases;
(ii) the extension of the term of the original Crown leases, where the extension is (whether by law, custom or otherwise) wholly or principally attributable to the taxpayer's prior ownership of the original Crown leases;
(iii) changing the purpose for which the land to which the original Crown leases related may be used;
(iv) in a case where the original Crown leases were not leases in perpetuity - the conversion of the original Crown leases to Crown leases in perpetuity;
(v) the conversion of the original Crown leases to freehold interests;
(vi) the consolidation, or the consolidation and division, of the original Crown leases;
(vii) the subdivision of the original Crown leases;
(viii) excising or relinquishing a part (which part is in this section called the ``excised area'') of the area of land to which the original Crown leases related;
(ix) expanding the area of land to which the original Crown leases related; and
(c) in the case of a taxpayer in the capacity of a trustee of a trust estate - immediately after the grant of the new Crown leases or the freehold interests, the taxpayer holds the new Crown leases or the freehold interests upon the same trust as the taxpayer held the original Crown leases. 160ZWA(2) [Application of Pt IIIA in respect of original Crown leases]
Subject to subsection (4), this Part (other than this section) does not apply in respect of the expiry or surrender of any of the original Crown leases.
160ZWA(3) [Pre- and post-20/9/85 original Crown leases]For the purposes of this section:
(a) an original Crown lease acquired by the taxpayer before 20 September 1985 shall be taken to be a pre-20 September 1985 original Crown lease; and
(b) any other original Crown lease shall be taken to be a post-20 September 1985 original Crown lease. 160ZWA(4) [Post-20/9/85 original Crown lease relating to excised area]
Subject to this Part, if the taxpayer received, or was entitled to receive, any consideration in respect of the expiry or surrender of a post-20 September 1985 original Crown lease that related, in whole or in part, to the excised area:
(a) if the original Crown lease related wholly to the excised area - this Part applies in respect of the disposal of that Crown lease; and
(b) if the original Crown lease related only in part to the excised area - the taxpayer shall be taken, for the purposes of this Part, to have disposed of that part of that Crown lease that is attributable to the excised area. 160ZWA(5) [New Crown lease or freehold interest wholly related to pre-20/9/85 original Crown lease land]
If a particular new Crown lease or freehold interest relates wholly to land to which a pre-20 September 1985 original Crown lease related - the taxpayer shall be taken, for the purposes of this Part, to have acquired the new Crown lease or freehold interest before 20 September 1985.
160ZWA(6) [New Crown lease wholly related to post-20/9/85 original Crown lease land]If a particular new Crown lease relates wholly to land to which a post-20 September 1985 original Crown lease related - the new Crown lease shall be taken, for the purposes of this section, to be a post-20 September 1985 new Crown lease.
160ZWA(7) [Freehold interest wholly related to post-20/9/85 original Crown lease land]If a particular freehold interest relates wholly to land to which a post-20 September 1985 original Crown lease related - the freehold interest shall be taken, for the purposes of this section, to be a post-20 September 1985 freehold interest.
160ZWA(8) [New Crown lease partly related to 2 or more different lands]If a particular new Crown lease relates partly to any 2 or more of the following:
(a) land to which a pre-20 September 1985 original Crown lease related;
(b) land to which a post-20 September 1985 original Crown lease related;
(c) other land;
the following provisions have effect:
(d) the new Crown lease shall be taken, for the purposes of this Part, to comprise 2 or 3 separate leases, as follows:
(i) the new Crown lease to the extent to which it relates to land to which a pre-20 September 1985 original Crown lease related;
(ii) the new Crown lease to the extent to which it relates to land to which a post-20 September 1985 original Crown lease related;
(iii) the new Crown lease to the extent to which it relates to other land;
(e) the taxpayer shall be treated, for the purposes of this Part, as if the taxpayer had acquired the lease referred to in subparagraph (d)(i) before 20 September 1985;
(f) the lease referred to in subparagraph (d)(ii) shall be taken, for the purposes of this section, to be a post-20 September 1985 new Crown lease;
(g) on the disposal of the actual new Crown lease, the consideration in respect of the disposal of the actual lease shall be apportioned between the separate leases. 160ZWA(9) [Freehold interest partly related to 2 or more different lands]
If a particular freehold interest relates partly to any 2 or more of the following:
(a) land to which a pre-20 September 1985 original Crown lease related;
(b) land to which a post-20 September 1985 original Crown lease related;
(c) other land;
the following provisions have effect:
(d) the freehold interest shall be taken, for the purposes of this Part, to comprise 2 or 3 separate freehold interests as follows:
(i) the freehold interest to the extent to which it relates to land to which a pre-20 September 1985 original Crown lease related;
(ii) the freehold interest to the extent to which it relates to land to which a post-20 September 1985 original Crown lease related;
(iii) the freehold interest to the extent to which it relates to other land;
(e) the taxpayer shall be treated, for the purposes of this Part, as if the taxpayer had acquired the freehold interest referred to in subparagraph (d)(i) before 20 September 1985;
(f) the freehold interest referred to in subparagraph (d)(ii) shall be taken, for the purposes of this section, to be a post-20 September 1985 freehold interest;
(g) on the disposal of the actual freehold interest, the consideration in respect of the disposal of the actual freehold interest shall be apportioned between the separate freehold interests. 160ZWA(10) [Post-20/9/85 land asset]
For the purposes of subsections (11) and (12), a post-20 September 1985 new Crown lease or a post-20 September 1985 freehold interest shall be taken to be a post-20 September 1985 land asset.
160ZWA(11) [Determination of amount taken to have been paid for post-20/9/85 land asset]The taxpayer shall be taken to have paid or given as consideration in respect of the acquisition of a post-20 September 1985 land asset:
(a) for the purposes of ascertaining whether a capital gain accrued to the taxpayer in the event of a subsequent disposal of the land asset by the taxpayer - the amount calculated in accordance with the formula:
| ICB of post CGT orig. leases | × |
MV of land asset
MV of post CGT land assets |
where:
(b) for the purposes of ascertaining whether the taxpayer incurred a capital loss in the event of a subsequent disposal of the land asset by the taxpayer - the amount calculated in accordance with the formula:
| RCB of post CGT orig. leases | × |
MV of land asset
MV of post CGT land assets |
where:
If a post-20 September 1985 land asset is disposed of by the taxpayer within 12 months after the earliest day, being a day after 19 September 1985, on which any post-20 September 1985 original Crown lease was acquired by the taxpayer, the reference in paragraph (11)(a) to the indexed cost bases to the taxpayer of post-20 September 1985 original Crown leases is a reference to the cost bases to the taxpayer of the post-20 September 1985 original Crown leases.
160ZWA(13) [Commissioner's discretion where original area differs from new area](a) the area of land (in this subsection called the ``original area'') to which the original Crown leases related differs from the area of land (in this subsection called the ``new area'') to which the new Crown leases or the freehold interests relate; and
(b) having regard to all relevant circumstances, including:
(i) the difference between the size of the original area and the size of the new area;
(ii) the difference between:
(A) the market value of the new Crown leases or the freehold interests immediately after the grant of the new Crown leases or freehold interests to the taxpayer; and
(B) the amount that would have been the market value of the new Crown leases or freehold interests, immediately after the grant of the new Crown leases or freehold interests to the taxpayer, if the new Crown leases or freehold interests had been granted in respect of the original area instead of the new area;
(iii) if land (in this subparagraph called the ``excepted land'') that formed part (whether a minor part or a significant part) of the original area is not included in the new area but land (in this subparagraph called the ``new land'') that did not form part of the original area is included in the new area - the circumstances that gave rise to the exclusion of the excepted land from, and the inclusion of the new land in, the new area and, in particular, (if applicable) the circumstance that the taxpayer sought, but was unable to secure, the inclusion of the excepted land and agreed to the inclusion of the new land only as a substitute for the excepted land; and
the Commissioner is satisfied that it would be unreasonable not to apply this subsection;
(iv) in the case of the grant of new Crown leases - whether the new Crown leases were granted for the purpose of correcting errors or omissions;
the Commissioner may, for the purposes of subsections (5) to (9) (inclusive), to such extent as the Commissioner considers reasonable, treat a new Crown lease or a freehold interest as relating, in whole or in part, to land to which a particular original Crown lease related.
160ZWA(14) [``freehold interest'']In this section:
"freehold interest"
means an estate in fee simple.
(a) a Crown lease (in this subsection called the ``original lease'') of land (in this subsection called the ``original land'') has been granted to a taxpayer;
(b) after the grant of the original lease, the original land came to be vested in or held by a government authority; and
(c) the government authority granted to the taxpayer under a statutory law of the Commonwealth, of a State or of a Territory a lease (in this subsection called the ``fresh lease'') of the original land, or of that land less an excised area or together with an additional area;
then, for the purposes of this section, the fresh lease shall be taken to be a Crown lease and to have been granted by way of renewal of the original lease.
160ZWA(16) [Period between original lease and fresh lease]If there was a period between the end of the term of the original lease referred to in subsection (15) and the beginning of the term of the fresh lease so referred to, that period shall not be taken to preclude the fresh lease from being regarded for the purposes of that subsection as a renewal of the original lease provided that the taxpayer concerned continued in occupation of the original land during that period under a permission, licence or authority granted by the relevant government authority pending the grant of the fresh lease.
In this Division:
"associate"
has the same meaning as in section
54AA
;
(Repealed by No 121 of 1997)
"entity"
means any of the following:
(a) a company;
(b) a partnership;
(c) a person in the capacity of trustee;
(d) any other person;
interest
, in relation to a unit of property, means an interest attributable to a quasi-ownership right granted by an exempt Australian government agency or an exempt foreign government agency.
(Repealed by No 121 of 1997)
(Repealed by No 121 of 1997)
"unit of property"
has the same meaning as in section
54AA
.
In this Division, exempt Australian government agency , exempt foreign government agency , quasi-owner and quasi-ownership right have the same meanings as in the Income Tax Assessment Act 1997 .
This section has effect in spite of any other provision of this Part.
(a) an entity holds land under a quasi-ownership right granted by an exempt Australian government agency or an exempt foreign government agency; and
(b) a unit of property is attached to the land; and
(c) the entity is the quasi-owner of the unit under subsection 42-310(1) of the Income Tax Assessment Act 1997 ; and
(d) the quasi-ownership right expires or is surrendered or terminated; and
(e) the expiry, surrender or termination is followed by:
(i) the grant to the entity of one or more fresh quasi-ownership rights over the land; or
(ii) the grant or transfer to the entity of an estate in fee simple in the land; and
(f) if the entity is not a partnership - apart from this section, the entity is taken, for the purposes of this Part, to have disposed of the entity's interest in the unit because of the expiry, surrender or termination of the quasi-ownership right; and
(g) if the entity is a partnership - apart from this section, a partner in the partnership is taken, for the purposes of this Part, to have disposed of the partner's interest in the unit because of the expiry, surrender or termination of the quasi-ownership right; and
(h) neither section 160ZZF nor section 160ZWA applies in relation to the disposal mentioned in paragraph (f) or (g).
If the entity is not a partnership:
(a) this Part does not apply in respect of the disposal by the entity of the entity's interest in the unit; and
(b) the Commissioner must take such steps as are necessary to grant CGT roll-over relief in relation to the entity in respect of the disposal of the entity's interest in the unit. 160ZWC(3) Entity a partnership - CGT roll-over relief.
If the entity is a partnership:
(a) this Part does not apply in respect of the disposal by a partner in the partnership of the partner's interest in the unit; and
(b) the Commissioner must take such steps as are necessary to grant CGT roll-over relief in relation to the partner in respect of the disposal of the partner's interest in the unit. 160ZWC(4) CGT roll-over relief - steps to be taken.
The steps that the Commissioner may take include:
(a) treating a particular asset as having been acquired by an entity or partner before 20 September 1985; or
(b) treating an entity or partner as having paid, as consideration in respect of the acquisition of an asset held by the entity or partner, an amount equal to:
(i) for the purpose of ascertaining whether a capital gain accrued to the entity or partner in the event of a subsequent disposal of the asset by the entity or partner - such amount as is ascertained in a manner that the Commissioner determines to be appropriate; or
160ZWC(5) Determination of consideration.
(ii) for the purpose of ascertaining whether the entity or partner incurred a capital loss in the event of a subsequent disposal of the asset by the entity or partner - such amount as is ascertained in a manner that the Commissioner determines to be appropriate.
A determination under paragraph (4)(b) may provide for the amount concerned to be ascertained in a different manner in different circumstances.
(a) an entity holds land under a quasi-ownership right granted by an exempt Australian government agency or an exempt foreign government agency; and
(b) a unit of property is attached to the land; and
(c) the entity is the quasi-owner of the unit under subsection 42-310(1) of the Income Tax Assessment Act 1997 ; and
(d) the quasi-ownership right expires or is surrendered or terminated; and
(e) the expiry, surrender or termination is followed by:
(i) the grant to an associate of the entity of one or more fresh quasi-ownership rights over the land; or
(ii) the grant or transfer to an associate of the entity of an estate in fee simple in the land; and
(f) if the entity is not a partnership - the entity is taken, for the purposes of this Part, to have disposed of the entity's interest in the unit because of the expiry, surrender or termination of the quasi-ownership right; and
(g) if the entity is a partnership - a partner in the partnership is taken, for the purposes of this Part, to have disposed of the partner's interest in the unit because of the expiry, surrender or termination of the quasi-ownership right; and
(h) neither section 160ZZF nor section 160ZWA applies in relation to the disposal mentioned in paragraph (f) or (g).
If the entity is not a partnership, subsection 160ZK(1) has effect, in relation to the disposal of the entity's interest in the unit, as if the amount mentioned in paragraph 160ZK(1)(a) were further reduced by the undeducted cost of the unit under Division 42 (Depreciation) of the Income Tax Assessment Act 1997 immediately before the expiry, surrender or termination of the quasi-ownership right.
If the entity is a partnership, subsection 160ZK(3) has effect, in relation to the disposal by a partner in the partnership of the partner's interest in the unit, as if the amount mentioned in paragraph 160ZK(3)(a) were further reduced by so much of the undeducted cost of the unit under Division 42 (Depreciation) of the Income Tax Assessment Act 1997 immediately before the expiry, surrender or termination of the quasi-ownership right as is attributable to the partner's interest in the unit.
(a) an asset is held by a person as trustee otherwise than as trustee of a unit trust or of the estate of a deceased person; and
(b) a beneficiary under the trust becomes absolutely entitled to the asset as against the trustee,
the trustee shall be deemed, for the purposes of this Part, to have disposed of the asset to the beneficiary at the time when the beneficiary became so entitled.
160ZX(2) [Scope of subsec (3)-(5)](a) a trustee of a trust estate is deemed by subsection (1) to have disposed of an asset to a beneficiary; or
(b) a trustee of a trust estate other than the estate of a unit trust or of a trust that arose upon or resulted from the death of a person disposes of an asset of the trust estate to a beneficiary in satisfaction of the interest or part of the interest of the beneficiary in the corpus of the trust estate,
the following provisions of this section have effect.
160ZX(3) [Deemed consideration for disposal - trustee]The trustee shall be deemed for the purposes of this Part to have disposed of the asset to the beneficiary for a consideration equal to the market value of the asset at the time of the disposal.
160ZX(4) [Deemed consideration for disposal - beneficiary]The beneficiary shall be deemed to have, at the time when the asset was disposed of, disposed of -
(a) in a case to which paragraph (2)(a) applies - the interest of the beneficiary in the corpus of the trust estate to the extent to which the interest was constituted by the asset; or
(b) in a case to which paragraph (2)(b) applies - the interest or part of the interest of the beneficiary in the corpus of the trust estate that is referred to in that paragraph,
for a consideration equal to the market value of the asset at the time of the disposal of the asset.
160ZX(5) [Indexed cost base to beneficiary]If the beneficiary did not pay or give any consideration in respect of the acquisition of the interest or part of the interest referred to in subsection (4) and did not acquire the interest or part of the interest by way of assignment from another person, the indexed cost base to the beneficiary in respect of the acquisition of the interest or part of the interest shall be deemed to be an amount equal to the market value of the asset at the time of the disposal of the asset.
Where -
(a) a person acquired a right to receive income from a trust estate other than the estate of a unit trust or of a trust that arose upon or resulted from the death of another person; and
(b) the person did not, apart from any operation of subsection 160ZH(9) , pay or give any consideration in respect of the acquisition of the right and did not acquire the right by way of assignment from another person,
subsection 160ZH(9) does not apply in relation to the right.
Where a person (in this section referred to as the ``beneficiary'') has a right to receive income from a trust estate other than the estate of a unit trust or of a trust that arose upon or resulted from the death of another person and the trustee disposes of an asset of the trust estate to the beneficiary in satisfaction of the right or a part of the right -
(a) the asset shall be deemed for the purposes of this Part to have been so disposed of for a consideration equal to its market value; and
(b) the beneficiary shall be deemed to have, at the time when the asset was so disposed of, disposed of the right or part of the right, as the case may be, for a consideration equal to the market value of the asset at that time.
(a) a person (in this section referred to as the ``beneficiary'') acquires an interest in the corpus of a trust estate, other than the estate of a unit trust or of a trust that arose upon or resulted from the death of another person;
(b) the beneficiary did not, apart from any operation of subsection 160ZH(9) , pay or give any consideration in respect of the acquisition of the interest and did not acquire the interest by way of assignment from another person; and
(c) the interest is disposed of in whole or in part during the year of income by the beneficiary,
the following provisions of this section have effect in relation to the disposal.
160ZYB(2) [Capital gain]Subject to subsection (3), where the consideration in respect of the disposal exceeds -
(a) if the beneficiary is the only person having an interest in the corpus of the trust estate and the disposal relates to the whole of that interest - the amount (if any) remaining after deducting the total amount of the liabilities of the trust from the amount ascertained in accordance with the formula A + B , where -
(b) if there are two or more persons having an interest in the corpus of the trust estate and the disposal relates to the whole of the beneficiary's interest - so much of the amount (if any) that would be ascertained in accordance with paragraph (a) if that paragraph were applicable as bears to that amount the same proportion as the interest of the beneficiary in that corpus bears to the total of all the interests in that corpus; or
(c) if the disposal relates to part only of the beneficiary's interest in the corpus of the trust estate - so much of the amount (if any) that would be ascertained in accordance with paragraph (a) or (b), whichever paragraph would be applicable if the disposal related to the whole of that interest, as bears to that amount the same proportion as that part of that interest bears to the whole of that interest,
a capital gain equal to the excess shall be deemed for the purposes of this Part to have accrued to the beneficiary during the year of income.
160ZYB(3) [Disposal within 12 months of acquisition]If the disposal of the interest or part of the interest occurred within 12 months after the day on which the interest was acquired by the beneficiary, a reference in paragraph (2)(a) to the indexed cost base to the trustee of an asset shall be construed as a reference to the cost base to the trustee of the asset.
160ZYB(4) [Capital loss]Where the consideration in respect of the disposal is less than -
(a) if the beneficiary is the only person having an interest in the corpus of the trust estate and the disposal relates to the whole of that interest - the amount (if any) remaining after deducting the total amount of the liabilities of the trust from the amount ascertained in accordance with the formula A + B , where -
(b) if there are two or more persons having an interest in the corpus of the trust estate and the disposal relates to the whole of the beneficiary's interest - so much of the amount (if any) that would be ascertained in accordance with paragraph (a) if that paragraph were applicable as bears to that amount the same proportion as the interest of the beneficiary in that corpus bears to the total of all the interests in that corpus; or
(c) if the disposal relates to part only of the beneficiary's interest in the corpus of the trust estate - so much of the amount (if any) that would be ascertained in accordance with paragraph (a) or (b), whichever paragraph would be applicable if the disposal related to the whole of that interest, as bears to that amount the same proportion as that part of that interest bears to the whole of that interest,
the beneficiary shall be deemed for the purposes of this Part to have incurred during the year of income a capital loss equal to the difference between the consideration in respect of the disposal and the amount ascertained in accordance with paragraph (a), (b) or (c), whichever paragraph is applicable.
160ZYB(5) [Section not applicable where disposal deemed by sec 160ZX(4)]This section does not apply where the beneficiary is deemed to have disposed of the interest or part of the interest by virtue of subsection 160ZX(4) .
Where -
(a) a taxpayer holds units in a unit trust (in this Division referred to as the ``original units'');
(b) an amount (in this Division referred to as the ``relevant amount'') is payable to the taxpayer by the trustee of the unit trust in respect of the original units;
(c) other units in the unit trust (in this Division referred to as the ``bonus units'') are issued to the taxpayer;
(d) the unit trust is not a corporate unit trust within the meaning of subsection 102J(1), or a public trading trust within the meaning of section 102R , in relation to the year of income in which the bonus units are issued; and
(e) the relevant amount is applied by the trustee of the unit trust, in whole or in part, in payment or part payment of the money payable by the taxpayer in respect of the bonus units or the liability of the trustee of the unit trust to pay the relevant amount to the taxpayer is otherwise satisfied, in whole or in part, by the issue of the bonus units,
the following provisions of this Division have effect.
Where no part of the relevant amount was included in the assessable income of the taxpayer of any year of income under a provision of this Act other than this Part, the bonus units shall be deemed, for the purposes of this Part, to have been acquired by the taxpayer at the time applicable under the following paragraphs:
(a) if:
(i) the bonus units were issued after 1 o'clock in the afternoon, by legal time in the Australian Capital Territory, on 10 December 1986;
(ii) the original units were acquired by the taxpayer before 20 September 1985; and
the time when the liability arose to pay the money that was first paid as mentioned in subparagraph (iii); or
(iii) after the time referred to in subparagraph (i), money has been paid to the trustee of the unit trust in respect of the bonus units, being money that the taxpayer paid or was required to pay;
(b) in any other case - the time when the taxpayer acquired the original units.
In respect of bonus units to which paragraph 160ZYD(b) applies, the amount paid by the taxpayer in respect of the original units or, if more than one amount was paid by the taxpayer in respect of the original units, each amount shall be deemed for the purposes of this Part to have been paid by the taxpayer as consideration in respect of the acquisition of the original units and the bonus units in such proportions as is reasonable in the circumstances.
Where the relevant amount was included in the assessable income of the taxpayer of any year of income under a provision of this Act other than this Part, the taxpayer shall be deemed, for the purposes of this Part, to have paid in respect of the acquisition of the bonus units, a consideration equal to the amount so included in the assessable income of the taxpayer and to have so paid that consideration at the time when the bonus units were issued to the taxpayer.
Where the time of acquisition of the bonus units by the taxpayer is determined under paragraph 160ZYD(a), the cost base, indexed cost base and reduced cost base to the taxpayer of the bonus units shall be determined as if the amount of any consideration in respect of the acquisition of the bonus units were increased by the market value of the bonus units immediately before that time (not including any part of that market value that is attributable to amounts that, apart from this section, would be taken into account in determining that cost base, indexed cost base or reduced cost base, as the case may be).
This Part does not apply in respect of the disposal by a taxpayer of a unit in a unit trust if:
(a) the unit trust is a PST, within the meaning of Part IX, in relation to the year of income of the unit trust in which the disposal occurred; and
(b) any of the following subparagraphs applies in relation to the taxpayer:
(i) the taxpayer is the trustee of a complying superannuation fund , a complying ADF or a PST, within the meaning of Part IX, in relation to the year of income of the taxpayer in which the disposal occurred;
(ii) the taxpayer is a life assurance company (within the meaning of Division 8 of Part III) and, immediately before the disposal of the unit, the unit was included in a tax-advantaged insurance fund (within the meaning of section 111B) of the taxpayer;
(iii) the taxpayer is a registered organization (within the meaning of Division 8A of Part III) and, immediately before the disposal of the unit, the unit was held by the taxpayer solely in respect of tax-advantaged business (within the meaning of section 116GC ) of the taxpayer.
Where -
(a) a person (in this Division referred to as the ``shareholder'') holds shares in a company (in this Division referred to as the ``original shares'');
(b) the company issues other shares (in this Division referred to as the ``bonus shares'') to the shareholder in circumstances mentioned in subsection 6BA(1) ; and
(c) Division 8A does not apply to the bonus shares;
the following provisions of this Division have effect.
The bonus shares shall be deemed, for the purposes of this Part, to have been acquired by the shareholder at the time applicable under the following paragraphs:
(a) if:
(i) the bonus shares were issued after 1 o'clock in the afternoon, by legal time in the Australian Capital Territory, on 10 December 1986;
(ii) the original shares were acquired by the shareholder before 20 September 1985; and
the time when the liability arose to pay the money that was first paid as mentioned in subparagraph (iii); or
(iii) after the time referred to in subparagraph (i), money has been paid to the company in respect of the bonus shares, being money that the shareholder paid or was required to pay;
(b) in any other case - the time when the shareholder acquired the original shares.
This section does not apply in respect of the bonus shares if section 160ZYHA applies in respect of the bonus shares.
The shareholder shall be deemed, for the purposes of this Part, to have paid in respect of the acquisition of the original shares or of the bonus shares a consideration equal to the amount, or the sum of the amounts, that would be deemed to be payable in respect of the original shares or the bonus shares, as the case may be, if it were necessary for the purposes of a provision of this Act (other than this Part) to determine the amount of any profit or loss arising on the sale or disposal of the original shares or the bonus shares, as the case may be.
160ZYH(2) [Relevant amount not excluded by sec 6BA]If the whole or a part of a relevant amount (as defined in section 6BA ):
(a) which is applied by the company in payment or part payment of the moneys payable by the shareholder in respect of the bonus shares; or
(b) the liability of the company to pay which is otherwise satisfied by the issue of the bonus shares,
is not excluded by section 6BA from being treated as being an amount paid or payable by the shareholder in respect of the bonus shares or as in any other way constituting any part of the cost to the shareholder of the bonus shares (which relevant amount or part of a relevant amount is referred to in this subsection as the ``non-excluded amount'' ), so much of the consideration that, by virtue of subsection (1), the shareholder is deemed for the purposes of this Part to have paid in respect of the acquisition of the bonus shares as consists of the non-excluded amount shall be deemed for the purposes of this Part to have been paid at the time when the bonus shares were issued to the shareholder.
160ZYH(3) [When deemed consideration for bonus shares paid]If an amount (in this subsection referred to as the ``original amount'' ) paid or payable by the shareholder in respect of the original shares (whether on purchase of the shares, on application for or allotment of the shares, to meet calls or otherwise) is deemed by subsection 6BA(3) to have been paid or to be payable by the shareholder in respect of the bonus shares, so much of the consideration that, by virtue of subsection (1), the shareholder is deemed for the purposes of this Part to have paid in respect of the acquisition of the bonus shares as consists of the original amount shall be deemed for the purposes of this Part to have been paid at the time when the original amount was paid by the shareholder in respect of the original shares or, if the original amount formed part of a larger amount, at the time when the larger amount was paid by the shareholder in respect of the original shares.
160ZYH(4) [When deemed consideration for bonus shares paid]If the consideration that, by virtue of subsection (1), the shareholder is deemed for the purposes of this Part to have paid in respect of the acquisition of the bonus shares includes an amount to which neither subsection (2) nor (3) applies, so much of that consideration as consists of that amount shall be deemed for the purposes of this Part to have been paid at the time when that amount was paid.
Where the time of acquisition of the bonus shares by the shareholder is determined under paragraph 160ZYG(a), the cost base, indexed cost base and reduced cost base to the shareholder of the bonus shares shall be determined as if the amount of any consideration in respect of the acquisition of the bonus shares were increased by the market value of the bonus shares immediately before that time (not including any part of that market value that is attributable to amounts that, apart from this section, would be taken into account in determining that cost base, indexed cost base or reduced cost base, as the case may be).
Where:
(a) a person (in this Division called the ``shareholder'' ) holds shares in a company;
(b) after 30 June 1987, the company issues other shares (in this Division called the ``bonus shares'' ) to the shareholder in the circumstances mentioned in subsection 6BA(1) ; and
(c) some or all of the paid-up value of the bonus shares is a dividend;
this Division has effect for the purposes of this Part.
The cost base, indexed cost base and reduced cost base to the shareholder of the bonus shares shall be determined as if the amount of any consideration in respect of the acquisition of the bonus shares were increased by so much of the paid-up value of the bonus shares as is a dividend.
A reference in this Division to the reducing amount is a reference to the amount by which the aggregate of the amounts included in the assessable income of a taxpayer under subsection 26AAC(5) and paragraph 26AAC(8C)(a) is reduced in accordance with paragraph 26AAC(4F)(c) .
If an amount is included in the assessable income of a taxpayer under section 26AAC as a result of the acquisition by the taxpayer of shares in a company, the taxpayer shall be deemed for the purposes of this Part to have paid:
(a) subject to paragraph (b), at the time when the shares were acquired by the taxpayer; or
(b) in a case to which subsection 26AAC(15) applies - at the time when the shares are deemed for the purposes of section 26AAC to have been acquired by the taxpayer;
as consideration in respect of the acquisition of the shares, an amount equal to the market value of the shares at that time, reduced by so much of the reducing amount (if any) as is attributable to those shares.
If, by virtue of subsection 26AAC(8C) , an amount is included in the assessable income of a taxpayer as a result of the acquisition by the taxpayer of a right to acquire shares in a company, the taxpayer shall be deemed, for the purposes of this Part to have paid, at the time when the taxpayer acquired the right, in respect of the acquisition of the right, an amount equal to the market value of the right at that time, reduced by so much of the reducing amount (if any) as is attributable to that right.
For the purposes of this Part, if:
(a) either:
(i) an amount is included in the assessable income of a taxpayer under section 26AAC as a result of the acquisition by the taxpayer of a share in a company; or
(ii) apart from subsection 26AAC(4F) , an amount would have been included in the assessable income of a taxpayer under section 26AAC as a result of the acquisition by the taxpayer of a share in a company; and
(b) the share was acquired by the taxpayer under the terms of a trust deed under which a trustee is required or authorised to sell, or otherwise to transfer, shares in a company to employees of the company or of another company or to relatives of those employees; and
(c) if an amount was paid by the taxpayer as consideration for the share - that amount is equal to or less than the indexed cost base to the trustee of the share;
this Part does not apply in respect of the disposal by the trustee of the share to the taxpayer.
160ZYJA(2) [Right to acquire shares]For the purposes of this Part, if:
(a) any of the following apply:
(i) an amount is included in the assessable income of a taxpayer under subsection 26AAC(8C) as a result of the acquisition by the taxpayer of a right to acquire shares in a company; or
(ii) apart from subsection 26AAC(4F) , an amount would have been included in the assessable income of a taxpayer under subsection 26AAC(8C) as a result of the acquisition by the taxpayer of a right to acquire shares in a company; or
(iii) an amount is included in the assessable income of a taxpayer under subsection 26AAC(7) or (8) as a result of the disposal by the taxpayer or an associate of the taxpayer of a right to acquire shares in a company; or
(iv) both:
(A) an amount is included in the assessable income of a taxpayer under section 26AAC as a result of the acquisition by the taxpayer or an associate of the taxpayer of shares in a company; and
(B) the shares were acquired as a result of the exercise or operation of a right to acquire shares in the company; and
(b) the right was acquired, or originally acquired, by the taxpayer under the terms of a trust deed under which a trustee is required or authorised to sell, or otherwise to transfer, shares in a company to employees of the company or of another company or to relatives of those employees; and
(c) if an amount was paid by the taxpayer as consideration for the right - that amount is equal to or less than the indexed cost base to the trustee of the right;
this Part does not apply in respect of the disposal by the trustee of the right to the taxpayer.
160ZYJA(3) [Acquisition by deceased estate]For the purposes of this Part, if:
(a) an amount is included in the assessable income of the trustee of the estate of a deceased person under subsection 26AAC(9) as a result of the acquisition by the trustee of shares in a company; and
(b) the shares were acquired as a result of the exercise or operation of a right to acquire shares in the company; and
(c) the right was acquired by the deceased person under the terms of a trust deed under which a trustee (in this subsection called the ``scheme trustee'' ) is required or authorised to sell, or otherwise to transfer, shares in a company to employees of the company or of another company or to relatives of those employees; and
(d) if an amount was paid by the deceased person as consideration for the right - that amount is equal to or less than the indexed cost base to the scheme trustee of the right;
this Part does not apply in respect of the disposal by the scheme trustee of the right to the deceased person.
160ZYJA(4) [Indexed cost base](a) the trustee mentioned in subsection (1) disposed of the share to the taxpayer within 12 months after the share was acquired by the trustee; or
(b) the trustee mentioned in subsection (2) disposed of the right to the taxpayer within 12 months after the right was acquired by the trustee; or
(c) the scheme trustee mentioned in subsection (3) disposed of the right to the deceased person within 12 months after the right was acquired by the scheme trustee;
the reference in paragraph (1)(c), (2)(c) or (3)(d) to the indexed cost base to the trustee or to the scheme trustee, as the case may be, is to be read as a reference to the cost base to the trustee or to the scheme trustee, as the case requires.
160ZYJA(5) [Amendment of assessments]Section 170 does not prevent the amendment of an assessment at any time for the purpose of giving effect to this section.
160ZYJA(6) [Interpretation]In spite of section 160E , in this section:
"associate"
has the same meaning as in section
26AAC
;
"employee"
has the same meaning as in section
26AAC
.
This section applies if an amount is, or apart from section 139BA would be, included in a taxpayer's assessable income under Division 13A of Part III as a result of the taxpayer acquiring a share or right.
160ZYJB(2) [Amount deemed paid on acquisition]If subsection 139CC(2) applies, the taxpayer is taken for the purposes of this Part to have paid, at the time when the share or right is acquired by the taxpayer, as consideration in respect of the acquisition, the greater of:
(a) the amount paid by the taxpayer as consideration in respect of the acquisition; and
(b) the market value of the share or right at the time of the acquisition.
Note:
Market Value is defined in Subdivision F of Division 13A of Part III .
160ZYJB(3) [Share or right disposed of at cessation time]If subsection 139CC(3) applies, this Part does not apply in respect of the disposal mentioned in that subsection.
160ZYJB(4) [Amount deemed paid at cessation time]If subsection
139CC(4)
applies, the taxpayer is taken for the purposes of this Part to have paid, at the cessation time, an amount equal to the market value of the share or right at that time as consideration in respect of the acquisition.
Note:
Cessation time is defined in sections 139CA and 139CB.
This section applies if an amount is included in a taxpayer's assessable income under Division
13A
of Part
III
as a result of an associate of the taxpayer acquiring a share or right.
Note:
Associate is defined in section 139GE .
160ZYJC(2) [Amount deemed paid on acquisition]The associate is taken for the purposes of this Part to have paid, at the time when the share or right is acquired by the associate, as consideration in respect of the acquisition, the greater of:
(a) the amount paid by the associate as consideration in respect of the acquisition; and
(b) the market value of the share or right at the time of the acquisition.
For the purposes of this Part, if:
(a) an amount is, or apart from section 139BA would be, included in a taxpayer's assessable income under Division 13A of Part III as a result of the acquisition by the taxpayer of a share or right in a company; and
(b) the share or right was acquired by the taxpayer under the terms of a trust deed under which the trustee is required or authorised to sell, or otherwise to transfer, the share, or right, to:
(i) an employee of the company or of another company;
(ii) an associate of such an employee; and
(c) either no amount was paid by the taxpayer as consideration for the share or, if an amount was paid, that amount is equal to or less than the indexed cost base to the trustee of the share or right;
this Part does not apply in respect of the disposal by the trustee of the share or right to the taxpayer.
Note:
Employee is defined in section 139GA .
160ZYJD(2) [Cost base to the trustee]If the trust disposed of the share or right within 12 months after the share or right was acquired by the trust, the reference in paragraph (1)(c) to the indexed cost base to the trustee is to be read as a reference to the cost base to the trustee.
Despite section 160E , associate, cessation time, employee and market value have the same meaning in this Division as in Division 13A of Part III .
Where -
(a) a person (in this Division referred to as the ``shareholder'' ) holds shares in a company (in this Division referred to as the ``original shares'' );
(b) both of the following subparagraphs apply:
(i) a company (in this paragraph called the ``issuing company'' ) issues to the shareholder rights (in this Division called the ``rights'' ) to acquire shares (in this Division called the ``new shares'' ) in the issuing company or to acquire an option (in this Division called the ``option'' ) to acquire shares in the issuing company;
(ii) either:
(A) the issuing company is the company referred to in paragraph (a); or
(B) the issuing company is, or but for the issue of the rights would be, related to the company referred to in paragraph (a) when the rights are issued; and
(c) the shareholder did not, apart from any operation of subsection 160ZH(9) , pay or give any consideration in respect of the acquisition of the rights,
sections 160ZYL to 160ZYO (inclusive) have effect.
The rights shall not be taken to have been disposed of by the exercise of the rights.
The rights shall be deemed, for the purposes of this Part, to have been acquired by the shareholder at the time when the shareholder acquired the original shares.
The shareholder shall not be deemed to have paid or given any consideration in respect of the acquisition of the rights.
When the rights are exercised, whether by the shareholder or by a person who acquired the rights directly or indirectly as a result of the disposal of the rights by the shareholder, the person who exercised the rights shall be deemed, for the purposes of this Part, to have acquired the new shares or the option, as the case may be, at the time when the rights were exercised.
160ZYO(2) [Consideration where rights exercised by shareholder]Subject to subsection (4), if the rights are exercised by the shareholder, the shareholder shall be deemed, for the purposes of this Part, to have paid or given as consideration in respect of the acquisition of the new shares or the option, as the case may be, an amount equal to the amount paid in respect of the exercise of the rights.
160ZYO(3) [Rights exercised by person other than the shareholder]Subject to subsection (4), if the rights are exercised by a person who acquired the rights directly or indirectly as a result of the disposal of the rights by the shareholder, that person shall be deemed, for the purposes of this Part, to have paid or given as consideration in respect of the acquisition of the new shares or the option, as the case may be, an amount equal to the sum of the consideration paid or given by that person for the acquisition of the rights and the amount paid in respect of the exercise of the rights.
160ZYO(4) [Rights acquired before 20 September 1985]When the rights are exercised and -
(a) in the case of rights exercised by the shareholder - the rights are deemed, by virtue of section 160ZYM , to have been acquired by the shareholder before 20 September 1985; or
(b) in the case of rights exercised by a person who acquired the rights directly or indirectly as a result of the disposal of the rights by the shareholder - that person acquired the rights before 20 September 1985,
the shareholder or other person who exercised the rights shall be deemed, for the purposes of this Part, to have paid or given as consideration in respect of the acquisition of the new shares or the option, as the case may be, an amount equal to thesum of the market value of the rights at the time when the rights were exercised and the amount paid in respect of the exercise of the rights.
This Division is subject to Division 9.
In addition to the effect that it has apart from this section, the Division also has the effect it would have if -
(a) the reference in paragraph 160ZYK(a) to a person who holds shares in a company were a reference to a person who holds convertible notes within the meaning of Division 3A of Part III issued by the company;
(b) references to the shareholder were references to the person who holds the convertible notes; and
(c) references to the original shares were references to the convertible notes held by that person.
Where:
(a) a person (in this Division called the `` unitholder '') holds units in a unit trust (in this Division called the `` original units '');
(b) after 28 January 1988, the trustee of the unit trust issues to the unitholder rights (in this Division called the `` rights '') to acquire units (in this Division called `` new units '') in the unit trust or to acquire an option (in this Division called the `` option '') to acquire units in the unit trust; and
(c) the unitholder did not pay or give any consideration in respect of the acquisition of the rights;
sections 160ZYQB to 160ZYQE (inclusive) have effect.
The rights shall not be taken to have been disposed of by the exercise of the rights.
The rights shall be deemed, for the purposes of this Part, to have been acquired by the unitholder at the time when the unitholder acquired the original units.
The unitholder shall not be deemed to have paid or given any consideration in respect of the acquisition of the rights.
When the rights are exercised, whether by the unitholder or by a person who acquired the rights directly or indirectly as a result of the disposal of the rights by the unitholder, the person who exercised the rights shall be deemed, for the purposes of this Part, tohave acquired the new units or the option, as the case may be, at the time when the rights were exercised.
160ZYQE(2) [Rights exercised by unitholder]Subject to subsection (4), if the rights are exercised by the unitholder, the unitholder shall be deemed, for the purposes of this Part, to have paid or given as consideration in respect of the acquisition of the new units or the option, as the case may be, an amount equal to the amount paid in respect of the exercise of the rights.
160ZYQE(3) [Rights exercised by person who acquired rights from disposal by unitholder]If the rights are exercised by a person who acquired the rights directly or indirectly as a result of the disposal of the rights by the unitholder, that person shall be deemed, for the purposes of this Part, to have paid or given as consideration in respect of the acquisition of the new units or the option, as the case may be, an amount equal to the sum of the consideration paid or given by that person for the acquisition of the rights and the amount paid in respect of the exercise of the rights.
160ZYQE(4) [Where rights deemed to have been acquired before 20/9/85](a) the rights are exercised by the unitholder; and
(b) the rights are deemed, by virtue of section 160ZYQC , to have been acquired by the unitholder before 20 September 1985;
the unitholder shall be deemed, for the purposes of this Part, to have paid or given as consideration in respect of the acquisition of the new units or the option, as the case may be, an amount equal to the sum of the market value of the rights at the time when the rights were exercised and the amount paid in respect of the exercise of the rights.
In addition to the effect that it has apart from this section, this Division also has the effect it would have if:
(a) the reference in paragraph 160ZYQA(a) to a person who holds units in a unit trust were a reference to a person who holds convertible notes within the meaning of Division 12A issued by the trustee of the unit trust;
(b) references to the unitholder were references to the person who holds the convertible notes; and
(c) references to the original units were references to the convertible notes held by that person.
Where -
(a) a person (in this Division referred to as the `` shareholder '') holds shares in a company (in this Division referred to as the `` original shares '');
(b) both of the following subparagraphs apply:
(i) a company (in this paragraph called the ``issuing company'' ) issues to the shareholder an option (in this Division called the ``option'' ) to acquire shares (in this Division called the ``new shares'' ) in the issuing company;
(ii) either:
(A) the issuing company is the company referred to in paragraph (a); or
(B) the issuing company is, or but for the issue of the options would be, related to the company referred to in paragraph (a) when the options are issued; and
(c) the shareholder did not, apart from any operation of subsection 160ZH(9) , pay or give any consideration in respect of the acquisition of the option,
sections 160ZYS to 160ZYV (inclusive) have effect.
The option shall not be taken to have been disposed of by the exercise of the option.
The option shall be deemed, for the purposes of this Part, to have been acquired by the shareholder at the time when the shareholder acquired the original shares.
The shareholder shall not be deemed to have paid or given any consideration in respect of the acquisition of the option.
When the option is exercised, whether by the shareholder or by a person who acquired the option directly or indirectly as a result of the disposal of the option by the shareholder, the person who exercised the option shall be deemed, for the purposes of this Part, to have acquired the new shares at the time when the option was exercised.
160ZYV(2) [Option exercised by shareholder]Subject to subsection (4), if the option is exercised by the shareholder, the shareholder shall be deemed, for the purposes of this Part, to have paid or given as consideration in respect of the acquisition of the new shares an amount equal to the amount paid in respect of the exercise of the option.
160ZYV(3) [Option exercised by person other than shareholder]Subject to subsection (4), if the option is exercised by a person who acquired the option directly or indirectly as a result of the disposal of the option by the shareholder, that person shall be deemed, for the purposes of this Part, to have paid or given as consideration in respect of the acquisition of the new shares an amount equal to the sum of the consideration paid or given by that person for the acquisition of the option and the amount paid in respect of the exercise of the option.
160ZYV(4) [Option acquired prior to 20 September 1985]When the option is exercised and -
(a) in the case of an option exercised by the shareholder - the option is deemed, by virtue of section 160ZYT , to have been acquired by the shareholder before 20 September 1985; or
(b) in the case of an option exercised by a person who acquired the option directly or indirectly as a result of the disposal of the option by the shareholder - that person acquired the option before 20 September 1985,
the shareholder or other person who exercised the option shall be deemed, for the purposes of this Part, to have paid or given as consideration in respect of the acquisition of the new shares an amount equal to the sum of the market value of the option at the time when the option is exercised and the amount paid in respect of the exercise of the option.
This Division is subject to Division 9.
In addition to the effect that it has apart from this section, the Division also has the effect it would have if -
(a) the reference in paragraph 160ZYR(a) to a person who holds shares in a company were a reference to a person who holds convertible notes within the meaning of Division 3A of Part III issued by the company;
(b) references to the shareholder were references to the person who holds the convertible notes; and
(c) references to the original shares were references to the convertible notes held by that person.
Where:
(a) a person (in this Division called the ``unitholder'' ) holds units in a unit trust (in this Division called the ``original units'' );
(b) after 28 January 1988, the trustee of the unit trust issues to the unitholder an option (in this Division called the ``option'' ) to acquire other units (in this Division called the ``new units'' ) in the unit trust; and
(c) the unitholder did not pay or give any consideration in respect of the acquisition of the option;
sections 160ZYXB to 160ZYXE (inclusive) have effect.
The option shall not be taken to have been disposed of by the exercise of the option.
The option shall be deemed, for the purposes of this Part, to have been acquired by the unitholder at the time when the unitholder acquired the original units.
The unitholder shall not be deemed to have paid or given any consideration in respect of the acquisition of the option.
When the option is exercised, whether by the unitholder or by a person who acquired the option directly or indirectly as a result of the disposal of the option by the unitholder, the person who exercised the option shall be deemed, for the purposes of this Part, to have acquired the new units at the time when the option was exercised.
160ZYXE(2) [Option exercised by unitholder]Subject to subsection (4), if the option is exercised by the unitholder, the unitholder shall be deemed, for the purposes of this Part, to have paid or given as consideration in respect of the acquisition of the new units an amount equal to the amount paid in respect of the exercise of the option.
160ZYXE(3) [Option exercised by person who acquired it from disposal by unitholder]If the option is exercised by a person who acquired the option directly or indirectly as a result of the disposal of the option by the unitholder, that person shall be deemed, for the purposes of this Part, to have paid or given as consideration in respect of the acquisition of the new units an amount equal to the sum of the consideration paid or given by that person for the acquisition of the option and the amount paid in respect of the exercise of the option.
160ZYXE(4) [Where option deemed to have been acquired before 20/9/85](a) the option is exercised by the unitholder; and
(b) the option is deemed, by virtue of section 160ZYXC , to have been acquired by the unitholder before 20 September 1985;
the unitholder shall be deemed, for the purposes of this Part, to have paid or given as consideration in respect of the acquisition of the new units an amount equal to the sum of the market value of the option at the time when the option is exercised and the amount paid in respect of the exercise of the option.
In addition to the effect that it has apart from this section, the Division also has the effect it would have if:
(a) the reference in paragraph 160ZYXA(a) to a person who holds units in a unit trust were a reference to a person who holds convertible notes within the meaning of Division 12A issued by the trustee of the unit trust;
(b) references to the unitholder were references to the person who holds the convertible notes; and
(c) references to the original units were references to the convertible notes held by that person.
In this Division, ``convertible note'' has the same meaning as in Division 3A of Part III.
This Division does not apply in relation to a convertible note that is a traditional security within the meaning of section 26BB .
For the purposes of this Part, a convertible note shall not be taken to have been disposed of by the conversion of the note into shares.
Where shares are acquired by a taxpayer by the conversion of a convertible note, the shares shall be deemed, for the purposes of this Part, to have been acquired by the taxpayer -
(a) if the convertible note was acquired by the taxpayer before 20 September 1985 and the taxpayer did not pay or give any consideration in respect of the conversion - at the time when the convertible note was acquired; or
(b) if -
(i) the convertible note was acquired before 20 September 1985 and the taxpayer paid or gave any consideration in respect of the conversion; or
at the time when the conversion took place.
(ii) the convertible note was acquired on or after 20 September 1985,
A taxpayer who acquired shares by the conversion of a convertible note shall be deemed, for the purposes of this Part, to have paid as consideration in respect of the acquisition of the shares an amount equal to -
(a) if the convertible note was acquired before 20 September 1985 and the taxpayer paid or gave any consideration in respect of the conversion - the sum of the market value of the note at the time when the conversion took place and the amount or value of the consideration paid or given in respect of the conversion; or
(b) if the convertible note was acquired on or after 20 September 1985 -
(i) if no consideration was paid or given by the taxpayer in respect of the conversion - the amount or value of the consideration paid or given by the taxpayer in respect of the acquisition of the convertible note; or
(ii) if the taxpayer paid or gave any consideration in respect of the conversion - the sum of the amount or value of that consideration and the amount or value of the consideration paid or given by the taxpayer in respect of the acquisition of the convertible note.
This Division is subject to Division 9.
In this Division:
"convertible note"
means a note issued after 28 January 1988 by the trustee of a unit trust, being a note that, if the unit trust were a company, would be a convertible note issued by the company, and includes a note that would be a convertible note within the meaning of Division
3A
of Part
III
if:
(a) references in that Division to a company were references to a unit trust, or to the trustee of a unit trust, as the context requires; and
(b) references in that Division to shares were references to units.
This Division does not apply in relation to a convertible note that is a traditional security within the meaning of section 26BB .
For the purposes of this Part, a convertible note shall not be taken to have been disposed of by the conversion of the note into units.
Where units are acquired by a taxpayer by the conversion of a convertible note, the units shall be deemed, for the purposes of this Part, to have been acquired by the taxpayer at the time when the conversion took place.
View history note
A taxpayer who acquired units by the conversion of a convertible note shall be deemed, for the purposes of this Part, to have paid or given as consideration in respect of the acquisition of the units an amount equal to the sum of the consideration paid or given by the taxpayer in respect of the acquisition of the convertible note and the amount paid by the taxpayer in respect of the conversion.
In this section:
"convertible note"
means a convertible note within the meaning of Division 12 that is a traditional security within the meaning of section
26BB
.
A taxpayer who acquired shares by the conversion of a convertible note acquired after 10 May 1989 and on or before 15 August 1989 is taken, for the purposes of this Part, to have paid as consideration in respect of the acquisition of the shares an amount equal to:
(a) if the market value of the shares at the time of the conversion is not less than the sum of the consideration paid or given for the acquisition of the convertible note and the amount paid by the taxpayer in respect of the conversion - that market value; or
(b) if the market value of the shares at the time of the conversion is less than that sum - the consideration that would be deemed to have been paid or given in respect of the acquisition of the shares under section 160ZZA if Division 12 had applied in relation to the convertible note. 160ZZBE(3) [Note acquired after 15 August 1989]
A taxpayer who acquired shares by the conversion of a convertible note acquired after 15 August 1989 is taken, for the purposes of this Part, to have paid as consideration in respect of the acquisition of the shares an amount equal to the market value of the shares at the time of the conversion.
In this section:
"convertible note"
means a convertible note within the meaning of Division 12A that is a traditional security within the meaning of section
26BB
.
A taxpayer who acquired units by the conversion of a convertible note acquired after 10 May 1989 and on or before 15 August 1989 is taken, for the purposes of this Part, to have paid as consideration in respect of the acquisition of the units an amount equal to:
(a) if the market value of the units at the time of the conversion is not less than the sum of the consideration paid or given for the acquisition of the convertible note and the amount paid by the taxpayer in respect of the conversion - that market value; or
(b) if the market value of the units at the time of the conversion is less than that sum - the consideration that would be deemed to have been paid or given in respect of the acquisition of the units under section 160ZZA if Division 12A had applied in relation to the convertible note. 160ZZBF(3) [Note acquired after 15 August 1989]
A taxpayer who acquired units by the conversion of a convertible note acquired after 15 August 1989 is taken, for the purposes of this Part, to have paid as consideration in respect of the acquisition of the units an amount equal to the market value of the units at the time of the conversion.
This section does not apply in relation to an option if Division 10, 10A, 11 or 11A applies in relation to that option.
This section has effect for the purposes of this Part subject to the provisions of this Part relating to options that are personal-use assets.
160ZZC(3) [Effect of grant of option]Subject to subsections (3A), (3AA) and (3AB) and to the following provisions of this section as to treating the grant of an option as part of a larger transaction, where an option has been granted:
(a) the grant of the option shall be deemed to have constituted a disposal of the option at the time when the grant took effect; and
(b) the option shall be deemed to have been owned by the grantor immediately before the disposal took place.
If an option was granted after 19 September 1985 but before 23 May 1986 that binds the grantor to dispose of an asset acquired before 20 September 1985, the grant of the option is not taken to have constituted the disposal of the option by the grantor but this subsection does not affect the operation of subsections (7) and (8) in relation to the option.
If an option was granted after 19 September 1985 but before 23 May 1986 that binds the grantor to acquire an asset and the option expires without being exercised or is cancelled, released or abandoned, the grant of the option is not taken to have constituted the disposal of the option by the grantor.
Where, on or after 20 September 1985:
(a) a company grants an option to:
(i) acquire shares in the company; or
(ii) acquire debentures of the company; or
(b) the trustee of a unit trust grants an option to:
(i) acquire units in the unit trust; or
the following provisions have effect:
(ii) acquire debentures of the unit trust,
(c) the grant of the option shall not be taken to have constituted a disposal of the option at the time when the grant took effect;
(d) if the option is exercised - the grant of the option shall not be taken to have constituted a disposal of the option at any time;
(e) if the option expires without being exercised or is cancelled, released or abandoned:
(i) the grant of the option shall be taken to have constituted a disposal of the option at the time when the option expires or is cancelled, released or abandoned, as the case may be; and
(ii) the option shall be deemed to have been owned by the grantor immediately before the disposal took place; and
(iii) subsection 160ZD(2) does not apply in respect of the disposal.
A reference in subsection (3A) to a debenture of a unit trust is a reference to anything issued by the trustee of the unit trust that, if the unit trust were a company, would be a debenture of the company.
(a) the case where the grantor of an option is bound by the option to dispose of what the grantor does not own and, because the option expires or is cancelled, released or abandoned, never has occasion to own; and
(b) the case where the grantor is bound by the option to acquire what, because the option expires or is cancelled, released or abandoned, the grantor does not acquire. 160ZZC(5) [Renewal or extension of option]
Where an option has been renewed or extended, the renewal or extension shall be deemed to have constituted the grant by the person who renewed or extended the option of a fresh option that took effect at the time immediately after the time when the first-mentioned option would, but for the renewal or extension, have expired.
160ZZC(6) [Cost base of option]Notwithstanding section 160ZH , the cost base to a taxpayer of an option granted by the taxpayer comprises the amounts of expenditure incurred by the taxpayer in respect of the grant of the option and does not include any other amounts, and the indexed cost base and the reduced cost base shall be ascertained accordingly.
160ZZC(7) [Effect of exercise of option on grantor]If an option is exercised, the grant of the option and the transaction entered into by the grantor in fulfilment of the grantor's obligations under the option shall be treated as a single transaction and accordingly, for the purposes of the application of this Part in relation to the grantor:
(a) if the option binds the grantor to dispose of an asset, the consideration for the option forms part of the consideration received by the grantor in respect of the disposal; and
(b) if the option binds the grantor to acquire an asset, the consideration for the option shall be deducted from the consideration paid or given by the grantor in respect of the acquisition pursuant to the grantor's obligations under the option. 160ZZC(8) [Effect of exercise of option on grantee]
An option shall not be taken to have been disposed of by the exercise of the option but, if an option is exercised, the acquisition of the option (whether directly from the grantor or not) and the transaction entered into by the person exercising the option in the exercise of that person's rights under the option shall be treated as a single transaction and accordingly, for the purposes of the application of this Part in relation to the person who exercised the option:
(a) if the option binds the grantor to dispose of an asset, the consideration for the option forms part of the consideration paid or given by the person who exercised the option in respect of the acquisition of the asset; and
(b) if the option binds the grantor to acquire an asset, the consideration for the option forms part of the incidental costs to the person who exercised the option of the disposal of the asset acquired by the grantor of the option. 160ZZC(9) [Option granted prior to 20 September 1985]
If an option that binds the grantor to dispose of an asset was granted before 20 September 1985 and exercised by the grantee on or after that date, paragraph (8)(a) does not apply but the market value of the option at the time when it was exercised forms part of the consideration paid or given by the person who exercised the option in respect of the acquisition of the asset.
160ZZC(9A) [Issue of shares is disposal by company]For the purposes of subsections (8) and (9), despite paragraph 160M(5)(a), an issue of shares in a company is taken to constitute a disposal of shares by the company.
Nothing in section 170 prevents the amendment of an assessment for the purpose of giving effect to subsection (7), (8) or (9).
This section applies in relation to an option that binds the grantor both to acquire and to dispose of an asset as if the option were two separate options and one-half of the consideration in respect of the grant of the option were attributed to each of the separate options.
160ZZC(12) [Forfeiture of deposit]Where a deposit of money or other consideration, being a deposit that was made in respect of a prospective purchase or other transaction that is cancelled or otherwise abandoned, is forfeited -
(a) the deposit shall be deemed to have been paid or given as consideration in respect of the grant by the person who received the benefit of the forfeiture of an option that bound the grantor to dispose of an asset and was not exercised; and
(b) any costs that the person who received the benefit of the forfeiture incurred in connection with the prospective purchase or other transaction shall be deemed to be amounts of expenditure incurred by that person in respect of the grant of the option.
In this section, ``asset to which this section applies'' means an asset that is a unit of industrial property within the meaning of Division 10B of Part III .
160ZZD(2) [Grant of licence disposal for purposes of Div 10B]Where the grant of a licence in respect of an asset to which this section applies constitutes a disposal of part of the asset for the purposes of Division 10B, then, for the purposes of this Part, the grant of the licence constitutes a disposal by the grantor of that part of the asset and constitutes an acquisition of an asset (that is to say, the licence) by the grantee.
160ZZD(3) [Disposal of part of asset]Where, during the year of income, a taxpayer disposes of part of an asset to which this section applies, the following provisions of this section have effect for the purposes of this Part.
160ZZD(4) [Disposal more than 12 months after acquisition]Where the disposal takes place more than 12 months after the day on which the asset was acquired by the taxpayer:
(a) in a case to which paragraph (b) does not apply:
(i) if the consideration in respect of the disposal is less than the indexed cost base to the taxpayer in respect of the asset, this Part (other than this Division) does not apply in relation to the disposal but the taxpayer shall be deemed also to have disposed of, and to have immediately re-acquired, at the same time as the first-mentioned disposal, so much of the asset as was not disposed of by the first-mentioned disposal for a consideration equal to the amount by which that indexed cost base exceeded the consideration in respect of the first-mentioned disposal; or
(ii) if the consideration in respect of the disposal is not less than the indexed cost base to the taxpayer in respect of the asset:
(A) the amount of that indexed cost base shall be deemed to be nil; and
(B) if the consideration in respect of the disposal exceeds that indexed cost base - a capital gain equal to the excess shall be deemed to have accrued to the taxpayer during the year of income; or
(b) if, as a result of a previous application or applications of this section, the amount of the indexed cost base to the taxpayer in respect of the asset is nil - a capital gain equal to the consideration in respect of the disposal shall be deemed to have accrued to the taxpayer during the year of income. 160ZZD(5) [Disposal within 12 months of acquisition]
Where the disposal took place within 12 months after the day on which the asset was acquired by the taxpayer:
(a) in a case to which paragraph (b) does not apply -
(i) if the consideration in respect of the disposal is less than the cost base to the taxpayer in respect of the asset, this Part (other than this Division) does not apply in relation to the disposal but the taxpayer shall be deemed also to have disposed of, and to have immediately re-acquired, at the same time as the first-mentioned disposal, so much of the asset as was not disposed of by the first-mentioned disposal for a consideration equal to the amount by which that cost base exceeded the consideration in respect of the first-mentioned disposal; or
(ii) if the consideration in respect of the disposal is not less than the cost base to the taxpayer in respect of the asset -
(A) the amount of that cost base shall be deemed to be nil; and
(B) if the consideration in respect of the disposal exceeds that cost base - a capital gain equal to the excess shall be deemed to have accrued to the taxpayer during the year of income; or
(b) if, as a result of a previous application or applications of this section, the amount of the cost base to the taxpayer in respect of the asset is nil - a capital gain equal to the consideration in respect of the disposal shall be deemed to have accrued to the taxpayer during the year of income. 160ZZD(6) [Licence]
Subsections (3), (4) and (5) apply in relation to an asset, being a licence in respect of an asset to which this section applies, in the same manner as those subsections apply in relation to an asset to which this section applies.
Where -
(a) a taxpayer who:
(i) is carrying on or has carried on eligible mining operations within the meaning of Subdivision 330-B of the Income Tax Assessment Act 1997 , or has incurred transport capital expenditure within the meaning of Subdivision 330-H of that Act; or
disposes of an asset in respect of which, or in respect of the acquisition of which, the taxpayer has incurred expenditure of a capital nature to which Subdivision 330-A, 330-C or 330-H of the Income Tax Assessment Act 1997 applies or Division 10, 10AAA or 10AA of Part III of this Act applied; and
(ii) has carried on prescribed mining operations within the meaning of Division 10 of Part III of this Act or prescribed petroleum operations within the meaning of Division 10AA of that Part, or has incurred expenditure to which Division 10AAA of that Part applied;
(b) the disposal has effect for the purposes of a provision of this Act other than this Part as the disposal of several separate assets,
the disposal shall be deemed for the purposes of this Part to constitute the disposal of those separate assets and the consideration in respect of the disposal shall be apportioned in the same manner as it is apportioned for the purposes of this Act other than this Part.
In this section -
(a) a mining right; or
(b) a prospecting right;
(a) an authority, licence, permit or right under a law of the Commonwealth, of a State, of a Territory or of a foreign country to mine minerals in a particulararea; or
(b) a lease of land under such a law by virtue of which the lessee is entitled to mine minerals on the land,
and includes an interest in such an authority, licence, permit, right or lease;
(a) an authority, licence, permit or right under a law of the Commonwealth, of a State, of a Territory or of a foreign country to prospect or explore for minerals in a particular area; or
(b) a lease of land under such a law by virtue of which the lessee is entitled to prospect or explore for minerals on the land,
and includes an interest in such an authority, licence, permit, right or lease.
(a) at a particular time, one or more mining assets (in this section called the ``original mining assets'' ) owned by a taxpayer expire or are surrendered;
(b) one or more fresh mining assets (in this section called the ``new mining assets'' ) is or are granted to the taxpayer by way of any one or more of the following:
(i) the renewal of the original mining assets, where the renewal is (whether by law, custom or otherwise) wholly or principally attributable to the taxpayer's prior ownership of the original mining assets;
(ii) the extension of the term of the original mining assets, where the extension is (whether by law, custom or otherwise) wholly or principally attributable to the taxpayer's prior ownership of the original mining assets;
(iii) the consolidation, or the consolidation and division, of the original mining assets;
(iv) the subdivision of the original mining assets;
(v) in a case where the original mining assets are mining rights - the conversion of those mining rights to prospecting rights;
(vi) in a case where the original mining assets are prospecting rights - the conversion of those prospecting rights to mining rights;
(vii) excising or relinquishing a part (which part is in this section called the ``excised area'' ) of the area to which the original mining assets related;
(viii) expanding the area of land to which the original mining assets related; and
(c) in the case of a taxpayer in the capacity of a trustee of a trust estate - immediately after the grant of the new mining assets, the taxpayer holds the new mining assets upon the same trust as the taxpayer held the original mining assets.
Subject to subsection (5), this Part (other than this section) does not apply in respect of the expiry or surrender of any of the original mining assets.
For the purposes of this section:
(a) an original mining asset acquired by the taxpayer before 20 September 1985 shall be taken to be a pre-20 September 1985 original mining asset; and
(b) any other original mining asset shall be taken to be a post-20 September 1985 original mining asset.
Subject to this Part, if the taxpayer received, or was entitled to receive, any consideration in respect of the expiry or surrender of a post-20 September 1985 original mining asset that related, in whole or in part, to the excised area:
(a) if the original mining asset related wholly to the excised area - this Part applies in respect of the disposal of that mining asset; and
(b) if the original mining asset related only in part to the excised area - the taxpayer shall be taken, for the purposes of this Part, to have disposed of that part of that mining asset that is attributable to the excised area.
If a particular new mining asset relates wholly to land to which a pre-20 September 1985 original mining asset related - the taxpayer shall be taken, for the purposes of this Part, to have acquired the new mining asset before 20 September 1985.
If a particular new mining asset relates wholly to land to which a post-20 September 1985 original mining asset related - the new mining asset shall be taken, for the purposes of this section, to be a post-20 September 1985 new mining asset.
If a particular new mining asset relates partly to any 2 or more of the following:
(a) land to which a pre-20 September 1985 original mining asset related;
(b) land to which a post-20 September 1985 original mining asset related;
(c) other land;
the following provisions have effect:
(d) the new mining asset shall be taken, for the purposes of this Part, to comprise 2 or 3 separate mining assets, as follows:
(i) the new mining asset to the extent to which it relates to land to which a pre-20 September 1985 original mining asset related;
(ii) the new mining asset to the extent to which it relates to land to which a post-20 September 1985 original mining asset related;
(iii) the new mining asset to the extent to which it relates to other land;
(e) the taxpayer shall be treated, for the purposes of this Part, as if the taxpayer had acquired the mining asset referred to in subparagraph (d)(i) before 20 September 1985;
(f) the mining asset referred to in subparagraph (d)(ii) shall be taken, for the purposes of this section, to be a post-20 September 1985 new mining asset;
(g) on the disposal of the actual new mining asset, the consideration in respect of the disposal of the actual mining asset shall be apportioned between the separate assets.
The taxpayer shall be taken to have paid or given as consideration in respect of the acquisition of a post-20 September 1985 new mining asset:
(a) for the purposes of ascertaining whether a capital gain accrued to the taxpayer in the event of a subsequent disposal of the new mining asset by the taxpayer - the amount calculated in accordance with the formula:
| ICB of post CGT orig. assets | × |
MV of new asset
MV of post CGT new assets |
where:
(b) for the purposes of ascertaining whether the taxpayer incurred a capital loss in the event of a subsequent disposal of the new mining asset by the taxpayer - the amount calculated in accordance with the formula:
| RCB of post CGT orig. assets | × |
MV of land asset
MV of post CGT new assets |
where:
If a post-20 September 1985 new mining asset is disposed of by the taxpayer within 12 months after the earliest day, being a day after 19 September 1985, on which any post-20 September 1985 original mining asset was acquired by the taxpayer, the reference in paragraph (9)(a) to the indexed cost bases to the taxpayer of post-20 September 1985 original mining assets is a reference to the cost bases to the taxpayer of the post-20 September 1985 original mining assets.
(a) the area of land (in this subsection called the ``original area'' ) to which the original mining assets related differs from the area of land (in this subsection called the ``new area'' ) to which the new mining assets relate; and
(b) having regard to all relevant circumstances, including:
(i) the difference between the size of the original area and the size of the new area;
(ii) the difference between:
(A) the market value of the new mining assets immediately after the grant of the new mining assets to the taxpayer; and
(B) the amount that would have been the market value of the new mining assets, immediately after the grant of the new mining assets to the taxpayer, if the new mining assets had been granted in respect of the original area instead of the new area; and
the Commissioner is satisfied that it would be unreasonable not to apply this subsection;
(iii) whether the new mining assets were granted for the purpose of correcting errors or omissions;
the Commissioner may, for the purposes of subsections (6) to (8) (inclusive), to such extent as the Commissioner considers reasonable, treat a new mining asset as relating, in whole or in part, to land to which a particular original mining asset related.
Where a person who owns a mining or prospecting right or an interest in such a right grants to another person a right to receive income from operations carried on pursuant to the mining or prospecting right, the grant of the right to receive the income -
(a) does not constitute a disposal of part of the mining or prospecting right; but
(b) constitutes the disposal by the first-mentioned person of a right (that is to say, the right to receive the income) -
(i) which was created by that person immediately before it was granted; and
(ii) which was acquired by that person without that person having paid or given any consideration in respect of the acquisition.
In this section, ``policy of insurance'' does not include a policy of assurance within the meaning of section 160ZZI .
160ZZH(2) [Disposal of rights of insurer]This Part does not apply in respect of the disposal of, or of an interest in, the rights of the insurer under a policy of insurance, whether the risks insured relate to an asset or not.
160ZZH(3) [Disposal of rights of insured]This Part applies in respect of the disposal of, or of an interest in, the rights of the insured under a policy of insurance against the risk of the loss or destruction of, or damage to, property only to the extent that those rights relate to an asset in respect of the disposal of which this Part would apply or would have applied.
In this section, ``policy of life assurance'' means a policy of assurance on the life of a person and includes an instrument securing the grant of an annuity, whether or not for a term dependent on the life of a person.
160ZZI(2) [Disposal of rights under policy]Subject to subsection (3), this Part does not apply in respect of the disposal of, or of an interest in, any rights under a policy of life assurance.
160ZZI(3) [Person not original beneficial owner]Subsection (2) does not apply where the person making the disposal is not the original beneficial owner and acquired the rights or interest for an amount of money or other consideration.
160ZZI(3A) [Disposal by fund trustees]This Part does not apply in respect of the disposal by a taxpayer of, or of an interest in, any rights under a policy of life assurance if:
(a) the taxpayer is the trustee of a complying superannuation fund , within the meaning of Part IX, in relation to the year of income of the taxpayer in which the disposal occurred; or
(b) the taxpayer is the trustee of a complying ADF, within the meaning of Part IX, in relation to the year of income of the taxpayer in which the disposal occurred; or
(c) the taxpayer is the trustee of a PST, within the meaning of Part IX, in relation to the year of income of the taxpayer in which the disposal occurred.
For the purposes of this section but without limiting the generality of section 160M , an act, transaction or event that results in:
(a) the payment of the sum or sums assured by a policy of life assurance;
(b) the transfer of investments or other assets to the owner of a policy of life assurance in accordance with the policy; or
(c) the payment of the surrender value of a policy of life assurance,
constitutes the disposal of the right under the policy to the payment of the sum or sums referred to in paragraph (a), to the transfer of the investments or other assets referred to in paragraph (b) or to the payment of the surrender value referred to in paragraph (c), as the case may be.
This Part does not apply in respect of -
(a) the disposal of a right to, or to any part of, an allowance, annuity or capital amount payable out of a superannuation fund or an approved deposit fund; or
(b) the disposal of a right to, or to any part of, an asset of a superannuation fund or of an approved deposit fund, not being a disposal by the trustee of the fund. 160ZZJ(2) [What constitutes disposal]
For the purposes of subsection (1) but without limiting the generality of section 160M , an act, transaction or event that results in the payment of an amount to a person out of a superannuation fund or an approved deposit fund or the transfer to a person of property being an asset of a superannuation fund or approved deposit fund constitutes the disposal of the right of the person to the amount or property.
160ZZJ(3) [Payment not received by virtue of fund membership]Subsection (1) does not apply where the person who disposed of the right received the payment or property otherwise than by virtue of being a member of the superannuation fund or approved deposit fund and that person acquired the right for an amount of money or other consideration.
160ZZJ(4) [Definitions]For the purposes of this section -
"approved deposit fund"
has the same meaning as in Subdivision AA of Division 2 of Part III;
(a) an eligible superannuation fund within the meaning of Part IX; or
(b) a scheme for the payment of benefits upon retirement or death, being a scheme constituted by or under a law of the Commonwealth or of a State or Territory.
This Part does not apply in respect of the disposal of a right to, or to any part of, an RSA.
160ZZJA(2) [Payments out of RSAs]For the purposes of subsection (1), but without limiting the generality of section 160M , an act, transaction or event that results in the payment of an amount to a person out of an RSA constitutes the disposal of the right of the person to the amount.
(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
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
(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,
(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.
(Omitted by No 11 of 1989)
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.
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.
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.
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
160ZZK(7) [When asset replacement asset]
(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.
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.
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.
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.
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.
Nothing in section 170 prevents the amendment of an assessment at any time for the purpose of giving effect to this section.
(a) a taxpayer would, but for this section, 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 asset (in this section referred to as the ``replacement asset'' ) -
(i) by way of compensation for the compulsory acquisition, or for loss or destruction, of the original asset; or
(ii) under a policy of insurance against the risk of loss or destruction of the original asset;
(aa) the replacement asset is not trading stock of the taxpayer immediately after its acquisition by the taxpayer;
(b) if, immediately before the act, transaction or event 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
the replacement asset is a taxable Australian asset;
(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,
(c) if the original asset was acquired by the taxpayer on or after 20 September 1985, the market value of the replacement asset at the time when it was acquired by the taxpayer exceeded the amount that would have been the indexed cost base to the taxpayer of the original 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.
The application of the provisions of this Part, other than this section, in respect of the disposal is subject to this section.
160ZZL(3) [Original asset acquired prior to 20 September 1985]If the original asset was acquired before 20 September 1985, the replacement asset shall be deemed, for the purposes of this Part, to have been acquired before that date.
160ZZL(4) [No disposal of original asset; acquisition of replacement asset]The taxpayer shall not be taken for the purposes of this Part to have disposed of the original asset but shall be deemed to have paid as consideration in respect of the acquisition of the replacement asset an amount equal to the indexed cost base to the taxpayer of the original asset.
160ZZL(5)(Omitted by No 11 of 1989)
160ZZL(6) [Disposal of replacement asset within 12 months]
If the replacement asset is disposed of by the taxpayer within 12 months after the original asset was acquired by the taxpayer, the references in paragraph (1)(c) and subsection (4) to the indexed cost base to the taxpayer of the original asset shall be construed as references to the cost base to the taxpayer of the original asset.
160ZZL(7) [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;
any asset 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.
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 (in this subsection called the ``first asset'' ); and
(ii) informing the taxpayer that, if those negotiations are unsuccessful, the first asset will be compulsorily acquired by the government or authority; and
(b) as a result of those negotiations, the first asset is acquired by the government or authority;
any other asset received by the taxpayer in respect of the disposal of the first 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 first asset.
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.
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.
View history note
Where a taxpayer disposes of an asset to his or her spouse pursuant to -
(a) an order of a court under the Family Law Act 1975 or under a corresponding law of a foreign country; or
(b) a maintenance agreement approved by a court under section 87 of the Family Law Act 1975 or a corresponding agreement approved by, or otherwise sanctioned by, a court under a corresponding law of a foreign country; or
(ba) an order of a court under a law of a State or Territory or of a foreign country relating to the breakdown of de facto marriages;
this Part other than this section does not apply in respect of the disposal and -
(c) if the asset was acquired by the taxpayer before 20 September 1985 - the spouse shall be deemed to have acquired the asset before that date; or
(d) if the asset was acquired by the taxpayer on or after 20 September 1985 -
(i) the spouse shall be deemed to have paid as consideration in respect of the acquisition of the asset an amount equal to -
(A) for the purpose of ascertaining whether a capital gain accrued to the spouse in the event of a subsequent disposal of the asset by the spouse - the amount that would have been the indexed cost base to the taxpayer of the asset for the purposes of this Part if this Part had applied in respect of the disposal of the asset by the taxpayer to the spouse; or
(B) for the purpose of ascertaining whether the spouse incurred a capital loss in the event of a subsequent disposal of the asset by the spouse - the amount that would have been the reduced cost base to the taxpayer of the asset for the purposes of this Part if this Part had applied in respect of the disposal of the asset by the taxpayer to the spouse; and
(ii) in the case of an asset that was a personal-use asset of the taxpayer - the asset shall be taken for the purposes of this Part to be a personal-use asset of the spouse.
If in the case of an asset to which paragraph (1)(d) applies, the asset was disposed of by the spouse within 12 months after the day on which the asset was acquired by the taxpayer, the reference in that paragraph to the indexed cost base to the taxpayer of the asset shall be construed as a reference to the cost base to the taxpayer of the asset.
160ZZM(3) [``spouse'']In this section, ``spouse'' , in relation to a taxpayer, includes a former spouse of the taxpayer.
(a) on or after 20 September 1985, a taxpayer (in this section called the ``first taxpayer'' ), being a company or a trustee of a trust estate, disposes of an asset (in this section called the ``roll-over asset'' ) to a person (in this section called the ``spouse'' ) who is or was the spouse of another person; and
(b) the disposal of the roll-over asset is pursuant to:
(i) an order of a court under the Family Law Act 1975 or under a corresponding law of a foreign country; or
(ii) a maintenance agreement approved by a court under section 87 of the Family Law Act 1975 or a corresponding agreement approved by, or otherwise sanctioned by, a court under a corresponding law of a foreign country; or
(iii) an order of a court under a law of a State or Territory or of a foreign country relating to the breakdown of de facto marriages.
This Part (other than this section) does not apply in respect of the disposal and:
(a) if the roll-over asset was acquired by the first taxpayer before 20 September 1985 - the spouse shall be taken to have acquired the roll-over asset before that date; or
(b) if the roll-over asset was acquired by the first taxpayer on or after 20 September 1985:
(i) the spouse shall be taken to have paid as consideration in respect of the acquisition of the roll-over asset an amount equal to:
(A) for the purpose of ascertaining whether a capital gain accrued to the spouse in the event of a subsequent disposal of the roll-over asset by the spouse - the amount that would have been the indexed cost base to the first taxpayer of the roll-over asset for the purposes of this Part if this Part had applied in respect of the disposal of the roll-over asset by the first taxpayer to the spouse; or
(B) for the purpose of ascertaining whether the spouse incurred a capital loss in the event of a subsequent disposal of the roll-over asset by the spouse - the amount that would have been the reduced cost base to the first taxpayer of the roll-over asset for the purposes of this Part if this Part had applied in respect of the disposal of the roll-over asset by the first taxpayer to the spouse; and
160ZZMA(3) [Asset disposed of by spouse within 12 months of company or trustee taxpayer's acquisition]
(ii) in the case of a roll-over asset that was a personal-use asset of the first taxpayer - the roll-over asset shall be taken, for the purposes of this Part, to be a personal-use asset of the spouse.
If, in a case to which paragraph (2)(b) applies, the roll-over asset is disposed of by the spouse within 12 months after the day on which the roll-over asset was acquired by the first taxpayer, the reference in that paragraph to the indexed cost base to the first taxpayer of the roll-over asset shall be read as a reference to the cost base to the first taxpayer of the roll-over asset.
160ZZMA(3A) [Application of Div 7 of Pt X](a) there is a requirement to calculate under Division 7 of PartX the attributable income of a company in relation to any taxpayer; and
(b) this section, as it has effect in accordance with that Division, is relevant to that calculation because both of the following subparagraphs apply:
(i) the company is the first taxpayer;
(ii) apart from the residency assumption mentioned in that Division, the disposal of the asset concerned is not a disposal of a taxable Australian asset;
then, in addition to the effect that this section has apart from this subsection, this section also has the effect, in relation to any subsequent disposal of the asset (whether by the spouse or otherwise) that it would have if it had applied in relation to the spouse subject to the modifications made by that Division.
(a) there is a requirement to calculate under section 102AAU the attributable income of a non-resident trust estate of a year of income; and
(b) this section, as it has effect in accordance with Subdivision D of Division 6AAA of Part III, is relevant to that calculation because both of the following subparagraphs apply:
(i) the trustee of the trust estate is the first taxpayer;
(ii) apart from the assumptions about residency that apply for the purposes of that Subdivision, the disposal of the asset concerned is not a disposal of a taxable Australian asset;
then, in addition to the effect that this section has apart from this subsection, this section also has the effect, in relation to any subsequent disposal of the asset (whether by the spouse or otherwise) that it would have if it had applied in relation to the spouse subject to the modifications made by that Subdivision.
Where, immediately before the disposal of the roll-over asset by the first taxpayer, another taxpayer (in this section called the ``second taxpayer'' ) (whether or not the spouse) held another asset, being:
(a) if the first taxpayer is a company:
(i) a share in the company that was acquired by the second taxpayer after 19 September 1985;
(ii) a loan to the company, being a loan acquired by the second taxpayer after 19 September 1985; or
(iii) an underlying interest in a share in, or loan to, the company, being an underlying interest that was acquired by the second taxpayer after 19 September 1985; or
(b) if the first taxpayer is a trustee of a trust estate:
(i) an interest or unit in the trust that was acquired by the second taxpayer after 19 September 1985;
(ii) a loan to the trustee, being a loan acquired by the second taxpayer after 19 September 1985; or
(iii) an underlying interest in an interest or unit in the trust, or in a loan to the trustee, being an underlying interest that was acquired by the second taxpayer after 19 September 1985;
(which other asset is in this section called the ``second taxpayer's asset'' ), the following provisions have effect:
(c) for the purposes of ascertaining whether a capital gain accrued to the second taxpayer in the event of a subsequent disposal of the second taxpayer's asset by the second taxpayer - the indexed cost base to the second taxpayer of the second taxpayer's asset shall be reduced by:
(i) if the roll-over asset was acquired by the first taxpayer before 20 September 1985 - the amount calculated in accordance with the formula:
Adjusted MV − Adjusted assessable amount
where:
Adjusted MV is so much of the adjusted market value of the roll-over asset immediately before the disposal of the roll-over asset by the first taxpayer as may reasonably be regarded as being represented in the adjusted market value of the second taxpayer's asset immediately before the disposal of the roll-over asset by the first taxpayer; and Adjusted assessable amount is the adjusted assessable amount (if any); or
(ii) if the roll-over asset was acquired by the first taxpayer on or after 20 September 1985 - the amount calculated in accordance with the formula:
Adjusted ICB − Adjusted assessable amount
where:
Adjusted ICB is so much of the adjusted indexed cost base to the first taxpayer of the roll-over asset immediately before the disposal of the roll-over asset by the first taxpayer as may reasonably be regarded as being represented in the adjusted market value of the second taxpayer's asset immediately before the disposal of the roll-over asset by the first taxpayer; and Adjusted assessable amount is the adjusted assessable amount (if any);
(d) for the purposes of ascertaining whether the second taxpayer incurred a capital loss in the event of a subsequent disposal of the second taxpayer's asset by the second taxpayer - the reduced cost base to the second taxpayer of the second taxpayer's asset shall:
(i) if subparagraph (iii) does not apply and the roll-over asset was acquired by the first taxpayer before 20 September 1985 - be reduced by the amount calculated in accordance with the formula:
MV − Assessable amount
where:
MV is so much of the market value of the roll-over asset immediately before the disposal of the roll-over asset by the first taxpayer as may reasonably be regarded as being represented in the market value of the second taxpayer's asset immediately before the disposal of the roll-over asset by the first taxpayer; and Assessable amount is the assessable amount (if any);
(ii) if subparagraph (iii) does not apply and the roll-over asset was acquired by the first taxpayer on or after 20 September 1985 - be reduced by the amount calculated in accordance with the formula:
RCB − Assessable amount
where:
RCB is so much of the reduced cost base to the first taxpayer of the roll-over asset immediately before the disposal of the roll-over asset by the first taxpayer as may reasonably be regarded as being represented in the market value of the second taxpayer's asset immediately before the disposal of the roll-over asset by the first taxpayer; and Assessable amount is the assessable amount (if any); or
160ZZMA(5) [Asset disposed of by second taxpayer within 12 months of company or trustee taxpayer's acquisition]
(iii) if the reduced cost base to the second taxpayer, as reduced by subparagraph (i) or (ii) of this paragraph, exceeds the indexed cost base to the second taxpayer as reduced by subparagraph (c)(i) or (ii) - be taken to be equal to the indexed cost base as so reduced.
If the second taxpayer's asset is disposed of by the second taxpayer within 12 months after the day on which the first taxpayer acquired the roll-over asset:
(a) a reference in paragraph (4)(c) to the adjusted market value shall be read as a reference to the market value;
(b) the reference in subparagraph (4)(c)(ii) to the adjusted indexed cost base shall be read as a reference to the cost base; and
(c) a reference in paragraph (4)(c) to the adjusted assessable amount shall be read as a reference to the assessable amount. 160ZZMA(6) [Underlying interest in particular property]
For the purposes of this section, an asset held by a taxpayer shall be taken to be an underlying interest in particular property if, because of the holding of that asset, the taxpayer holds an interest (whether directly or through one or more interposed companies or trusts) in the property.
Subject to subsection (8), if at any time, whether before or after the commencement of this section, the Australian Statistician has published or publishes an index number in respect of a quarter in substitution for an index number previously published by the Australian Statistician in respect of that quarter, the publication of the later index number shall be disregarded for the purposes of this section.
160ZZMA(8) [Change of reference base by Statistician]If at any time, whether before or after the commencement of this section, the Australian Statistician has changed or changes the reference base for the Consumer Price Index, then, for the purposes of the application of this section after the change took place or takes place, regard shall be had only to index numbers published in terms of the new reference base.
160ZZMA(9) [Adjusted market value, adjusted indexed cost base, adjusted assessable amount]A reference in this section to the adjusted market value of an asset, to the adjusted indexed cost base of an asset or to the adjusted assessable amount is a reference to:
(a) if the factor ascertained in accordance with subsections (10) and (11) in relation to the market value, the indexed cost base or the assessable amount, as the case may be, is greater than 1 - the market value, the indexed cost base or the assessable amount, as the case may be, multiplied by that factor; or
(b) in any other case - the market value, the indexed cost base or the assessable amount, as the case may be. 160ZZMA(10) [Factor]
The factor to be ascertained for the purposes of subsection (9) in relation to the market value or the indexed cost base of an asset immediately before the disposal of the roll-over asset by the first taxpayer or in relation to the assessable amount in relation to that disposal is the number (calculated to 3 decimal places) ascertained by dividing the index number in respect of the quarter of the year in which the second taxpayer's asset was disposed of by the second taxpayer by the index number in respect of the quarter of the year in which the roll-over asset was disposed of by the first taxpayer.
160ZZMA(11) [Rounding of decimal places]Where the factor ascertained in accordance with subsection (10) would, if it were calculated to 4 decimal places, end with a number greater than 4, that factor shall be taken to be the factor calculated to 3 decimal places in accordance with that subsection and increased by 0.001.
160ZZMA(12) [Definitions]In this section:
"assessable amount"
, in relation to the disposal of the roll-over asset by the first taxpayer, means any amount that, as a result of that disposal, is included in the assessable income of the second taxpayer of any year of income by virtue of a provision of this Act other than this Part;
"index number"
, in relation to a quarter, means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of that quarter.
In this section, ``asset'' does not include a personal-use asset.
160ZZN(2) [Taxpayer other than company or trustee](a) one of the following subparagraphs applies:
(i) a taxpayer (other than a company or a taxpayer in the capacity of a trustee) who is a resident of Australia disposes of an asset (in this section called a ``roll-over asset'' ) to a company that is a resident of Australia;
(ii) a taxpayer (other than a company or a taxpayer in the capacity of a trustee) who is not a resident of Australia disposes of a taxable Australian asset (in this section also called a ``roll-over asset'' ) to a company that is a resident of Australia;
(iii) on or before 25 May 1988, a taxpayer (other than a company or a taxpayer in the capacity of a trustee) disposed of a taxable Australian asset (in this section also called a ``roll-over asset'' ) to a company that is not a resident of Australia;
(iv) both of the following conditions are satisfied:
(A) after 25 May 1988, a taxpayer (other than a company or a taxpayer in the capacity of a trustee) disposes of a taxable Australian asset (in this section also called a ``roll-over asset'' ) to a company that is not a resident of Australia;
(B) immediately after the disposal, the asset is a taxable Australian asset of the company;
(b) subject to subsection (5A), the consideration in respect of the disposal consists only of non-redeemable shares in the company;
(ba) the market value of the shares is substantially the same as the market value of the roll-over asset, reduced, if the company assumes in connection with the disposal a liability or liabilities in respect of the roll-over asset, by the amount of the liability or the total of the amounts of the liabilities;
(c) immediately after the disposal the taxpayer is the beneficial owner of all the shares in the company;
(ca) (Omitted by No 48 of 1991)
(caa) the roll-over asset is not trading stock of the company immediately after its acquisition by the company;
(cab) if:
(i) the roll-over asset is:
(A) a right to which Division 10 or 10A applies; or
(B) an option to which Division 11, 11A or 13 applies; or
(C) a convertible note to which Division 12 or 12A applies; and
the derived asset is not trading stock of the company immediately after its acquisition by the company; and
(ii) as a result of the exercise of the right or option, or the conversion of the convertible note, the company acquires another asset (in this paragraph called the ``derived asset'' );
(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 subsection is to apply in respect of the disposal,
this Part (other than this section) does not apply in respect of the disposal and -
(e) if the roll-over asset was acquired by the taxpayer before 20 September 1985 - the company shall be deemed, for the purposes of this Part, to have acquired the roll-over asset before that date; and
(f) if the roll-over asset was acquired by the taxpayer on or after 20 September 1985, the company shall be deemed to have paid or given as consideration in respect of the acquisition of the roll-over asset an amount equal to -
(i) for the purpose of ascertaining whether a capital gain accrued to the company in the event of a subsequent disposal of the roll-over asset by the company - the amount that would have been the indexed cost base to the taxpayer of the roll-over asset for the purposes of this Part if this Part had applied in respect of the disposal of the roll-over asset by the taxpayer to the company; or
(ii) for the purpose of ascertaining whether the company incurred a capital loss in the event of a subsequent disposal of the roll-over asset by the company - the amount that would have been the reduced cost base to the taxpayer of the roll-over asset for the purposes of this Part if this Part had applied in respect of the disposal of the roll-over asset by the taxpayer to the company.
If, in the case of a roll-over asset to which paragraph (2)(f) applies, the asset was disposed of by the company within 12 months after the day on which the asset was acquired by the taxpayer, the reference in that paragraph to the indexed cost base to the taxpayer of the asset shall be construed as a reference to the cost base to the taxpayer of the asset.
(a) one of the following subparagraphs applies:
(i) a taxpayer in the capacity of a trustee of a trust estate that is a resident trust estate or of a unit trust that is a resident unit trust disposes of an asset (in this section also called a ``roll-over asset'' ) of the trust estate or of the unit trust to a company that is a resident of Australia;
(ii) a taxpayer in the capacity of a trustee of a trust estate that is not a resident trust estate or of a unit trust that is not a resident unit trust disposes of a taxable Australian asset (in this section also called a ``roll-over asset'' ) of the trust estate or of the unit trust to a company that is a resident of Australia;
(iii) on or before 25 May 1988, a taxpayer in the capacity of a trustee of a trust estate or of a unit trust disposed of a taxable Australian asset (in this section also called a ``roll-over asset'' ) of the trust estate or of the unit trust to a company that is not a resident of Australia;
(iv) both of the following conditions are satisfied:
(A) after 25 May 1988, a taxpayer in the capacity of a trustee of a trust estate or of a unit trust disposes of a taxable Australian asset (in this section also called a ``roll-over asset'' ) of the trust estate or of the unit trust to a company that is not a resident of Australia;
(B) immediately after the disposal, the asset is a taxable Australian asset of the company;
(b) subject to subsection (5A), the consideration in respect of the disposal consists only of non-redeemable shares in the company;
(ba) the market value of the shares is substantially the same as the market value of the roll-over asset, reduced, if the company assumes in connection with the disposal a liability or liabilities in respect of the roll-over asset, by the amount of the liability or the total of the amounts of the liabilities;
(c) immediately after the disposal the taxpayer owns all the shares in the company and holds those shares upon the same trust as the taxpayer held the roll-over asset that was disposed of to the company;
(ca) the roll-over asset is not trading stock of the company immediately after its acquisition by the company;
(cb) if:
(i) the roll-over asset is:
(A) a right to which Division 10 or 10A applies; or
(B) an option to which Division 11, 11A or 13 applies; or
(C) a convertible note to which Division 12 or 12A applies; and
the derived asset is not trading stock of the company immediately after its acquisition by the company; and
(ii) as a result of the exercise of the right or option, or the conversion of the convertible note, the company acquires another asset (in this paragraph called the ``derived asset'' );
(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 subsection is to apply in respect of the disposal,
this Part (other than this section) does not apply in respect of the disposal and -
(e) if the roll-over asset was acquired by the taxpayer in the capacity of a trustee of the trust concerned before 20 September 1985 - the company shall be deemed, for the purposes of this Part, to have acquired the roll-over asset before that date; or
(f) if the roll-over asset was acquired by the taxpayer in the capacity of trustee of the trust concerned on or after 20 September 1985, the company shall be deemed to have paid or given as consideration in respect of the acquisition of the roll-over asset an amount equal to -
(i) for the purpose of ascertaining whether a capital gain accrued to the company in the event of a subsequent disposal of the roll-over asset by the company - the amount that would have been the indexed cost base to the taxpayer of the roll-over asset for the purposes of this Part if this Part had applied in respect of the disposal of the roll-over asset by the taxpayer to the company; or
(ii) for the purpose of ascertaining whether the company incurred a capital loss in the event of a subsequent disposal of the roll-over asset by the company - the amount that would have been the reduced cost base to the taxpayer of the roll-over asset for the purposes of this Part if this Part had applied in respect of the disposal of the roll-over asset by the taxpayer to the company.
If, in the case of a roll-over asset to which paragraph (4)(f) applies, the asset was disposed of by the company within 12 months after the day on which the asset was acquired by the taxpayer, the reference in that paragraph to the indexed cost base to the taxpayer of the asset shall be construed as a reference to the cost base to the taxpayer of the asset.
The consideration in respect of the disposal of a roll-over asset is not taken not to consist only of non-redeemable shares in the company merely because the company assumes in connection with the disposal a liability or liabilities in respect of the asset but, if the company so assumes such a liability or liabilities, neither subsection (2) nor subsection (4) applies in relation to the disposal unless:
(a) if the asset was acquired by the taxpayer before 20 September 1985 - the amount of the liability or the total of the amounts of the liabilities does not exceed the market value of the asset at the time of the disposal; or
(b) if the asset was acquired by the taxpayer on or after 20 September 1985 - the amount of the liabilityor the total of the amounts of the liabilities does not exceed the amount that, if this Part had applied in respect of the disposal of the asset by the taxpayer to the company, would have been:
(i) if the asset was disposed of within the period of 12 months after the day on which the asset was acquired by the taxpayer - the cost base to the taxpayer of the asset; or
(ii) if the asset was disposed of after that period - the indexed cost base to the taxpayer of the asset.
(Omitted by No 48 of 1991)
160ZZN(6A)
(Omitted by No 48 of 1991)
160ZZN(7) [Acquisition of shares]
The shares that constituted the consideration for a disposal by a taxpayer to a company of a roll-over asset to which subsection (2) or (4) applies -
(a) shall, if the asset was acquired by the taxpayer before 20 September 1985 - be deemed for the purposes of this Part to have been acquired before that date; or
(b) shall, if the asset was acquired by the taxpayer on or after 20 September 1985, be deemed for the purposes of this Part to have been acquired by the taxpayer for a consideration equal to -
(i) for the purpose of ascertaining whether a capital gain accrued to the taxpayer in the event of a subsequent disposal of the shares by the taxpayer - the amount that would have been the indexed cost base to the taxpayer of the asset for the purposes of this Part if this Part had applied in respect of the disposal of the asset by the taxpayer to the company, reduced, if the company assumed in connection with the disposal a liability or liabilities in respect of the asset, by the amount of the liability or the total of the amounts of the liabilities; or
(ii) for the purpose of ascertaining whether the taxpayer incurred a capital loss in the event of a subsequent disposal of the shares by the taxpayer - the amount that would have been the reduced cost base to the taxpayer of the asset for the purposes of this Part if this Part had applied in respect of the disposal of the asset by the taxpayer to the company, reduced, if the company assumed in connection with the disposal a liability or liabilities in respect of the asset, by the amount of the liability or the total of the amounts of the liabilities.
If, in the case of shares to which paragraph (7)(b) applies, the shares were disposed of by the taxpayer within 12 months after the day on which the roll-over asset was acquired by the taxpayer, the reference in that paragraph to the indexed cost base to the taxpayer of the roll-over asset shall be construed as a reference to the cost base to the taxpayer of the roll-over asset.
This section does not apply to the disposal of a roll-over asset to a company whose income of the year of income in which the asset was disposed of is exempt from tax by virtue of a relevant exempting provision.
Section 170 does not prevent the amendment of an assessment at any time for the purpose of giving effect to paragraph (2)(cab) or (4)(cb).
In this section:
"asset"
does not include a personal-use asset.
(a) 2 or more taxpayers (in this section called the ``ex-partners'' ), being all of the partners in a partnership, dispose of their interests in a partnership asset of the partnership (which partnership asset is in this section called the ``eligible asset'' ) to a company; and
(b) subject to subsection (12), the consideration in respect of the disposal consists only of non-redeemable shares in the company (which shares are in this section called the ``replacement shares'' ); and
(c) the market value of the replacement shares is substantially the same as the market value of the eligible asset, reduced, if the company assumes in connection with the disposal a liability or liabilities in respect of the eligible asset, by the amount of the liability or the total of the amounts of the liabilities; and
(d) immediately after the disposal:
(i) all of the shares in the company are beneficially owned by the ex-partners; and
(ii) each ex-partner holds the shares in the company in the same proportions as the ex-partner held the ex-partner's interest in the eligible asset immediately before the disposal; and
(da) the eligible asset is not trading stock of the company immediately after its acquisition by the company; and
(db) if:
(i) the eligible asset is:
(A) a right to which Division 10 or 10A applies; or
(B) an option to which Division 11, 11A or 13 applies; or
(C) a convertible note to which Division 12 or 12A applies; and
the derived asset is not trading stock of the company immediately after its acquisition by the company; and
(ii) as a result of the exercise of the right or option, or the conversion of the convertible note, the company acquires another asset (in this paragraph called the ``derived asset'' );
(e) in the case of an ex-partner, being a taxpayer other than a taxpayer in the capacity of a trustee - one of the following subparagraphs applies:
(i) both the taxpayer and the company are residents of Australia at the time of the disposal;
(ii) all of the following conditions are satisfied:
(A) the taxpayer is not a resident of Australia at the time of the disposal;
(B) the company is a resident of Australia at the time of the disposal;
(C) the disposal is a disposal of a taxable Australian asset;
(iii) all of the following conditions are satisfied:
(A) the company is not a resident of Australia at the time of the disposal;
(B) the disposal is a disposal of a taxable Australian asset;
(C) immediately after the disposal, the eligible asset is a taxable Australian asset of the company; and
(f) in the case of an ex-partner, being a taxpayer in the capacity of a trustee of a trust estate or of a unit trust - one of the following subparagraphs applies:
(i) both of the following conditions are satisfied:
(A) the trust estate or the unit trust is a resident trust estate or a resident unit trust in relation to the year of income in which the disposal occurred;
(B) the company is a resident of Australia at the time of the disposal;
(ii) all of the following conditions are satisfied:
(A) the company is a resident of Australia at the time of the disposal;
(B) the trust estate or the unit trust is not a resident trust estate or a resident unit trust in relation to the year of income in which the disposal occurred;
(C) the disposal is a disposal of a taxable Australian asset of the trust estate or of the unit trust;
(iii) all of the following conditions are satisfied:
(A) the company is not a resident of Australia at the time of the disposal;
(B) the disposal is a disposal of a taxable Australian asset of the trust estate or of the unit trust;
(C) immediately after the disposal, the eligible asset is a taxable Australian asset of the company; and
(g) in the case of an ex-partner, being a taxpayer in the capacity of a trustee - immediately after the disposal, the ex-partner holds the replacement shares upon the same trust as the ex-partner held the ex-partner's interest in the eligible asset; and
(h) all of the ex-partners have elected that this section is to apply in relation to the disposal.
This Part (other than this section) does not apply in respect of the disposal.
160ZZNA(4) [Pre- or post-20/9/85 eligible asset interest]For the purposes of this section:
(a) an interest in the eligible asset that was acquired by an ex-partner before 20 September 1985 is taken to be a pre-20 September 1985 eligible asset interest; and
(b) any other interest in the eligible asset is taken to be a post-20 September 1985 eligible asset interest. 160ZZNA(5) [Asset deemed acquired before 20/9/85]
If an eligible asset relates wholly to pre-20 September 1985 eligible asset interests - the company is taken, for the purposes of this Part, to have acquired the eligible asset before 20 September 1985.
160ZZNA(6) [Post-20/9/85 eligible asset]If an eligible asset relates wholly to post-20 September 1985 eligible asset interest - the eligible asset is taken, for the purposes of this section, to be a post-20 September 1985 eligible asset.
160ZZNA(7) [Asset relating to pre- and post-20/9/85 eligible asset interests]If an eligible asset relates partly to both of the following:
(a) pre-20 September 1985 eligible asset interests;
(b) post-20 September 1985 eligible asset interests;
the following provisions have effect:
(c) the eligible asset is taken, for the purposes of this Part, to comprise 2 separate assets, as follows:
(i) the eligible asset to the extent to which it relates to pre-20 September 1985 eligible asset interests;
(ii) the eligible asset to the extent to which it relates to post-20 September 1985 eligible asset interests;
(d) the company is to be treated, for the purposes of this Part, as if the company had acquired the eligible asset referred to in subparagraph (c)(i) before 20 September 1985;
(e) the eligible asset referred to in subparagraph (c)(ii) is taken, for the purposes of this section, to be a post-20 September 1985 eligible asset;
(f) on the disposal of the actual eligible asset, the consideration in respect of the disposal of the actual eligible asset is to be apportioned between the separate assets. 160ZZNA(8) [Consideration for post-20/9/85 eligible asset]
The company is taken to have paid or given as consideration in respect of the acquisition of a post-20 September 1985 eligible asset:
(a) for the purposes of ascertaining whether a capital gain accrued to the company in the event of a subsequent disposal of the eligible asset by the company - the sum of the amounts that would have been the indexed cost bases to the ex-partners of post-20 September 1985 eligible asset interests for the purposes of this Part if this Part had applied in respect of the disposal of those interests to the company; or
(b) for the purposes of ascertaining whether the company incurred a capital loss in the event of a subsequent disposal of the eligible asset by the company - the sum of the amounts that would have been the reduced cost bases to the ex-partners of post-20 September 1985 eligible asset interests for the purposes of this Part if this Part had applied in respect of the disposal of those interests to the company. 160ZZNA(9) [Post-20/9/85 eligible asset disposed of within 12 months]
If a post-20 September 1985 eligible asset is disposed of by the company within 12 months after the earliest day, being a day after 19 September 1985, on which any post-20 September 1985 eligible asset interest was acquired by an ex-partner, the reference in paragraph (8)(a) to the indexed cost bases to the ex-partner of post-20 September 1985 eligible asset interests is a reference to the cost bases to the ex-partner of the post-20 September 1985 eligible asset interests.
160ZZNA(10) [Replacement shares acquired by ex-partner]In the case of a particular taxpayer, being an ex-partner:
(a) if all of the interests in the eligible asset held by the taxpayer were pre-20 September 1985 eligible asset interests - the taxpayer is taken, for the purposes of this Part, to have acquired the replacement shares concerned before 20 September 1985; and
(b) if:
(i) some, but not all, of the interests in the eligible asset held by the taxpayer were pre-20 September 1985 eligible asset interests; and
(ii) the taxpayer, in the notice of election, nominates, as pre-CGT shares, such of the replacement shares acquired by the taxpayer as are specified in the notice; and
the taxpayer is taken, for the purposes of this Part, to have acquired the nominated shares before 20 September 1985; and
(iii) the number of replacement shares nominated by the taxpayer does not exceed the number calculated using the formula:
Shares × MV of pre-CGT interests
MV of total interests
where:
`` Shares '' means the number of replacement shares owned by the taxpayer immediately after the disposal. `` MV of pre-CGT interests '' means the number of dollars in the market value of the pre-20 September 1985 eligible asset interests immediately before the disposal. `` MV of total interests '' means the number of dollars in the market value of the interest in the eligible asset held by the taxpayer immediately before the disposal;
(c) each replacement share acquired by the taxpayer that is not taken by paragraph (a) or (b) to have been acquired by the taxpayer before 20 September 1985 is taken to be a post-20 September 1985 replacement share for the purposes of this section; and
(d) in the case of a post-20 September 1985 replacement share - the taxpayer is taken to have paid or given as consideration in respect of the acquisition of the share an amount equal to:
(i) for the purpose of ascertaining whether a capital gain accrued to the taxpayer in the event of a subsequent disposal of the share by the taxpayer - the amount calculated using the formula:
Net-ICB of post-CGT interests
Post-CGT shares
where:
`` Net ICB of post-CGT interests '' means the sum of the amounts that would have been the indexed cost bases to the taxpayer of post-20 September 1985 eligible asset interests for the purposes of this Part if this Part had applied in respect of the disposal of the interests by the taxpayer to the company, being that sum reduced by the amount worked out in relation to the taxpayer using the reduction formula in subsection (10A); `` Post-CGT shares '' means the number of post-20 September 1985 replacement shares owned by the taxpayer immediately after the disposal; or
(ii) for the purposes of ascertaining whether the taxpayer incurred a capital loss in the event of a subsequent disposal of the share by the taxpayer - the amount calculated using the formula:
Net-RCB of post-CGT interests
Post-CGT shares
where:
`` Net RCB of post-CGT interests '' means the sum of the amounts that would have been the reduced cost bases to the taxpayer of post-20 September 1985 eligible asset interests for the purposes of this Part if this Part had applied in respect of the disposal of the interests by the taxpayer to the company, being that sum reduced by the amount worked out in relation to the taxpayer using the reduction formula in subsection (10A); `` Post-CGT shares '' means the number of post-20 September 1985 replacement shares owned by the taxpayer immediately after the disposal.
This is the reduction formula referred to in subparagraphs (10)(d)(i) and (ii):
|
Assumed
liabilities |
× |
Ex-partner's
interest |
× |
Post-20 September 1985
replacement shares Replacement shares |
where:
`` Assumed liabilities '' means the total amount of any liability or liabilities in respect of the eligible asset assumed by the company in connection with the disposal of the eligible asset.
`` Ex-partner's interest '' means the taxpayer's percentage interest in the eligible asset immediately before its disposal.
`` Post-20 September 1985 replacement shares '' means the number of post-20 September 1985 replacement shares acquired by the taxpayer.
`` Replacement shares '' means the total number of replacement shares acquired by the taxpayer.
If a post-20 September 1985 replacement share is disposed of by a taxpayer within 12 months after the earliest day, being a day after 19 September 1985, on which any partnership asset interest was acquired by the taxpayer, the reference in paragraph (10)(d) to the indexed cost bases to the taxpayer of interests is a reference to the cost bases to the taxpayer of the interests.
160ZZNA(12) [Assumption of liability by company]The consideration in respect of the disposal mentioned in subsection (2) is not taken not to consist only of non-redeemable shares in the company merely because the company assumes in connection with the disposal a liability or liabilities in respect of the eligible asset but, if the company so assumes such a liability or liabilities, this section does not apply in relation to the disposal unless:
(a) in the case of a pre-20 September 1985 eligible asset interest - the amount of the liability or the total of the amounts of the liabilities does not exceed the market value of the interest at the time of the disposal; or
(b) in the case of a post-20 September 1985 eligible asset interest - the amount of the liability or the total of the amounts of the liabilities does not exceed the amount that, if this Part had applied in respect of the disposal of the interest by the ex-partner to the company, would have been:
(i) if the interest was disposed of within the period of 12 months after the day in which the interest was acquired by the ex-partner - the cost base to the ex-partner of the interest; or
160ZZNA(13) [Manner and time of election]
(ii) if the interest was disposed of after that period - the indexed cost base to the ex-partner of the interest.
An election under this subsection by a taxpayer, being an ex-partner, must be made 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.
160ZZNA(14) [Reference to interest in the eligible asset]A reference in this section to an interest in the eligible asset that was acquired by an ex-partner at a particular time includes a reference to an interest in the eligible asset that was acquired by the ex-partner at a time when the eligible asset was a partnership asset of a partnership that was a predecessor (whether immediate or not) of the partnership mentioned in subsection (2).
160ZZNA(15) [Amendment of assessments]Section170 does not prevent the amendment of an assessment at any time for the purpose of giving effect to paragraph (2)(db).
(a) one of the following subparagraphs applies:
(i) a company (in this section called the ``transferor'' ) that is a resident of Australia, other than a prescribed dual resident, disposes of an asset (in this section called a ``roll-over asset'' ) to another company (in this section called the ``transferee'' ) that is a resident of Australia, other than a prescribed dual resident;
(ii) a company (in this section also called the ``transferor'' ) that is not a resident of Australia disposes of a taxable Australian asset (in this section also called a ``roll-over asset'' ) to another company (in this section also called the ``transferee'' ) that is a resident of Australia, other than a prescribed dual resident;
(iii) on or before 25 May 1988, a company (in this section also called the ``transferor'' ) disposed of a taxable Australian asset (in this section also called a ``roll-over asset'' ) to another company (in this section also called the ``transferee'' ) that is not a resident of Australia;
(iv) the following conditions are satisfied:
(A) after 25 May 1988, a company (in this section also called the ``transferor'' ) disposes of a taxable Australian asset (in this section also called a ``roll-over asset'' ) to another company (in this section also called the ``transferee'' ) that is not a resident of Australia;
(B) immediately after the disposal, the asset is a taxable Australian asset of the transferee;
(aa)-(ac) (Omitted by No 48 of 1991)
(b) the transferee is related to the transferor when the disposal takes place;
(ba) the roll-over asset is not trading stock of the transferee immediately after its acquisition by the transferee;
(bb) if:
(i) the roll-over asset is:
(A) a right to which Division 10 or 10A applies; or
(B) an option to which Division 11, 11A or 13 applies; or
(C) a convertible note to which Division 12 or 12A applies; and
the derived asset is not trading stock of the transferee immediately after its acquisition by the transferee;
(ii) as a result of the exercise of the right or option, or the conversion of the convertible note, the transferee acquires another asset (in this paragraph called the ``derived asset'' );
(c) the transferee is not a person whose income of the year of income in which the disposal took place is exempt from tax by virtue of a relevant exempting provision; and
(d) either:
(i) subsection (1AA) (disposals giving rise to capital losses) applies to the disposal; or
(ii) the transferor and the transferee have elected that this section is to apply in relation to the disposal;
this Part (other than this section and Division 19A) does not apply in respect of the disposal and:
(e) if the roll-over asset was acquired by the transferor before 20 September 1985 - the transferee shall be deemed to have acquired the roll-over asset before that date; and
(f) if the roll-over asset was acquired by the transferor on or after 20 September 1985, the transferee shall be deemed to have paid as consideration in respect of the acquisition of the roll-over asset an amount equal to:
(i) for the purpose of ascertaining whether a capital gain accrued to the transferee in the event of a subsequent disposal of the roll-over asset by the transferee - the amount that would have been the indexed cost base to the transferor of the roll-over asset for the purposes of this Part if this Part had applied in respect of the disposal of the roll-over asset by the transferor to the transferee; or
(ii) for the purpose of ascertaining whether the transferee incurred a capital loss in the event of a subsequent disposal of the roll-over asset by the transferee - the amount that would have been the reduced cost base to the transferor of the roll-over asset for the purposes of this Part if this Part had applied in respect of the disposal of the roll-over asset by the transferor to the transferee;
(g)-(h) (Omitted by No 17 of 1993)
This subsection applies to a disposal if:
(a) assuming this Part applied to the disposal, the disposal would give rise to a capital loss; and
(b) the disposal is not covered by an election under subsection (1AB).
The transferor and the transferee may make an election under this subsection in relation to a disposal if the transferor and the transferee intend that, before the end of the year of income of the transferor after the year in which the disposal takes place, they will cease to be related and that the transferor, together with related companies of the transferor, will cease to hold 50% or more of the shares in the transferee.
If a transferor and a transferee make an election under subsection (1AB) and the transferor, together with related companies of the transferor, does not cease to hold 50% or more of shares in the transferee before the end of the year of income of the transferor after the year in which the disposal occurs, no capital loss is taken to have arisen in relation to the disposal of the asset by the transferor.
No capital loss is taken to have arisen in relation to the disposal of the asset by the transferor if:
(a) the transferor and transferee make an election under subsection (1AB); and
(b) at any time in the 4 year period after the disposal of the asset, the asset is held by the transferor or a company that is related to the transferor or a company where, at that time, the transferor, together with other companies related to the transferor, holds 50% or more of the shares in the company.
Paragraph (b) does not apply in relation to the asset being held by the transferee in the period between the time when the asset is disposed of by the transferor and the time when the transferor, together with related companies of the transferor, ceases to hold 50% or more of the shares in the transferee.
If, in the case of a roll-over asset to which paragraph (1)(f) applies, the asset was disposed of by the transferee within 12 months after the day on which the asset was acquired by the transferor, the reference in that paragraph to the indexed cost base to the transferor of the asset shall be construed as a reference to the cost base to the transferor of the asset.
(Omitted by No 48 of 1991)
160ZZO(2D) [Application of Div 7 of Pt X]
(a) there is a requirement to calculate under Division 7 of Part X the attributable income of a company in relation to any taxpayer; and
(b) this section, as it has effect in accordance with that Division, is relevant to that calculation because both of the following subparagraphs apply:
(i) the company is the transferor;
(ii) apart from the residency assumption mentioned in that Division, the disposal of the roll-over asset concerned is not a disposal of a taxable Australian asset;
then, in addition to the effect that this section has apart from this subsection, this section also has the effect, in relation to any subsequent disposal of the roll-over asset (whether by the transferee or otherwise) that it would have if it had applied in relation to the transferee subject to the modifications made by that Division.
An election under this section must be made in writing on or before the date of lodgment of the transferor's return for the year of income in which the disposal took place. The Commissioner may allow the election to be made at a later time.
(Omitted by No 17 of 1993)
160ZZO(4) [Asset an interest in CFC or FIF]
(a) subsection (1AA) applies to a disposal (the first disposal ) of an asset; and
(b) the asset is an interest in a CFC or a FIF; and
(c) the consideration in respect of the first disposal is reduced under section 461 or 613 ;
then:
(d) for the purpose of determining if a capital gain arises in respect of the subsequent disposal of the asset by the transferee, the indexed cost base of the asset to the transferee is to be increased, at the time of the subsequent disposal, by so much of the attribution surplus as was taken into account under paragraph 461(1)(c) or 613(1)(c) in relation to the first disposal; and
(e) for the purpose of determining if a capital loss arises in respect of the subsequent disposal of the asset by the transferee, the reduced cost base of the asset to the transferee is to be increased, at the time of the subsequent disposal, by so much of the attribution surplus as was taken into account under paragraph 461(1)(c) or 613(1)(c) in relation to the first disposal.
In subsection (4):
attribution surplus
means an attribution surplus under Part X or Part XI.
CFC
has the same meaning as in Part X.
FIF
has the same meaning as in Part XI.
(Omitted by No 82 of 1994)
160ZZO(7)-(8)
(Omitted by No 82 of 1994)
160ZZO(8A)
(Omitted by No 82 of 1994)
160ZZO(8B)
(Omitted by No 82 of 1994)
160ZZO(9) [Personal-use asset]
Where this section applies to the disposal of a roll-over asset that was a personal-use asset of the transferor, the asset shall be taken for the purposes of this Part to be a personal-use asset of the transferee.
Section 170 does not prevent the amendment of an assessment at any time for the purpose of giving effect to paragraph (1)(bb) or subsection (1AC) or (1AD).
(Omitted by No 48 of 1991)
SECTION 160ZZOA COMPANIES CEASING TO BE RELATED AFTER SECTION 160ZZO APPLICATION 160ZZOA(1) Deemed disposal and re-acquisition on break-up of group.
(a) a group roll-over disposal of an asset to a company takes place; and
(b) the company is not the ultimate holding company in relation to the disposal; and
(c) the company ceases, at a particular time ( ``the break-up time'' ) when it has not disposed of the asset, to be a subsidiary of the ultimate holding company in relation to:
(i) if subparagraph (ii) does not apply - the disposal; or
(whether the ceasing is because of the dissolution of the ultimate holding company or any other company or for any other reason); and
(ii) if the disposal is the second or a later disposal in a series of group roll-over disposals - the first of the disposals in the series;
(ca) the cessation referred to in paragraph (c) is not an eligible sub-group break-up;
then the company is taken, for the purposes of this Part:
(d) to have disposed of the asset at the break-up time for a consideration equal to the asset's market value at that time; and
(e) to have immediately re-acquired the asset for that consideration.
For the purposes of this section:
(a) a ``group roll-over disposal'' of an asset takes place if section 160ZZO applies to the disposal of the asset; and
(b) a ``series of group roll-over disposals'' of an asset takes place if 2 or more group roll-over disposals of the asset take place without an intervening disposal that is not a group roll-over disposal occurring, but once this section has applied, any disposal before the break-up time does not form part of a series for the purposes of any later application of this section; and
(c) the expression ``subsidiary'' has the same meaning as in section 160G; and
(d) a company ( ``the first company'' ) is the ``ultimate holding company'' in relation to a group roll-over disposal of an asset if:
(i) the first company is not a subsidiary of another company at the time of the disposal; and
(ii) the disposal is to a subsidiary of the first company or to the first company itself; and
(e) if a company has one or more subsidiaries, the company and all of the subsidiaries of the company are a ``sub-group'' and the company is the ``holding company'' ; and
(f) a cessation referred to in paragraph (1)(c) is an ``eligible sub-group break-up'' if:
(i) the company referred to in paragraph (1)(c) is a member of a sub-group at the time of the group roll-over disposal referred to in that paragraph; and
(ii) the transferor and the transferee referred to in section 160ZZO:
(A) if sub-subparagraph (B) does not apply - in relation to the group roll-over disposal; orwere members of the sub-group at the time of the group roll-over disposal concerned; and
(B) if the group roll-over disposal was one of a series of group roll-over disposals - in relation to each of the group roll-over disposals in the series;
(iii) if the company is the holding company of the sub-group - immediately after the cessation, none of the shares in the company are held by the ultimate holding company or by a company that is related to the ultimate holding company; and
(iv) if the company is not the holding company of the sub-group - immediately after the cessation, none of the shares in the company or in the holding company are held by the ultimate holding company or by a company that is related to the ultimate holding company.
This section will in certain circumstances reduce a capital gain or capital loss to a company from the cancellation of shares in a wholly-owned subsidiary in the course of liquidation of the subsidiary. The main requirement is that roll-over relief must have been available to the subsidiary under section 160ZZO for the disposal by the subsidiary of an asset to the company in the course of the liquidation.
160ZZOB(2) Conditions for section applying.The consequences set out in subsection (3) occur if:
(a) either:
(i) one or more elections are made under section 160ZZO that that section apply to disposals of one or more assets (each of which is a 160ZZO CGT asset ) acquired on or after 20 September 1985; or
or both; and
(ii) subsection 160ZZO(1AA) applies to one or more disposals of assets (each of which is also a 160ZZO CGT asset ) acquired on or after that date;
(b) the disposals of the 160ZZO CGT assets are distributions in the course of the liquidation of the transferee mentioned in section 160ZZO , but they are not distributions to which subsection 160ZL(1) applies; and
(c) the market value of the distributed 160ZZO CGT assets constitutes the whole or part of the consideration for the cancellation, in the course of the liquidation, of all of the shares (the transferee's total shares ) beneficially owned in the transferor mentioned in section 160ZZO by the transferee; and
(d) throughout the period from the first or only disposal of a 160ZZO CGT asset until the cancellation of the shares, the transferee beneficially owned all of the shares in the transferor; and
(e) one or more shares (the transferee's CGT shares ) that were cancelled were acquired by the transferee on or after 20 September 1985; and
(f) either:
(i) there is an overall notional gain on distributions to the transferee of the 160ZZO CGT assets in the course of the liquidation and an overall actual gain on the cancellation of the transferee's CGT shares in the course of the liquidation; or
(ii) there is an overall notional loss on distributions to the transferee of the 160ZZO CGT assets in the course of the liquidation and an overall actual loss on the cancellation of the transferee's CGT shares in the course of the liquidation.
Note:
Various expressions used in paragraph (f) are defined in section 160ZZOC.
160ZZOB(3) Where overall notional gain on distribution and overall actual gain on cancellation.If subparagraph (2)(f)(i) applies:
(a) except as mentioned in paragraph (b) of this subsection, no capital gain accrues to the transferee, and the transferee incurs no capital loss, on the disposal of any of the transferee's CGT shares constituted by the cancellation; and
(b) a capital gain accrues to the transferee, in respect of the disposal of each of the transferee's CGT shares constituted by the cancellation, of an amount worked out using the formula:
|
Overall actual gain
−
(Adjustment factor
×
Overall notional gain)
Number of transferee's CGT shares |
Note:
The components in the formula are defined in section 160ZZOC .
160ZZOB(4) Where overall notional loss on distribution and overall actual loss on cancellation.If subparagraph (2)(f)(ii) applies:
(a) except as mentioned in paragraph (b) of this subsection, no capital gain accrues to the transferee, and the transferee incurs no capital loss, on the disposal of any of the transferee's CGT shares constituted by the cancellation; and
(b) a capital loss accrues to the transferee, in respect of the disposal of each of the transferee's CGT shares constituted by the cancellation, of an amount worked out using the formula:
|
Overall actual loss
−
(Adjustment factor
×
Overall notional loss)
Number of transferee's CGT shares |
Note:
The components in the formula are defined in section 160ZZOC .
This section contains definitions of various expressions used in section 160ZZOB .
160ZZOC(2) Overall notional gain on distributions.There is an overall notional gain on distributions to the transferee of the 160ZZO CGT assets in the course of the liquidation if:
(a) the sum of the notional gains (see subsection (3)) in respect of all of the distributions of 160ZZO CGT assets by the transferor to the transferee in the course of the liquidation;
exceeds:
(b) the sum of the notional losses (see subsection (4)) in respect of all such distributions.
The amount of the overall notional gain equals the excess.
160ZZOC(3) Notional gain on distribution.There is a notional gain in respect of the distribution of a 160ZZO CGT asset if, disregarding section 160ZZO , a capital gain would have accrued to the transferor in respect of the distribution assuming it had received consideration for the distribution equal to the asset's market value at the time of the distribution.
160ZZOC(4) Notional loss on distribution.There is a notional loss in respect of the distribution of a 160ZZO CGT asset if, disregarding section 160ZZO , a capital loss would have been incurred by the transferor in respect of the distribution assuming it had received consideration for the distribution equal to the asset's market value at the time of the distribution.
160ZZOC(5) Overall notional loss on distributions.There is an overall notional loss on distributions to the transferee of the 160ZZO CGT assets in the course of the liquidation if:
(a) the sum of the notional losses in respect of all the distributions of 160ZZO CGT assets by the transferor to the transferee in the course of the liquidation;
exceeds:
(b) the sum of the notional gains in respect of all such distributions.
The amount of the overall notional loss equals the excess.
160ZZOC(6) Overall actual gain on cancellations.An overall actual gain accrues to the transferor on the cancellation of the transferee's CGT shares if:
(a) the sum of the capital gains that accrue to it in respect of the cancellation, in the course of the liquidation, of all of the transferee's CGT shares;
exceeds:
(b) the sum of the capital losses that it incurs in respect of all such cancellations.
The amount of the overall actual gain equals the excess.
160ZZOC(7) Overall actual loss on cancellation.An overall actual loss accrues to the transferor on the cancellation of the transferee's CGT shares if:
(a) the sum of the capital losses that accrue to it in respect of the cancellation, in the course of the liquidation, of all of the transferee's CGT shares;
exceeds:
(b) the sum of the capital gains that accrue to it in respect of all such cancellations.
The amount of the overall actual loss equals the excess.
160ZZOC(8) Adjustment factor.The adjustment factor is the fraction worked out by dividing the number of the transferee's CGT shares by the number of the transferee's total shares.
(a) a company redeems or cancels all the shares of a particular class in the company;
(b) a taxpayer holds shares of that class in the company (in this section referred to as the ``original shares'' );
(c) the taxpayer is a resident of Australia or the redemption or cancellation constitutes a disposal of a taxable Australian asset;
(d) the company issues to the taxpayer other shares in the company (in this section referred to as the ``new shares'' ) in substitution for the original shares;
(e) the market value of the new shares immediately after they were issued is not less than the market value of the original shares immediately before the redemption or cancellation;
(f) the taxpayer did not receive any consideration other than the new shares by reason of the redemption or cancellation;
(fa) the total paid-up share capital of the company immediately after the new shares were issued equals the total paid-up share capital of the company immediately before the redemption or cancellation; and
(g) 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 redemption or cancellation;
this Part (other than this section) does not apply in respect of the redemption or cancellation and:
(h) if the original shares were acquired by the taxpayer before 20 September 1985 - the taxpayer shall be deemed to have acquired the new shares before that date; or
(j) if the original shares were acquired by the taxpayer on or after 20 September 1985, the taxpayer shall be deemed to have paid as consideration in respect of the acquisition of the new shares an amount equal to:
(i) for the purpose of ascertaining whether a capital gain accrued to the taxpayer in the event of a subsequent disposal of the new shares by the taxpayer - the amount that would have been the indexed cost base to the taxpayer of the original shares for the purposes of this Part if this Part had applied in respect of the disposal of the original shares by the taxpayer; or
(ii) for the purpose of ascertaining whether the taxpayer incurred a capital loss in the event of a subsequent disposal of the new shares by the taxpayer - the amount that would have been the reduced cost base to the taxpayer of the original shares for the purposes of this Part if this Part had applied in respect of the disposal of the original shares by the taxpayer.
If, in a case to which paragraph (1)(j) applies, the new shares were disposed of by the taxpayer within 12 months after the day on which the original shares were acquired by the taxpayer, the reference in that paragraph to the indexed cost base to the taxpayer of the original shares shall be construed as a reference to the cost base to the taxpayer of the original shares.
(a) after 28 January 1988, the trustee of a unit trust redeems or cancels all the units of a particular class in the unit trust;
(b) a taxpayer holds units of that class in the unit trust (in this section called the ``original units'' );
(c) the taxpayer is a resident of Australia or the redemption or cancellation constitutes a disposal of a taxable Australian asset;
(d) the trustee of the unit trust issues to the taxpayer other units in the unit trust (in this section called the ``new units'' ) in substitution for the original units;
(e) the market value of the new units immediately after they were issued is not less than the market value of the original units immediately before the redemption or cancellation;
(f) the taxpayer did not receive any consideration other than the new units because of the redemption or cancellation; and
(g) the taxpayer has elected that this section is to apply in respect of the redemption or cancellation. 160ZZPAA(2) [Application of Pt IIIA]
This Part (other than this section) does not apply in respect of the redemption or cancellation and:
(a) if the original units were acquired by the taxpayer before 20 September 1985 - the taxpayer shall be taken to have acquired the new units before that date; or
(b) if the original units were acquired by the taxpayer on or after 20 September 1985 - the taxpayer shall be taken to have paid as consideration in respect of the acquisition of the new units an amount equal to:
(i) for the purpose of ascertaining whether a capital gain accrued to the taxpayer in the event of a subsequent disposal of the new units by the taxpayer - the amount that would have been the indexed cost base to the taxpayer of the original units for the purposes of this Part if this Part had applied in respect of the disposal of the original units by the taxpayer; or
160ZZPAA(3) [New units disposed of by taxpayer within 12 months original units acquired]
(ii) for the purpose of ascertaining whether the taxpayer incurred a capital loss in the event of a subsequent disposal of the new units by the taxpayer - the amount that would have been the reduced cost base to the taxpayer of the original units for the purposes of this Part if this Part had applied in respect of the disposal of the original units by the taxpayer.
If, in a case to which paragraph (2)(b) applies, the new units were disposed of by the taxpayer within 12 months after the day on which the original units were acquired by the taxpayer, the reference in that paragraph to the indexed cost base to the taxpayer of the original units shall be read as a reference to the cost base to the taxpayer of the original units.
160ZZPAA(4) [Election]An election by a taxpayer under subsection (1) shall be made 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 redemption or cancellation concerned took place, or within such further period as the Commissioner allows.
(a) a taxpayer owns:
(i) rights (in this section called the ``original rights'' ) issued by a company to acquire shares (in this section called the ``original shares'' ) in the company or to acquire an option to acquire shares (in this section also called the ``original shares'' ) in the company; or
(ii) an option (in this section called the ``original option'' ) to acquire shares (in this section also called the ``original shares'' ) in the company;
(b) either of the following conditions is satisfied in relation to the original shares:
(i) the original shares are consolidated and divided into shares (in this section called the ``new shares'' ) of larger amount;
(ii) the original shares are subdivided into shares (in this section also called the ``new shares'' ) of smaller amount;
(c) after 28 January 1988, and as a consequence of the consolidation or subdivision:
(i) the original rights are cancelled; or
as the case may be;
(ii) the original option is cancelled;
(d) the taxpayer is a resident of Australia or the cancellation constituted a disposal of a taxable Australian asset;
(e) the company issues to the taxpayer:
(i) other rights (in this section called the ``new rights'' ) relating to the new shares, in substitution for the original rights; or
(ii) another option (in this section called the ``new option'' ) relating to the new shares, in substitution for the original option;
(f) the market value of the new rights or the new option immediately after it was or they were issued is not less than the market value of the original rights or the original option immediately before the cancellation;
(g) the taxpayer did not receive any consideration other than the new rights or the new option in respect of the cancellation; and
(h) the taxpayer has elected that this section is to apply in respect of the cancellation of the original rights or the original option. 160ZZPAB(2) [Application of Pt IIIA]
This Part (other than this section) does not apply in respect of the cancellation and:
(a) if the original rights or the original option was or were acquired by the taxpayer before 20 September 1985 - the taxpayer shall be taken to have acquired the new rights or the new option before that date; or
(b) if the original rights or the original option was or were acquired by the taxpayer on or after 20 September 1985 - the taxpayer shall be taken to have paid as consideration in respect of the acquisition of the new rights or the new option an amount equal to:
(i) for the purpose of ascertaining whether a capital gain accrued to the taxpayer in the event of the subsequent disposal by the taxpayer of:
(A) the new rights;
(B) the new option; orthe amount that would have been the indexed cost base to the taxpayer of the original rights or the original option for the purposes of this Part if this Part had applied in respect of the cancellation of the original rights or the original option; or
(C) the shares or option to which the new rights or the new option relates;
160ZZPAB(3) [Disposal by taxpayer within 12 months of new rights or new option or related shares or option]
(ii) for the purposes of ascertaining whether the taxpayer incurred a capital loss in the event of the subsequent disposal by the taxpayer of:
(A) the new rights;
(B) the new option; orthe amount that would have been the reduced cost base to the taxpayer of the original rights or the original option for the purposes of this Part if this Part had applied in respect of the cancellation of the original rights or the original option.
(C) the shares or option to which the new rights or the new option relates;
If, in a case to which paragraph (2)(b) applies:
(a) the new rights or the new option was or were disposed of by the taxpayer within 12 months after the day on which the original rights or the original option was or were acquired by the taxpayer; or
(b) the shares or option to which the new rights or the new option relates was or were disposed of by the taxpayer within 12 months after the day on which the shares or the option was or were acquired by the taxpayer;
the reference in that paragraph to the indexed cost base to the taxpayer of the original rights or the original option shall be read as a reference to the cost base to the taxpayer of the original rights or the original option.
160ZZPAB(4) [Election]An election by a taxpayer under subsection (1) shall be made 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 cancellation concerned took place, or within such further period as the Commissioner allows.
(a) a taxpayer owns:
(i) rights (in this section called the ``original rights'' ) issued by the trustee of a unit trust to acquire units (in this section called the ``original units'' ) in the unit trust or to acquire an option to acquire units (in this section also called the ``original units'' ) in the unit trust; or
(ii) an option (in this section called the ``original option'' ) to acquire units (in this section also called the ``original units'' ) in the unit trust;
(b) either of the following conditions is satisfied in relation to the original units:
(i) the original units are consolidated and divided into units (in this section called the ``new units'' ) of larger amount;
(ii) the original units are subdivided into units (in this section also called the ``new units'' ) of smaller amount;
(c) after 28 January 1988, and as a consequence of the consolidation or subdivision:
(i) the original rights are cancelled; or
as the case may be;
(ii) the original option is cancelled;
(d) the taxpayer is a resident of Australia or the cancellation constituted a disposal of a taxable Australian asset;
(e) the trustee of the unit trust issues to the taxpayer:
(i) other rights (in this section called the ``new rights'' ) relating to the new units, in substitution for the original rights; or
(ii) another option (in this section called the ``new option'' ) relating to the new units, in substitution for the original option;
(f) the market value of the new rights or the new option immediately after it was or they were issued is not less than the market value of the original rights or the original option immediately before the cancellation;
(g) the taxpayer did not receive any consideration other than the new rights or the new option in respect of the cancellation; and
(h) the taxpayer has elected that this section is to apply in respect of the cancellation of the original right or the original options. 160ZZPAC(2) [Application of Pt IIIA]
This Part (other than this section) does not apply in respect of the cancellation and:
(a) if the original rights or the original option was or were acquired by the taxpayer before 20 September 1985 - the taxpayer shall be taken to have acquired the new rights or the new option before that date; or
(b) if the original rights or the original option was or were acquired by the taxpayer on or after 20 September 1985 - the taxpayer shall be taken to have paid as consideration in respect of the acquisition of the new rights or the new option an amount equal to:
(i) for the purpose of ascertaining whether a capital gain accrued to the taxpayer in the event of the subsequent disposal by the taxpayer of:
(A) the new rights;
(B) the new option; orthe amount that would have been the indexed cost base to the taxpayer of the original rights or the original option for the purposes of this Part if this Part had applied in respect of the cancellation of the original rights or the original option; or
(C) the units or option to which the new rights or the new option relates;
160ZZPAC(3) [Disposal by taxpayer within 12 months of new rights or new option or related units or option]
(ii) for the purpose of ascertaining whether the taxpayer incurred a capital loss in the event of the subsequent disposal by the taxpayer of:
(A) the new rights;
(B) the new option; orthe amount that would have been the reduced cost base to the taxpayer of the original rights or the original option for the purposes of this Part if this Part had applied in respect of the cancellation of the original rights or the original option.
(C) the units or option to which the new rights or the new option relates;
If, in a case to which paragraph (2)(b) applies:
(a) the new rights or the new option was or were disposed of by the taxpayer within 12 months after the day on which the original rights or the original option was or were acquired by the taxpayer; or
(b) the units or option to which the new rights or the new option relates was or were disposed of by the taxpayer within 12 months after the day on which the units or the option was or were acquired by the taxpayer;
the reference in that paragraph to the indexed cost base to the taxpayer of the original rights or the original option shall be read as a reference to the cost base to the taxpayer of the original rights or the original option.
160ZZPAC(4) [Election]An election by a taxpayer under subsection (1) shall be made 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 cancellation concerned took place, or within such further period as the Commissioner allows.
(a) under a scheme that:
(i) is for the reorganisation of the affairs of a unit trust; and
2 or more taxpayers (in this section called the ``exchanging taxpayers'' ), being the holders of all the units (in this section called the ``exchange units'' ) in the unit trust, dispose of all the exchange units to a company (in this section called the ``interposed company'' ), not being a company in the capacity of a trustee of a trust estate;
(ii) was entered into, or commenced to be carried out, after 9 December 1987;
(b) the consideration in respect of each of the disposals consists only of non-redeemable shares (in this section called the ``replacement shares'' ) in the interposed company;
(c) the total number of replacement shares is equal to, or is a multiple of, the total number of exchange units;
(d) in the case of each exchanging taxpayer - all of the exchange units held by the taxpayer are disposed of at the same time (in this section called the ``exchanging taxpayer's disposal time'' );
(e) immediately after the time (in this section called the ``completion time'' ) of the disposals or, if the disposals occurred at different times, the last of the disposals:
(i) the exchanging taxpayers are the owners of all the shares in the interposed company; and
(ii) the interposed company holds all the units in the unit trust;
(f) if the exchanging taxpayer's disposal time in relation to a particular exchanging taxpayer occurred before the completiontime - the taxpayer was the owner of the replacement shares concerned at all times during the period commencing immediately after the exchanging taxpayer's disposal time and ending at the completion time;
(g) the unit trust is a resident unit trust in relation to the year of income of the unit trust in which the completion time occurred;
(h) the interposed company is a resident of Australia at the completion time and, if the disposals occurred at different times, at all times during the period commencing at the time of the first of the disposals and ending at the completion time;
(j) in the case of an exchanging taxpayer in the capacity of a trustee of a trust estate - immediately after the exchanging taxpayer's disposal time, the taxpayer holds the replacement shares concerned upon the same trust as the taxpayer held the exchange units that were disposed of to the interposed company;
(k) immediately after the completion time, each exchanging taxpayer owned the replacement shares in the interposed company in the same proportion as the taxpayer held the exchange units in the unit trust that were disposed of to the interposed company;
(m) in the case of each exchanging taxpayer - the ratio calculated in accordance with the formula:
|
MV of taxpayer's shares
MV of total shares |
where:
is the same as the ratio calculated in accordance with the formula:
|
MV of taxpayer's units
MV of total units |
where:
(n) the interposed company has, by notice in writing given to the Commissioner within 2 months after the completion time, or within such further time as the Commissioner allows, elected that this subsection apply in respect of all the disposals; and
(p) the notice referred to in paragraph (n) is accompanied by a declaration, in a form approved by the Commissioner, with respect to the operation of this section. 160ZZPA(2) [Conditions and effect of election]
(a) either of the following conditions is satisfied in relation to a particular exchanging taxpayer:
(i) the taxpayer is a resident of Australia;
(ii) each disposal of an exchange unit by the taxpayer constitutes a disposal of a taxable Australian asset; and
(b) the taxpayer has elected that this subsection is to apply in respect of the disposal of all the exchange units held by the taxpayer;
this Part (other than this section) does not apply in respect of the disposal of those units and:
(c) if all the exchange units held by the taxpayer were acquired by the taxpayer before 20 September 1985 - the taxpayer shall be deemed, for the purposes of this Part, to have acquired the replacement shares concerned before 20 September 1985;
(d) if:
(i) some, but not all, of the exchange units held by the taxpayer were acquired by the taxpayer before 20 September 1985;
(ii) the taxpayer, in the notice of election, nominates, as pre-CGT shares, such of the replacement shares acquired by the taxpayer as are specified in the notice; and
the taxpayer shall be deemed, for the purposes of this Part, to have acquired the nominated shares before 20 September 1985;
(iii) the number of replacement shares nominated by the taxpayer does not exceed the number calculated in accordance with the formula:
Shares × Pre CGT units
Total units
where:
Pre CGT units is the number of exchange units acquired by the taxpayer before 20 September 1985; Shares is the number of replacement shares owned by the taxpayer immediately after the completion time; and Total units is the number of exchange units that the taxpayer disposed of to the interposed company;
(e) each replacement share acquired by the taxpayer that is not deemed by paragraph (c) or (d) to have been acquired by the taxpayer before 20 September 1985 shall be taken to be a post-20 September 1985 replacement share for the purposes of paragraph (g) and subsection (3);
(f) each exchange unit that was acquired by the taxpayer on or after 20 September 1985 shall be taken to be a post-20 September 1985 exchange unit for the purposes of paragraph (g); and
(g) in the case of a post-20 September 1985 replacement share - the taxpayer shall be deemed to have paid or given as consideration in respect of the acquisition of the share an amount equal to:
(i) for the purpose of ascertaining whether a capital gain accrued to the taxpayer in the event of a subsequent disposal of the share by the taxpayer - the amount calculated in accordance with the formula:
ICB of post CGT units
Post CGT shares
where:
ICB of post CGT units is the sum of the amounts that would have been the indexed cost bases to the taxpayer of post-20 September 1985 exchange units for the purposes of this Part if this Part had applied in respect of the disposal of the units by the taxpayer to the interposed company; and Post CGT shares is the number of post-20 September 1985 replacement shares owned by the taxpayer immediately after the completion time; or
160ZZPA(3) [Indexed cost base - subsec (2)(g)]
(ii) for the purposes of ascertaining whether the taxpayer incurred a capital loss in the event of a subsequent disposal of the share by the taxpayer - the amount calculated in accordance with the formula:
RCB of post CGT units
Post CGT shares
where:
RCB of post CGT units is the sum of the amounts that would have been the reduced cost bases to the taxpayer of post-20 September 1985 exchange units for the purposes of this Part if this Part had applied in respect of the disposal of the units by the taxpayer to the interposed company; and Post CGT shares is the number of post-20 September 1985 replacement shares owned by the taxpayer immediately after the completion time.
If a post-20 September 1985 replacement share is disposed of by an exchanging taxpayer within 12 months after the earliest day, being a day after 19 September 1985, on which any exchange unit was acquired by the taxpayer, the reference in paragraph (2)(g) to the indexed cost bases to the taxpayer of units is a reference to the cost bases to the taxpayer of the units.
160ZZPA(4) [Mode of making election]An election by a taxpayer under subsection (2) shall be made 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 of the exchange units concerned took place, or within such further period as the Commissioner allows.
160ZZPA(5) [Units deemed to be acquired pre 20/9/85](a) any of the assets of the unit trust, as at the completion time, were acquired by the trustee of the unit trust before 20 September 1985;
(b) the interposed company, by notice in writing accompanying the notice referred to in paragraph (1)(n), nominates, as pre-CGT units, such of the exchange units held by the company immediately after the completion time as are specified in the notice; and
(c) the number of exchange units nominated by the company does not exceed the number calculated in accordance with the formula:
| Units | × |
Net value of pre CGT assets
Net value of total assets |
where:
the units so nominated shall be deemed, for the purposes of this Part, to have been acquired by the interposed company before 20 September 1985.
160ZZPA(6) [Units deemed acquired after 20/9/85]Any other exchange units held by the interposed company immediately after the completion time shall be taken to be post-20 September 1985 exchange units for the purposes of subsections (7) and (8).
160ZZPA(7) [Consideration for post 20/9/85 units]The interposed company shall be deemed to have paid or given as consideration in respect of the acquisition of each post-20 September 1985 exchange unit an amount equal to:
(a) for the purpose of ascertaining whether a capital gain accrued to the company in the event of a subsequent disposal of the unit by the company - the amount calculated in accordance with the formula:
|
Net ICB of post CGT assets
Post CGT units |
where:
(b) for the purposes of ascertaining whether the company incurred a capital loss in the event of a subsequent disposal of the unit by the company - the amount calculated in accordance with the formula:
|
Net RCB of post CGT assets
Post CGT units |
where:
If a post-20 September 1985 exchange unit is disposed of by the interposed company within 12 months after the day on which the unit was acquired by the company, the reference in paragraph (7)(a) to the indexed cost bases to the trustee of assets is a reference to the cost bases to the trustee of the assets.
160ZZPA(9) [Non-redeemable share]For the purposes of this section, a share issued by a company shall be taken to be a non-redeemable share unless:
(a) the share is, or at the option of the company is to be, liable to be redeemed; or
(b) the share was issued under, or as part of, an agreement or arrangement, whether oral or in writing and whether entered into before or after the commencement of this section, that had the purpose, or purposes that included the purpose, of enabling the company, by means of the redemption, purchase or cancellation of that share or of any other share in the company, or a distribution of the share capital of the company to pay, transfer or apply to, on behalf of or at the direction of the person to whom the share was issued or any other person, whether upon the exercise of an option by the company or by any other person or not, any money or other property other than shares in the company.
(a) immediately after the completion time, the exchanging taxpayers are the owners of some, but not all, of the shares in the interposed company;
(b) the number of the remaining shares does not exceed 5; and
(c) the Commissioner is of the opinion that, having regard to:
(i) the ratio calculated in accordance with the formula:
MV of remaining shares
MV of total shares
where:
MV of remaining shares is the number of dollars in the market value of the remaining shares immediately after the completion time; and MV of total shares is the number of dollars in the market value of the replacement shares immediately after the completion time; and
it would be unreasonable not to treat the exchanging taxpayers as being the owners of all the shares in the interposed company;
(ii) such other matters as the Commissioner considers relevant;
the following provisions have effect:
(d) the exchanging taxpayers shall be treated, for the purposes of subparagraph (1)(e)(i), as if, immediately after the completion time, they were the owners of all the shares in the interposed company;
(e) the remaining shares shall be disregarded for the purposes of the application of paragraph (1)(k). 160ZZPA(11) [Liabilities of unit trust]
For the purposes of this section, the liabilities of the unit trust, as at the completion time, to the extent that, apart from this subsection, they are not attributable to the assets of the unit trust as at the completion time (in this subsection called the ``general liabilities'' ), shall be taken to be attributable to particular assets of the unit trust, as at that time, to the extent calculated in accordance with the formula:
| General liabilities | × |
MV of particular assets
MV of total assets |
where:
General liabilities is the amount of the general liabilities;
MV of particular assets is the number of dollars in the market value, as at the completion time, of the particular assets as at that time; and
MV of total assets is the number of dollars in the market value, as at the completion time, of the assets of the unit trust as at that time.
(a) all of the following conditions are satisfied in relation to a scheme for the reorganisation of the affairs of a unit trust:
(i) the scheme was entered into, or commenced to be carried out, after 9 December 1987;
(ii) under the scheme, a company (in this section called the ``interposed company'' ), not being a company in the capacity of a trustee of a trust estate, acquires not more than 5 units (in this section called the ``formal units'' ) in the unit trust;
(iii) the interposed company did not hold any other units in the unit trust at any time before the acquisition of the formal units;
(iv) the remaining units (in this section called the ``exchange units'' ) in the unit trust are held by 2 or more taxpayers (in this section called the ``exchanging taxpayers'' );
(v) under the scheme, all the exchange units are redeemed or cancelled;
(vi) under the scheme, the trustee of the unit trust issues to the interposed company 2 or more units (in this section called the ``scheme units'' ) in the unit trust;
(vii) the number of scheme units issued to the interposed company equals, or is a multiple of, the number of exchange units that were redeemed or cancelled;
(b) the consideration in respect of each of the redemptions or cancellations consists only of newly issued non-redeemable shares (in this section called the ``replacement shares'' ) in the interposed company;
(c) the total number of replacement shares is equal to, or is a multiple of, the total number of exchange units;
(d) in the case of each exchanging taxpayer - all of the exchange units held by the taxpayer are redeemed or cancelled at the same time (in this section called the ``exchanging taxpayer's disposal time'' );
(e) immediately after the time (in this section called the ``completion time'' ) of the redemptions or cancellations or, if the redemptions or cancellations occurred at different times, the last of the redemptions or cancellations:
(i) the exchanging taxpayers are the owners of all the shares in the interposed company; and
(ii) the interposed company holds all the units in the unit trust;
(f) if the exchanging taxpayer's disposal time in relation to a particular exchanging taxpayer occurred before the completion time - the taxpayer was the owner of the replacement shares concerned at all times during the period commencing immediately after the exchanging taxpayer's disposal time and ending at the completion time;
(g) the unit trust is a resident unit trust in relation to the year of income of the unit trust in which the completion time occurred;
(h) the interposed company is a resident of Australia at the completion time and, if the redemptions or cancellations occurred at different times, at all times during the period commencing at the time of the first of the redemptions or cancellations and ending at the completion time;
(j) in the case of an exchanging taxpayer in the capacity of a trustee of a trust estate - immediately after the exchanging taxpayer's disposal time, the taxpayer holds the replacement shares concerned upon the same trust as the taxpayer held the exchange units that were redeemed or cancelled;
(k) immediately after the completion time, each exchanging taxpayer owned the replacement shares in the interposed company in the same proportion as the taxpayer held the exchange units in the unit trust that were redeemed or cancelled;
(m) in the case of each exchanging taxpayer - the ratio calculated in accordance with the formula:
|
MV of taxpayer's shares
MV of total shares |
where:
is the same as the ratio calculated in accordance with the formula:
|
MV of taxpayer's units
MV of total units |
where:
(n) the interposed company has, by notice in writing given to the Commissioner within 2 months after the completion time, or within such further time as the Commissioner allows, elected that this subsection apply in respect of all the redemptions or cancellations; and
(p) the notice referred to in paragraph (n) is accompanied by a declaration, in a form approved by the Commissioner, with respect to the operation of this section. 160ZZPB(2) [Conditions and effect of election]
(a) either of the following conditions is satisfied in relation to a particular exchanging taxpayer:
(i) the taxpayer is a resident of Australia;
(ii) each redemption or cancellation of an exchange unit held by the taxpayer constitutes a disposal of a taxable Australian asset; and
(b) the taxpayer has elected that this subsection is to apply in respect of the redemption or cancellation of all the exchange units held by the taxpayer;
this Part (other than this section) does not apply in respect of the redemption or cancellation of those units and:
(c) if all the exchange units held by the taxpayer were acquired by the taxpayer before 20 September 1985 - the taxpayer shall be deemed, for the purposes of this Part, to have acquired the replacement shares concerned before 20 September 1985;
(d) if:
(i) some, but not all, of the exchange units held by the taxpayer were acquired by the taxpayer before 20 September 1985;
(ii) the taxpayer, in the notice of election, nominates, as pre-CGT shares, such of the replacement shares acquired by the taxpayer as are specified in the notice; and
the taxpayer shall be deemed, for the purposes of this Part, to have acquired the nominated shares before 20 September 1985;
(iii) the number of replacement shares nominated by the taxpayer does not exceed the number calculated in accordance with the formula:
Shares × Pre CGT units
Total units
where:
Pre CGT units is the number of exchange units acquired by the taxpayer before 20 September 1985; Shares is the number of replacement shares owned by the taxpayer immediately after the completion time; and Total units is the number of exchange units held by the taxpayer that were redeemed or cancelled;
(e) each replacement share acquired by the taxpayer that is not deemed by paragraph (c) or (d) to have been acquired by the taxpayer before 20 September 1985 shall be taken to be a post-20 September 1985 replacement share for the purposes of paragraph (g) and subsection (3);
(f) each exchange unit that was acquired by the taxpayer on or after 20 September 1985 shall be taken to be a post-20 September 1985 exchange unit for the purposes of paragraph (g); and
(g) in the case of a post-20 September 1985 replacement share - the taxpayer shall be deemed to have paid or given as consideration in respect of the acquisition of the share an amount equal to:
(i) for the purpose of ascertaining whether a capital gain accrued to the taxpayer in the event of a subsequent disposal of the share by the taxpayer - the amount calculated in accordance with the formula:
ICB of post CGT units
Post CGT shares
where:
ICB of post CGT units is the sum of the amounts that would have been the indexed cost bases to the taxpayer of post-20 September 1985 exchange units for the purposes of this Part if this Part had applied in respect of the redemption or cancellation of the units held by the taxpayer; and Post CGT shares is the number of post-20 September 1985 replacement shares owned by the taxpayer immediately after the completion time; or
160ZZPB(3) [Indexed cost base - subsec (2)(g)]
(ii) for the purposes of ascertaining whether the taxpayer incurred a capital loss in the event of a subsequent disposal of the share by the taxpayer - the amount calculated in accordance with the formula:
RCB of post CGT units
Post CGT shares
where:
RCB of post CGT units is the sum of the amounts that would have been the reduced cost bases to the taxpayer of post-20 September 1985 exchange units for the purposes of this Part if this Part had applied in respect of the redemption or cancellation of the units held by the taxpayer; and Post CGT shares is the number of post-20 September 1985 replacement shares owned by the taxpayer immediately after the completion time.
If a post-20 September 1985 replacement share is disposed of by an exchanging taxpayer within 12 months after the earliest day, being a day after 19 September 1985, on which any exchange unit was acquired by the taxpayer, the reference in paragraph (2)(g) to the indexed cost bases to the taxpayer of units is a reference to the cost bases to the taxpayer of the units.
160ZZPB(4) [Mode of making election]An election by a taxpayer under subsection (2) shall be made 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 redemption or cancellation of the exchange units concerned took place, or within such further period as the Commissioner allows.
160ZZPB(5) [Units deemed to be acquired pre 20/9/85](a) any of the assets of the unit trust, as at the completion time, were acquired by the trustee of the unit trust before 20 September 1985;
(b) the interposed company, by notice in writing accompanying the notice referred to in paragraph (1)(n), nominates, as pre-CGT units, such of the scheme units held by the company immediately after the completion time as are specified in the notice; and
(c) the number of scheme units nominated by the company does not exceed the number calculated in accordance with the formula:
| Units | × |
Net value of pre CGT assets
Net value of total assets |
where:
the units so nominated shall be deemed, for the purposes of this Part, to have been acquired by the interposed company before 20 September 1985.
160ZZPB(6) [Units deemed acquired after 20/9/85]Any other scheme units held by the interposed company immediately after the completion time shall be taken to be post-20 September 1985 scheme units for the purposes of subsections (7) and (8).
160ZZPB(7) [Consideration for post 20/9/85 units]The interposed company shall be deemed to have paid or given as consideration in respect of the acquisition of each post-20 September 1985 scheme unit an amount equal to:
(a) for the purpose of ascertaining whether a capital gain accrued to the company in the event of a subsequent disposal of the unit by the company - the amount calculated in accordance with the formula:
|
Net ICB of post CGT assets
Post CGT units |
where:
(b) for the purposes of ascertaining whether the company incurred a capital loss in the event of a subsequent disposal of the unit by the company - the amount calculated in accordance with the formula:
|
Net RCB of post CGT assets
Post CGT units |
where:
If a post-20 September 1985 scheme unit is disposed of by the interposed company within 12 months after the day on which the unit was acquired by the company, the reference in paragraph (7)(a) to the indexed cost bases to the trustee of assets is a reference to the cost bases to the trustee of the assets.
160ZZPB(9) [Non-redeemable share]For the purposes of this section, a share issued by a company shall be taken to be a non-redeemable share unless:
(a) the share is, or at the option of the company is to be, liable to be redeemed; or
(b) the share was issued under, or as part of, an agreement or arrangement, whether oral or in writing and whether entered into before or after the commencement of this section, that had the purpose, or purposes that included the purpose, of enabling the company, by means of the redemption, purchase or cancellation of that share or of any other share in the company, or a distribution of the share capital of the company to pay, transfer or apply to, on behalf of or at the direction of the person to whom the share was issued or any other person, whether upon the exercise of an option by the company or by any other person or not, any money or other property other than shares in the company.
(a) immediately after the completion time, the exchanging taxpayers are the owners of some, but not all, of the shares in the interposed company;
(b) the number of the remaining shares does not exceed 5; and
(c) the Commissioner is of the opinion that, having regard to:
(i) the ratio calculated in accordance with the formula:
MV of remaining shares
MV of total shares
where:
MV of remaining shares is the number of dollars in the market value of the remaining shares immediately after the completion time; and MV of total shares is the number of dollars in the market value of the replacement shares immediately after the completion time; and
it would be unreasonable not to treat the exchanging taxpayers as being the owners of all the shares in the interposed company;
(ii) such other matters as the Commissioner considers relevant;
the following provisions have effect:
(d) the exchanging taxpayers shall be treated, for the purposes of subparagraph (1)(e)(i), as if, immediately after the completion time, they were the owners of all the shares in the interposed company;
(e) the remaining shares shall be disregarded for the purposes of the application of paragraph (1)(k). 160ZZPB(11) [Liabilities of unit trust]
For the purposes of this section, the liabilities of the unit trust, as at the completion time, to the extent that, apart from this subsection, they are not attributable to the assets of the unit trust as at the completion time (in this subsection called the ``general liabilities'' ), shall be taken to be attributable to particular assets of the unit trust, as at that time, to the extent calculated in accordance with the formula:
| General liabilities | × |
MV of particular assets
MV of total assets |
where:
General liabilities is the amount of the general liabilities;
MV of particular assets is the number of dollars in the market value, as at the completion time, of the particular assets as at that time; and
MV of total assets is the number of dollars in the market value, as at the completion time, of the assets of the unit trust as at that time.
Section 160ZZPA applies to a scheme for the reorganisation of the affairs of a company (in this section called the ``original company'' ) that was entered into, or commenced to be carried out, after 28 January 1988 in a corresponding way to the way in which that section applies to a scheme for the reorganisation of the affairs of a unit trust and, for the purposes of that corresponding application:
(a) references in that section to the unit trust or to the trustee of the unit trust shall be read as references to the original company;
(b) references in that section to units in the unit trust shall be read as references to shares in the original company; and
(c) the requirements in paragraphs 160ZZPA(1)(g) and (h) shall be replaced by a requirement that both the original company and the interposed company are residents of Australia at the completion time and, if the disposals occurred at different times, at all times during the period commencing at the time of the first of the disposals and ending at the completion time.
Section 160ZZPB applies to a scheme for the reorganisation of the affairs of a company (in this section called the ``original company'' ) that was entered into, or commenced to be carried out, after 28 January 1988 in a corresponding way to the way in which that section applies to a scheme for the reorganisation of the affairs of a unit trust and, for the purposes of that corresponding application:
(a) references in that section to the unit trust or to the trustee of the unit trust shall be read as references to the original company;
(b) references in that section to units in the unit trust shall be read as references to shares in the original company; and
(c) the requirements in paragraphs 160ZZPB(1)(g) and (h) shall be replaced by a requirement that both the original company and the interposed company are residents of Australia at the completion time and, if the disposals occurred at different times, at all times during the period commencing at the time of the first of the disposals and ending at the completion time.
(a) a statutory licence (in this section called the ``original licence'' ) owned by a taxpayer expires or is surrendered;
(b) a fresh statutory licence (in this section called the ``fresh licence'' ) is granted to the taxpayer by way of the renewal, or the extension of the term, of the original licence, where the renewal or extension is (whether by law, custom or otherwise) wholly or principally attributable to the taxpayer's ownership of the original licence; and
(c) in the case of a taxpayer in the capacity of a trustee of a trust estate - immediately after the grant of the fresh licence, the taxpayer holds the fresh licence upon the same trust as the taxpayer held the original licence. 160ZZPE(2) [Application of Pt IIIA]
This Part (other than this section) does not apply in respect of the expiry or surrender of the original licence and:
(a) if the original licence was acquired by the taxpayer before 20 September 1985 - the taxpayer shall be taken to have acquired the fresh licence before that date; and
(b) if the original licence was acquired by the taxpayer on or after 20 September 1985 - the taxpayer shall be taken to have paid as consideration in respect of the acquisition of the fresh licence an amount equal to:
(i) for the purposes of ascertaining whether a capital gain accrued to the taxpayer in the event of a subsequent disposal of the fresh licence by the taxpayer - the sum of:
(A) the amount that would have been the indexed cost base to the taxpayer of the original licence for the purposes of this Part if this Part had applied in respect of the expiry or surrender of the original licence; and
(B) any amount paid for the acquisition of the fresh licence; or
160ZZPE(3) [Disposal of fresh licence by taxpayer within 12 months original licence acquired]
(ii) for the purposes of ascertaining whether the taxpayer incurred a capital loss in the event of a subsequent disposal of the fresh licence by the taxpayer - the sum of:
(A) the amount that would have been the reduced cost base to the taxpayer of the original licence for the purposes of this Part if this Part had applied in respect of the expiry or surrender of the original licence; and
(B) any amount paid for the acquisition of the fresh licence.
If, in a case to which paragraph (2)(b) applies, the fresh licence is disposed of by the taxpayer within 12 months after the day on which the original licence was acquired by the taxpayer, the reference in that paragraph to the indexed cost base to the taxpayer of the original licence shall be read as a reference to the cost base to the taxpayer of the original licence.
160ZZPE(4) [Definition]In this section:
"statutory licence"
means an authority, licence or permit granted by or on behalf of:
(a) a government; or
(b) a government authority;
under a statutory law of the Commonwealth, of a State, of a Territory or of a foreign country, but does not include:
(c) a lease; or
(d) a mining asset within the meaning of section 160ZZF .
(a) all of the following conditions are satisfied in relation to the disposal of particular shares in a company by the trustee of a unit trust:
(i) the shares were acquired by the trustee before 20 September 1985;
(ii) the shares were disposed of by the trustee to 2 or more taxpayers, being unitholders in the unit trust (in this section called the ``unitholding taxpayers'' );
(iii) each of the disposals was in satisfaction of an entitlement in respect of one or more units in the unit trust (in this section called the ``unitholding taxpayer's entitlement units'' ) held by each unitholding taxpayer;
(iv) each of the disposals occurred:
(A) after 28 January 1988 and before 1 July 1988; and
(B) during a year of income of the unit trust earlier than the year of income commencing on 1 July 1988;
(v) the unit trust was established, within the meaning of section 102R , before 20 September 1985;
(vi) if the unit trust had been established, within the meaning of section 102R , after 19 September 1985, the unit trust would have been a public trading trust, for the purposes of Division 6C of Part III , in relation to each year of income of the unit trust in which each of the disposals occurred; and
(b) both of the following conditions are satisfied in relation to a particular unitholding taxpayer:
(i) at least one of the unitholding taxpayer's entitlement units was acquired by the unitholding taxpayer before 20 September 1985;
160ZZPF(2) [Provisions having effect]
(ii) the unitholding taxpayer has elected that this section is to apply in respect of the acquisition by the unitholding taxpayer of all the shares that were acquired by the unitholding taxpayer and in respect of which the conditions specified in paragraph (a) are satisfied.
The following provisions have effect in relation to a particular unitholding taxpayer:
(a) if all the unitholding taxpayer's entitlement units were acquired by the unitholding taxpayer before 20 September 1985 - the unitholding taxpayer shall be taken, for the purposes of this Part, to have acquired the shares concerned before 20 September 1985;
(b) if:
(i) some, but not all, of the unitholding taxpayer's entitlement units were acquired by the unitholding taxpayer before 20 September 1985;
(ii) the unitholding taxpayer, in the notice of election, nominates, as pre-CGT shares, such of the shares acquired by the unitholding taxpayer as are specified in the notice; and
the unitholding taxpayer shall be taken, for the purposes of this Part, to have acquired the nominated shares before 20 September 1985. 160ZZPF(3) [Election]
(iii) the number of shares nominated by the unitholding taxpayer does not exceed the number calculated in accordance with the formula:
Shares × Pre CGT units
Total units
where: Shares is the number of shares acquired by the unitholding taxpayer; Pre CGT units is the number of unitholding taxpayer's entitlement units acquired by the unitholding taxpayer before 20 September 1985; and Total units is the number of unitholding taxpayer's entitlement units held by the unitholding taxpayer;
An election by a unitholding taxpayer under subsection (1) shall be made by notice in writing given to the Commissioner on or before the date of lodgment of the return of income of the unitholding taxpayer for the year of income in which the acquisition of the shares concerned took place, or within such further period as the Commissioner allows.
(a) under a strata title law of a State or Territory or of a foreign country, land on which is erected one or more buildings is or was subdivided into stratum units, or into stratum units and common property; and
(b) immediately before the subdivision, a taxpayer (in this section called the ``converting taxpayer'' ) held a particular asset (in this section called the ``original asset'' ) being an asset in relation to the land. 160ZZPG(2) [Election by taxpayer]
(a) the converting taxpayer has elected that this subsection is to apply to the taxpayer in respect of the subdivision; and
(b) the Commissioner is satisfied, having regard to the following matters:
(i) the extent (if any) to which any interests in relation to the stratum units are or were held by persons who did not hold assets in relation to the land immediately before the subdivision;
(ii) the extent (if any) to which the rights of occupancy in relation to the stratum units differ from the rights of occupancy held immediately before the subdivision;
that it is appropriate to grant CGT roll-over relief in relation to the taxpayer in respect of the subdivision;
(iii) any other matters that the Commissioner considers relevant;
the Commissioner must take such steps as are necessary to grant CGT roll-over relief in relation to the taxpayer in respect of the subdivision.
160ZZPG(3) [Commissioner's determination]The steps that the Commissioner may take include:
(a) if the taxpayer disposed of an original asset - treating the original asset as if this Part did not apply in respect of the disposal; or
(b) if an original asset was acquired by the taxpayer before 20 September 1985 - treating a particular asset held by the taxpayer as having been acquired by the taxpayer before 20 September 1985; or
(c) if an original asset was acquired by the taxpayer on or after 20 September 1985 - treating the taxpayer as having paid, as consideration in respect of the acquisition of a particular asset held by the taxpayer, an amount equal to:
(i) for the purpose of ascertaining whether a capital gain accrued to the taxpayer in the event of a subsequent disposal of the asset by the taxpayer - such amount as is ascertained in a manner that the Commissioner determines to be appropriate; or
160ZZPG(4) [Determination of consideration]
(ii) for the purpose of ascertaining whether the taxpayer incurred a capital loss in the event of the subsequent disposal of the asset by the taxpayer - such amount as is ascertained in a manner that the Commissioner determines to be appropriate.
A determination under paragraph (3)(c) may provide for the amount concerned to be ascertained in a different manner in different circumstances.
160ZZPG(5) [Form and period of election]An election for the purposes of subsection (2) is to be in writing and lodged with the Commissioner on or before the date of lodgment of the taxpayer's return of income of the later of the following years of income:
(a) the year of income in which the subdivision concerned occurred;
(b) the year of income in which this section commenced;
or within such further period as the Commissioner allows.
160ZZPG(6) [Asset in relation to land]A reference in this section to an asset in relation to land includes a reference to a share in a company that owns a legal or equitable estate or interest in the land, being a share that entitles the holder to a right of occupancy to, or to a part of, a building erected on the land.
160ZZPG(7) [Definitions]In this section:
"strata title law"
means a law relating to strata title, group title, cluster title, unit title or similar title;
"stratum unit"
, in relation to a strata title law, means a lot or unit (however described in that law).
(a) a company that is not incorporated under company law does any act or thing that results in the company becoming a company incorporated under company law at a particular time (in this section called the ``conversion time'' ) without the creation of a new legal entity; and
(b) immediately before the conversion time, each of 2 or more taxpayers (in this section called the ``converting taxpayers'' ) held a particular asset (in this section called the ``original asset'' ), being an interest of a member in, or in relation to, the company; and
(c) at or about the conversion time, the company issued shares (in this section called the ``new shares'' ) to each converting taxpayer; and
(d) the original assets held by each converting taxpayer were disposed of at or about the conversion time; and
(e) the consideration in respect of each of the disposals consists only of the new shares. 160ZZPH(1A) [Demutualisation]
This section does not apply if the company is a mutual entity that is being demutualised and to whose demutualisation Division 326 applies.
(a) either of the following conditions is satisfied in relation to a particular converting taxpayer:
(i) the taxpayer is a resident of Australia;
(ii) each disposal of an original asset by the taxpayer constitutes a disposal of a taxable Australian asset; and
(b) the taxpayer has elected that this subsection is to apply in respect of the disposal of all the original assets held by the taxpayer; and
(c) the Commissioner is satisfied, having regard to the following matters:
(i) the extent to which each converting taxpayer owned the new shares in the company in the same proportion as the taxpayer held the original assets in the company that were disposed of;
(ii) the extent (if any) to which the ratio worked out using the following formula:
Market value of taxpayer's original assets
Market value of total original assets
where:
Market value of taxpayer's original assets is the market value, as at a particular time, of the original assets held by the taxpayer; Market value of total original assets is the market value, as at that time, of all of the original assets in the company held by all converting taxpayers;
differs from the ratio worked out using the following formula:
Market value of taxpayer's new shares
Market value of total new shares
where:
Market value of taxpayer's new shares is the market value, as at a particular time, of the new shares held by the taxpayer; Market value of total new shares is the market value, as at that time, of all the new shares in the company held by all the converting taxpayers;
that it is appropriate to grant CGT roll-over relief in relation to the taxpayer in respect of the company becoming a company incorporated under company law;
(iii) any other matters that the Commissioner considers relevant;
the Commissioner must take such steps as are necessary to grant CGT roll-over relief in relation to the taxpayer in respect of the company becoming a company incorporated under company law.
160ZZPH(3) [Determination by Commissioner]The steps that the Commissioner may take include:
(a) treating an original asset as if this Part did not apply in respect of its disposal; or
(b) if an original asset was acquired by the taxpayer before 20 September 1985 - treating a particular new share held by the taxpayer as having been acquired by the taxpayer before 20 September 1985; or
(c) if an original asset was acquired by the taxpayer on or after 20 September 1985 - treating the taxpayer as having paid, as consideration in respect of the acquisition of a particular new share held by the taxpayer, an amount equal to:
(i) for the purpose of ascertaining whether a capital gain accrued to the taxpayer in the event of a subsequent disposal of the new share by the taxpayer - such amount as is ascertained in a manner that the Commissioner determines to be appropriate; or
160ZZPH(4) [Determination of consideration]
(ii) for the purpose of ascertaining whether the taxpayer incurred a capital loss in the event of the subsequent disposal of the new share by the taxpayer - such amount as is ascertained in a manner that the Commissioner determines to be appropriate.
A determination under paragraph (3)(c) may provide for the amount concerned to be ascertained in a different manner in different circumstances.
160ZZPH(5) [Form and period of election]An election for the purposes of subsection (2) is to be in writing and lodged with the Commissioner on or before the date of lodgment of the taxpayer's return of income of the later of the following years of income:
(a) the year of income in which the conversion time occurred;
(b) the year of income in which this section commenced;
or within such further period as the Commissioner allows.
160ZZPH(6) [``company law'']In this section:
"company law"
means the
Companies Act 1981
or a similar law of the Commonwealth, of a State, of a Territory or of a foreign country relating to companies.
(a) a taxpayer (the transferor ) that is a qualifying superannuation fund that was in existence on 1 July 1994 disposes of an asset (the merger asset ) to another qualifying superannuation fund (the transferee ); and
(b) the disposal occurs under a merger between the transferor and the transferee; and
(c) the transferor and the transferee have, before the beginning of the merger period in relation to the merger, jointly elected in writing that this section apply to all disposals under the merger; and
(d) the transferor has retained the election and the transferee has been given a copy of the election;
this section, section 160ZZPIA and section 160ZZU apply to the disposal.
Note:
Section 160ZZPIA sets out the circumstances in which a disposal is under a merger and defines merger period and qualifying superannuation fund .
160ZZPI(2) Part IIIA not to apply.The other provisions of this Part do not apply to the disposal.
160ZZPI(3) Capital gain - subsequent disposal.For the purposes of working out whether a capital gain accrued to the transferee in the event of a subsequent disposal of the merger asset by the transferee, the transferee is taken to have paid whichever of the following amounts applies as consideration for the acquisition of the merger asset:
(a) if the merger asset was disposed of by the transferee within 12 months after the day on which the merger asset was acquired by the transferor - the amount that would have been the cost base to the transferor of the merger asset for the purposes of the other provisions of this Part if they had applied to the disposal of the merger asset by the transferor to the transferee;
(b) in any other case - the amount that would have been the indexed cost base to the transferor of the merger asset for the purposes of the other provisions of this Part if they had applied to the disposal of the merger asset by the transferor to the transferee. 160ZZPI(4) Capital loss - subsequent disposal.
For the purposes of working out whether the transferee incurred a capital loss in the event of a subsequent disposal of the merger asset by the transferee, the transferee is taken to have paid, as consideration for the acquisition of the merger asset, the amount that would have been the reduced cost base to the transferor of the merger asset for the purposes of the other provisions of this Part if they had applied to the disposal of the merger asset by the transferor to the transferee.
160ZZPI(5) Transitional - extension of time for election.If the merger period begins before the commencement of this section, the election under paragraph (1)(c) may be made within 2 months after the commencement of this section.
For the purposes of section 160ZZPI , the disposal of an asset by the transferor to the transferee occurs under a merger between the transferor and the transferee if the disposal of the asset occurs during the merger period (see subsection (3)) in relation to a merger (see subsection (2)) between the transferor and the transferee.
160ZZPIA(2) Meaning of merger.There is a merger between the transferor and the transferee if the following conditions are satisfied:
(a) at a particular time (the merger beginning ), the transferor for the first time disposes of an asset to the transferee, where the disposal of the asset occurs as part of the transfer of member benefits by the transferor to the transferee;
(b) at a later time (the merger end ), the transferor:
(i) has no remaining assets; and
(ii) has no remaining member benefits; and
(iii) has no members; and
(iv) will not accept new members;
(c) during the period from the merger beginning to the merger end, the transferor does not transfer any of its member benefits other than to the transferee, except where the transfer constitutes the making of an eligible benefit payment;
(d) the merger beginning is not before 1 July 1994 and the merger end is not after 30 June 1997;
(e) subject to subsection (6), the merger beginning and the merger end occur during one year of income of the transferor;
Note:
Subsection (6) is a transitional provision dealing with merger periods ending after 30 June 1994 and before 1 October 1995.
(f) both the transferor and the transferee are complying superannuation funds (within the meaning of Part IX) in relation to the year of income in which the merger beginning and the merger end occur. 160ZZPIA(3) Meaning of merger period.
The merger period , in relation to a merger, is the period from the merger beginning to the merger end.
160ZZPIA(4) Meaning of eligible benefit payment.The expression eligible benefit payment means a payment of an eligible termination payment (within the meaning of subsection 27A(1) ) that satisfies the following conditions:
(a) the payment is in accordance with payment standards prescribed under subsection 31(1) of the Superannuation Industry (Supervision) Act 1993 ;
(b) the whole of the payment is made because the member meets a condition that relates to one or more of the following matters:
(i) retirement;
(ii) death;
(iii) permanent or temporary incapacity;
(iv) permanent departure from Australia;
(v) financial hardship;
(vi) the attainment of a particular age;
160ZZPIA(5) Meaning of qualifying superannuation fund.
(vii) termination of employment.
The expression qualifying superannuation fund means a superannuation fund other than:
(a) a self managed superannuation fund within the meaning of section 10 of the Superannuation Industry (Supervision) Act 1993 ; or
(b) an eligible rollover fund within the meaning of section 242 of that Act.
For the purposes of subsection (2), if the year of income of the transferor in which the merger beginning occurs ends after 30 June 1994 and before 1 October 1995:
(a) the reference in paragraph (2)(e) to one year of income of the transferor; and
(b) the reference in paragraph (2)(f) to the year of income in which the merger beginning and the merger end occur;
are instead references to the period from the commencement of the transferor's year of income until the end of 30 September 1995.
This section applies to an asset that is disposed of as result of the trust deed of a trust (the first trust ) being amended or replaced where:
(a) immediately before the disposal the asset is held by the first trust; and
(b) immediately after the disposal the asset is held by a trust (the second trust ) (which may or may not be the first trust); and
(c) the assets held by, and the members of, the first trust immediately before the disposal are identical to the assets held by, and the members of, the second trust immediately after the disposal; and
(d) either:
(i) the first trust is a complying ADF or a complying superannuation fund and the deed was amended or replaced to comply with the Superannuation Industry (Supervision) Act 1993 ; or
160ZZPJ(2) Part does not apply to disposal.
(ii) the first trust is a complying ADF and the deed was amended or replaced so that it became a complying superannuation fund .
This Part (other than this section) does not apply in respect of the disposal of the asset.
160ZZPJ(3) Asset last acquired before 20 September 1985.If the day (the last acquisition day ) on which the last acquisition of the asset by the first trust before the disposal occurred was before 20 September 1985, the acquisition of the asset by the second trust is taken to have occurred before that day.
160ZZPJ(4) Asset last acquired on or after 20 September 1985.Subsections (5) to (8) apply if the last acquisition day was on or after 20 September 1985.
160ZZPJ(5) Trust to have acquired asset.The second trust is taken to have acquired the asset at the time of the disposal.
160ZZPJ(6) Calculating future capital gains.For the purpose of ascertaining if a capital gain accrued to the second trust in the event of a subsequent disposal of the asset by the second trust, the second trust is taken to have paid, as consideration for the acquisition of the asset, the amount that would have been the indexed cost base to the first trust of the asset for the purposes of this Part if this Part had applied to the disposal of the asset by the first trust.
160ZZPJ(7) Calculating future capital losses.For the purpose of ascertaining if the second trust incurred a capital loss in the event of a subsequent disposal of the asset by the second trust, the second trust is taken to have paid, as consideration for the acquisition of the asset, the amount that would have been the reduced cost base to the first trust of the asset for the purposes of this Part if this Part had applied to the disposal of the asset by the first trust.
160ZZPJ(8) Disposals within 12 months.If the asset is disposed of by the second trust within 12 months after the last acquisition day, the reference in subsection (6) to the indexed cost base to the second trust of the asset is to be read as a reference to the cost base to the second trust of the asset.
160ZZPJ(9) Interpretation.In this section, complying ADF and complying superannuation fund have the same meaning as in subsection 267(1) .
(Omitted by No 94 of 1999)
In this Division, unless the contrary intention appears:
active asset
has the meaning given by subsections 160ZZPL(3), (4), (5) and (6).
approved asset
has the meaning given by subsections 160ZZPT(1AA) to (1AC).
asset
has the meaning given by subsections 160ZZPL(1) and (2).
associate
has the meaning given by section
160ZZPM
.
Australian Statistician
means the Australian Statistician referred to in subsection 5(2) of the
Australian Bureau of Statistics Act 1975.
connected
has the meaning given by section
160ZZPN
.
consideration
, in respect of the acquisition of an asset, means the amount that is that consideration within the meaning of section
160ZH
.
controlling individual
has the meaning given by section
160ZZPNA
.
depreciable asset
means an asset the cost of which is allowable as a deduction under this Act over a period of time.
disposal test time
, in relation to the disposal of an asset, means the time immediately before the disposal.
disposal year of income
, in relation to a taxpayer in relation to a roll-over asset, means the year of income in which the roll-over asset was disposed of by the taxpayer.
entity
means any of the following:
(a) an individual;
(b) a partnership;
(c) a company;
(d) a trust.
gross goodwill roll-over amount
has the meaning given by subsection
160ZZPQ(4)
.
gross non-goodwill roll-over amount
has the meaning given by subsection
160ZZPQ(3) or (3A)
.
gross roll-over amount
means a gross goodwill roll-over amount or a gross non-goodwill roll-over amount.
incidental costs
to a taxpayer of the acquisition of an asset means the amount constituting those costs within the meaning of section
160ZH
.
listed public company
means a company in which any of the shares (except shares that carry the right to a fixed rate of dividend) are listed for quotation in the official list of an approvedstock exchange.
mutual insurance organisation
means:
(a) a mutual insurance company within the meaning of section 121AB; or
(b) a mutual affiliate company within the meaning of section 121AC.
net goodwill roll-over amount
has the meaning given by subsection
160ZZPS(5) or (3A)
.
net non-goodwill roll-over amount
has the meaning given by subsection
160ZZPR(5)
.
net roll-over amount
means a net goodwill roll-over amount or a net non-goodwill roll-over amount.
notional capital gain
has the meaning given by paragraph 160ZZPQ(1)(b).
(a) a listed public company; or
(b) a company (other than a listed public company) all the shares in which are beneficially owned by any one or more of the following:
(i) listed public companies;
(ii) mutual insurance organisations;
(iii) publicly traded unit trusts.
(a) a public company; or
(b) a mutual insurance organisation; or
(c) a publicly traded unit trust.
publicly traded unit trust
means a unit trust the units in which:
(a) are listed for quotation in the official list of an approved stock exchange; or
(b) are ordinarily available for subscription or purchase by the public.
replacement asset
has the meaning given by subsection 160ZZPT(1) but does not include an asset in respect of whose disposal:
(a) this Part would not apply because of a provision of section 160L; or
(b) a capital gain would not be taken to have accrued because of subsection 160Z(6) .
replacement goodwill asset
means a replacement asset that is goodwill.
replacement non-goodwill asset
means a replacement asset that is not goodwill.
resident unit trust
has the same meaning as in section
102Q
.
roll-over asset
has the meaning given by subsection 160ZZPL(7), (8) or (9).
roll-over goodwill asset
means a roll-over asset that is goodwill.
roll-over non-goodwill asset
means a roll-over asset that is not goodwill.
total goodwill cost base
, in relation to a taxpayer in relation to a disposal year of income, means the amount that, apart from this Division, would be:
(a) the sum (worked out at the time of acquisition) of the consideration in respect of, and the incidental costs to the taxpayer of, the acquisition of the replacement goodwill asset nominated by the taxpayer in respect of a net goodwill roll-over amount that applies to the taxpayer in respect of that year of income; or
(b) if the taxpayer nominated 2 or more replacement goodwill assets in respect of such a net goodwill roll-over amount - the sum (worked out at the time of the relevant acquisition) of the considerations in respect of, and the incidental costs to the taxpayer of, the acquisition of those replacement goodwill assets.
total net roll-over amount
, in relation to a taxpayer in relation to a disposal year of income, means the net roll-over amount, or the sum of the net roll-over amounts, applying to the taxpayer in respect of that year of income.
total non-goodwill cost base
(Omitted by No 16 of 1998).
This Division applies to a trust as if the trust were a taxpayer. However, a trust is not a legal person and any thing to be done by the trust has to be done by the trustee of the trust. Accordingly, any provision of this Division that refers to a taxpayer or entity having been, or not having been, required to do any thing or having done, or not having done, any thing is taken, if the taxpayer or entity is a trust, to refer to the trustee of the trust having been, or not having been, required to do that thing or having done, or not having done, that thing, as the case may be.
In this Division:
asset
has the meaning given by section
160A
except that it includes any motor vehicle, and includes a part of an asset, but, where the expression is used in relation to an individual who is not acting as a trustee, it does not include:
(a) an asset that is being used solely for the personal use and enjoyment of the individual or an associate of the individual; or
(b) a right to, or to any part of, any allowance, annuity or capital amount payable out of a superannuation fund or an approved deposit fund, as referred to in paragraph 160ZZJ(1)(a) ; or
(c) a right to, or to any part of, an asset of a superannuation fund or of an approved deposit fund, as referred to in paragraph 160ZZJ(1)(b) ; or
(d) a policy of life assurance as defined by subsection 160ZZI(1). 160ZZPL(2) Assets in connected entity excluded.
The assets of an entity for the purposes of this Division do not include shares, units or other interests (excluding an interest that is a security as defined by subsection 159GP(1) ) in another entity that is connected with the first-mentioned entity.
160ZZPL(3) Meaning of active asset .Subject to subsections (4), (5) and (6), an asset owned by a taxpayer is an active asset at a particular time if at that time:
(a) it is used, or held ready for use, by the taxpayer in the course of carrying on a business; or
(b) it is an intangible asset that is inherently connected with a business carried on by a taxpayer (for example, goodwill or the benefit of a restrictive covenant). 160ZZPL(3A) Subsection 157(3) to be disregarded.
In determining for the purposes of this section whether a taxpayer is carrying on a business, subsection 157(3) is to be disregarded.
The following assets are not active assets:
(a) shares in companies;
(b) interests in trusts;
(c) subject to subsections (5) and (5A), an asset whose predominant use is to derive interest, an annuity, rent, royalties or foreign exchange gains;
(d) financial instruments (such as loans, debentures, bonds, promissory notes, futures contracts, forward contracts, currency swap contracts and a right or option in respect of a share, security, loan or contract). 160ZZPL(5) Exception for intangible roll-over asset whose value has been enhanced by the taxpayer.
A roll-over asset that is an intangible asset and whose predominant use is a use mentioned in paragraph (4)(c) is not precluded by that paragraph from being an active asset if it has been substantially developed, altered or improved by the taxpayer to such an extent that its market value has been substantially enhanced.
A replacement asset is not precluded by paragraph (4)(c) from being an active asset merely because its predominant use is to derive rent if its use for that purpose is only temporary.
160ZZPL(6) Asset deemed to be active asset for 2 years in certain circumstances.(a) a taxpayer acquires an asset in a year of income for the purpose of having the asset as an active asset; and
(b) the taxpayer wishes to nominate the asset as a replacement asset for the purposes of the application of this Division in respect of a net roll-over amount; and
(c) a gross roll-over amount that applies to the taxpayer in respect of the year of income in which a roll-over asset was disposed of is taken into account in calculating the net roll-over amount; and
(d) the first-mentioned asset is an active asset at the end of 2 years after the last occasion in the year of income referred to in paragraph (c) on which the taxpayer disposed of any roll-over asset;
the first-mentioned asset is taken to have been an active asset at all times during that period of 2 years.
160ZZPL(7) Meaning of roll-over asset .An asset of a business carried on by a taxpayer is a roll-over asset in respect of the taxpayer in respect of a year of income if:
(aa) the asset is not a share in a company or a unit in a unit trust; and
(a) the asset is disposed of by the taxpayer in the year of income; and
(b) the threshold criteria set out in section 160ZZPP are complied with at the disposal test time.
A share in a company is a roll-over asset in respect of a taxpayer who is an individual (other than an individual acting as a trustee) in respect of a year of income if:
(a) the company is, in respect of the year of income, a private company that is a resident; and
(b) the share is disposed of by the taxpayer in the year of income; and
(c) the taxpayer is the controlling individual of the company at the disposal test time; and
(d) the threshold criteria set out in section 160ZZPP are complied with at the disposal test time.
A unit in a unit trust is a roll-over asset in respect of a taxpayer who is an individual (other than an individual acting as a trustee) in respect of a year of income if:
(a) the unit trust is a resident unit trust, but is not a publicly traded unit trust, in respect of the year of income; and
(b) the unit is disposed of by the taxpayer in the year of income; and
(c) the taxpayer is the controlling individual of the trust at the disposal test time; and
(d) the threshold criteria set out in section 160ZZPP are complied with at the disposal test time.
A person is an associate of a taxpayer for the purposes of this Division if the person is:
(a) if the taxpayer is an individual who is not acting as a trustee:
(i) the spouse of the taxpayer; or
(ii) a child under 18 years of age of the taxpayer; or
(b) an entity that acts, or could reasonably be expected to act, in accordance with the directions or wishes of the taxpayer; or
(c) an entity that acts, or could reasonably be expected to act, in concert with the taxpayer. 160ZZPM(2) [Partnerships]
If a taxpayer is a partner in a partnership, no other partner in the partnership is taken to be an associate of the taxpayer merely because of paragraph (1)(c).
Subject to this section, an entity is connected with a taxpayer for the purposes of this Division if:
(a) the taxpayer controls the entity; or
(b) the taxpayer is controlled by the entity; or
(c) the taxpayer and the entity are each controlled by the same entity. 160ZZPN(2) Control of entity: 50% or more of rights.
Subject to subsection (3), an entity (the first entity ) is taken for the purposes of subsection (1) to control another entity if the first entity, or an associate or associates of the first entity, or the first entity and an associate or associates of the first entity:
(a) own beneficially, or have the right to acquire the beneficial ownership of, interests in the other entity that carry between them the right to receive at least 50% of any distribution of income or capital that the other entity may make; or
(b) if the other entity is a company - own beneficially, or have the right to acquire beneficial ownership of, shares in the company that carry between them the right to exercise, or control the exercise of, at least 50% of the voting power in the company; or
(c) if the other entity is a discretionary trust:
(i) are the trustee or trustees of the trust; or
160ZZPN(2A) Where Public Trustee is trustee of discretionary trust.
(ii) have the power to determine the manner in which the trustee or trustees of the trust exercise the power to make any payment of income or capital to or for the benefit of beneficiaries of the trust.
Subparagraph (2)(c)(i) does not apply to the first entity if the trustee of the trust referred to in that subparagraph is the Public Trustee of a State or Territory acting in that capacity.
Paragraph (2)(c) does not apply if:
(a) the trust referred to in that paragraph is the taxpayer referred to in subsection (1); and
(b) a beneficiary of that trust is taken to control the trust because of the operation of a provision of this section; and
(c) that beneficiary is not an associate of that trust or of any person who has the power of determination referred to in subparagraph (2)(c)(ii).
An entity (the first entity ) is also taken for the purposes of subsection (1) to control another entity if the first entity, or an associate or associates of the first entity, or the first entity and an associate or associates of the first entity:
(a) own beneficially, or have the right to acquire the beneficial ownership of, interests in the other entity that carry between them the right to receive at least 40%, but less than 50%, of any distribution of income or capital that the other entity may make; or
(b) if the other entity is a company - own beneficially, or have the right to acquire beneficial ownership of, shares in the company that carry between them the right to exercise, or control the exercise of, at least 40%, but less than 50%, of the voting power in the company;
unless the first entity satisfies the Commissioner that the other entity is controlled by a person other than, or by persons that do not include, the first entity or an associate of the first entity.
160ZZPN(5) Control of discretionary trust.If the trustee or trustees of a discretionary trust have the power to pay to, or apply for the benefit of, an entity any income or capital of the trust, the entity is taken for the purposes of this section to own beneficially interests in any distribution of any income or capital, as the case may be, of the trust that is equal to the maximum percentage of the income or capital that the trustee is empowered to pay to, or apply for the benefit of, the entity.
160ZZPN(5A) [When subsec (5) does no apply]Subsection (5) does not apply if:
(a) the entity is a public entity; and
(b) the trustee or trustees have that power only because another beneficiary of the trust has an interest in the entity.
Subject to subsection (7), an entity that directly controls a second entity is taken for the purposes of this section also to control any other entity that is directly, or indirectly by any other application or applications of this section, controlled by the second entity.
160ZZPN(7) No tracing through public entity.If an entity (the first entity ) controls a public entity, the first entity is not taken merely because of the operation of subsection (6) to control any other entity that is controlled by the public entity.
This section sets out the meaning of controlling individual of a company and of a unit trust.
160ZZPNA(2) Control of companies.An individual is the controlling individual of a company at a particular time if, at that time, the individual:
(a) is a director and an employee (see subsection (4)) of the company; and
(b) holds all of the legal and equitable interests in shares that carry (between them) the right to exercise at least 50% of the voting power in the company; and
(c) holds all of the legal and equitable interests in shares that carry (between them) the right to receive at least 50% of any dividends that the company may pay; and
(d) holds all of the legal and equitable interests in shares that carry (between them) the right to receive at least 50% of any distribution of capital of the company. 160ZZPNA(3) Control of unit trusts.
An individual is the controlling individual of a unit trust at a particular time if, at that time, the individual:
(a) is an employee (see subsection (4)) of the trust; and
(b) has, for his or her benefit, entitlements to at least a 50% share of the income of the trust; and
(c) has, for his or her benefit, entitlements to at least a 50% share of the capital of the trust. 160ZZPNA(4) Employee.
In this section:
employee
has the same meaning as in the
Superannuation Guarantee (Administration) Act 1992
, except that subsection
12(11)
of that Act is to be disregarded.
For the purposes of subsection (2), a person who, at a particular time, holds a legal or equitable interest in a share:
(a) that is liable to be redeemed; or
(b) that, at the option of the company that issued it, is liable to be redeemed;
is taken not to hold the interest at that time.
160ZZPNA(6) Individual becoming director or employee within 3 months.(a) nominates a replacement asset that is a share in a private company or a unit in a unit trust; and
(b) becomes a director and employee of the company, or an employee of the trust, as the case may be, within 3 months after he or she acquires the share or unit;
the individual is taken, for the purposes of this Division, to have been such a director and employee, or such an employee, as the case may be, at all times during that period.
This Subdivision sets out the way in which roll-over relief is given to a taxpayer in respect of a year of income in which certain assets (roll-over assets) are disposed of by the taxpayer.
If certain threshold criteria and other conditions are satisfied, capital gains do not accrue in respect of the disposals and net roll-over amounts are worked out for the roll-over assets.
The taxpayer may then nominate certain replacement assets in respect of the net roll-over amounts and is to apportion the net roll-over amounts to replacement assets in accordance with various rules.
The amounts apportioned are taken to reduce the cost of the acquisition of the replacement assets.
This section sets out the threshold criteria all of which must be satisfied before this Division applies in relation to the disposal by a taxpayer of an asset.
Note:
The criteria must be satisfied at the disposal test time (see paragraphs 160ZZPL(7)(b), (8)(d) and (9)(d)).
(Repealed by No 16 of 1998)
160ZZPP(3) [Partnerships]
If the taxpayer is a partner in a partnership and the asset disposed of is an asset of the partnership, the net value of the partnership's assets must not exceed $5,000,000.
(a) the total of the net values of the assets of the taxpayer; and
Note:
The assets of a taxpayer do not include shares, units or other interests in entities connected with the taxpayer (see subsection 160ZZPL(2) ).
(b) the net values of the assets of any entities that are connected with the taxpayer; and
(c) (Omitted by by No 16 of 1998.)
(d) if an associate of the taxpayer is a partner in a partnership (other than a partnership that is connected with the taxpayer) - the share of the associate in the net value of the assets of the partnership;
must not exceed $5,000,000.
The net value of the assets of an entity at a particular time for the purposes of this Subdivision is the amount (if any) by which at that time the sum of the market values of the assets of the entity exceeded the sum of the liabilities of the entity that related to those assets (other than a liability that related to an asset that is not an asset for the purposes of this Part because of paragraph (a), (b), (c) or (d) of the definition of asset in subsection 160ZZPL(1) ).
(a) there is a roll-over asset in respect of a taxpayer in respect of a year of income; and
(b) apart from this Division, a capital gain (the notional capital gain ) would be taken to have accrued to the taxpayer as a result of the disposal of the roll-over asset; and
(c) where the roll-over asset is neither a share in a company nor a unit in a unit trust:
(i) the roll-over asset was an active asset at the disposal test time or, if it was not an active asset at that time because the relevant business had ceased to be carried on, the cessation occurred not earlier than 12 months before that time; and
(ii) the roll-over asset was an active asset during more than one-half of the period in which it was owned by the taxpayer; and
(d) (Omitted by No 16 of 1998).
(e) if the roll-over asset was nominated as a replacement asset under a previous application of this Division - the roll-over asset was acquired by the taxpayer more than 5 years before the disposal test time; and
(f) the taxpayer elects in writing, on or before the date of lodgment of the taxpayer's return of income for the disposal year of income, that this Division is to apply to the taxpayer in respect of the disposal of the roll-over asset;
the following provisions of this section have effect.
This Part (other than this Division) does not apply in respect of the disposal of the roll-over asset.
160ZZPQ(3) Calculation of gross non-goodwill roll-over amount for assets other than shares or units.If the roll-over asset is none of the following:
(a) goodwill;
(b) a share in a company;
(c) a unit in a unit trust;
an amount (the gross non-goodwill roll-over amount ) equal to the notional capital gain is taken for the purposes of this Division to apply to the taxpayer in respect of the year of income in which the disposal occurred.
If the roll-over asset is a share in a company or a unit in a unit trust, an amount (the gross non-goodwill roll-over amount ) equal to the lesser of the following amounts is taken for the purposes of this Division to apply to the taxpayer in respect of the year of income in which the disposal occurred:
(a) an amount equal to the notional capital gain;
(b) the amount worked out using the formula:
| Unrealised net
capital gain |
× |
Market value of share or unit
Total of market values of shares in the company or units in the unit trust |
If the gross non-goodwill roll-over amount is the amount worked out under paragraph (3A)(b), an amount equal to the difference between the notional capital gain and the amount worked out under that paragraph is taken to be a capital gain that accrued to the taxpayer in the year of income in which the disposal occurred.
Subject to subsection (3D), for the purposes of paragraph (3A)(b), the unrealised net capital gain is the total of the capital gains (after deducting any capital losses) that would accrue to the company or trust at the time of the disposal, as the case may be, if all assets of the company or trust that:
(a) either:
(i) were active assets at that time; or
(ii) had ceased to be active assets because of the cessation of the relevant business of the company or trust not earlier than 12 months before that time; and
(b) had been active assets during more than one-half of the period in which they were owned by the company or were assets of the trust, as the case may be;
were disposed of at that time and the consideration for the disposal of each asset was an amount equal to the market value of the asset.
In calculating the unrealised net capital gain referred to in subsection (3C), no regard is to be had to any asset that had been nominated by the company or trust as a replacement asset for the purposes of this Division and was acquired by the company or trust less than 5 years before the time of the disposal of the roll-over asset.
If the roll-over asset is goodwill, an amount (the gross goodwill roll-over amount ) equal to the notional capital gain is taken for the purposes of this Division to apply to the taxpayer in respect of the year of income in which the disposal occurred.
A taxpayer must not make an election under paragraph 160ZZPQ(1)(f) in respect of the disposal of an asset if the taxpayer has previously made an election under Division 17B in respect of the disposal.
This section applies to a taxpayer in respect of a disposal year of income if:
(a) there is a roll-over asset, or there are roll-over assets, in respect of the taxpayer in respect of that year of income; and
(b) there is a gross non-goodwill roll-over amount, or there are gross non-goodwill roll-over amounts, that apply to the taxpayer in respect of the disposal year of income. 160ZZPR(2) Gross non-goodwill amount to reduce capital losses.
The gross non-goodwill roll-over amount, or the sum of the gross non-goodwill roll-over amounts, is to be applied, to the maximum extent possible:
(a) first, in reduction of any capital losses that the taxpayer is taken to have incurred in the disposal year of income; and
(b) then, in reduction of any net capital losses that:
(i) the taxpayer is taken to have incurred in respect of years of income ( applicable years of income ) earlier than the disposal year of income but not earlier than the 1995-96 year of income; and
(ii) would, apart from this Division, be applied in determining whether a net capital gain accrues to the taxpayer in respect of the disposal year of income (if sufficient capital gains were to accrue in the disposal year of income).
In making reductions under paragraph (2)(b) of net capital losses incurred in respect of 2 or more applicable years of income, reductions are not to be made in respect of net capital losses incurred in respect of a particular applicable year of income until reductions are made, to the maximum extent possible, of net capital losses incurred in respect of any earlier applicable year of income or earlier applicable years of income.
160ZZPR(4) If capital losses wholly absorb gross non-goodwill roll-over amount.If no part of the gross non-goodwill roll-over amount, or of the sum of the gross non-goodwill roll-over amounts, remains after the application of that amount or sum under subsection (2), there is no net non-goodwill roll-over amount applying to the taxpayer in respect of the disposal year of income.
160ZZPR(5) Net non-goodwill roll-over amount.If any part of the gross non-goodwill roll-over amount, or of the sum of the gross non-goodwill roll-over amounts, remains after the application of that amount or sum under subsection (2), the amount remaining is taken to be the net non-goodwill roll-over amount applying to the taxpayer in respect of the disposal year of income.
This section applies to a taxpayer in respect of a disposal year of income if:
(a) there is a roll-over asset, or there are roll-over assets, in respect of the taxpayer in respect of that year of income; and
(b) there is a gross goodwill roll-over amount, or there are gross goodwill roll-over amounts, that apply to the taxpayer in respect of the disposal year of income. 160ZZPS(2) Gross goodwill roll-over amounts to reduce capital losses.
The gross goodwill roll-over amount, or the sum of the gross goodwill roll-over amounts, is to be applied, to the maximum extent possible:
(a) first, in reduction of any capital losses that:
(i) the taxpayer is taken to have incurred in respect of the disposal year of income; and
(ii) remain after the application (if any) of section 160ZZPR; and
(b) then, in reduction of any net capital losses that:
(i) the taxpayer is taken to have incurred in respect of years of income ( applicable years of income ) earlier than the disposal year of income but not earlier than the 1995-96 year of income; and
(ii) remain after the application (if any) of section 160ZZPR; and
(iii) would, apart from this Division, be applied in determining whether a net capital gain accrues to the taxpayer in respect of the disposal year of income (if sufficient capital gains were to accrue in the disposal year of income).
In making reductions under paragraph (2)(b) of net capital losses incurred in respect of 2 or more applicable years of income, reductions are not to be made in respect of net capital losses incurred in respect of a particular applicable year of income until reductions are made, to the maximum extent possible, of net capital losses incurred in respect of any earlier applicable year of income or earlier applicable years of income.
160ZZPS(4) If capital losses wholly absorb gross goodwill roll-over amount.If no part of the gross goodwill roll-over amount, or of the sum of the gross goodwill roll-over amounts, remains after the application of that amount or sum under subsection (2), there is no net goodwill roll-over amount applying to the taxpayer in respect of the disposal year of income.
160ZZPS(5) Net goodwill roll-over amount.If any part of the gross goodwill roll-over amount, or of the sum of the gross goodwill roll-over amounts, remains after the application of that amount or sum under subsection (2), the amount remaining is taken to be the net goodwill roll-over amount applying to the taxpayer in respect of the disposal year of income.
Subject to subsections (2) and (3), if:
(a) there is a roll-over asset or there are roll-over assets in respect of a taxpayer in respect of a year of income; and
(b) there is a net roll-over amount that applies to the taxpayer in respect of the year of income;
the taxpayer may nominate, for the purposes of the application of this Division in respect of the net roll-over amount, one or more approved assets (a replacement asset or replacement assets ) that were acquired by the taxpayer within the period beginning one year before, and ending 2 years after, the last disposal by the taxpayer of any roll-over asset in that year of income.
An active asset is an approved asset.
A share in a company is an approved asset in respect of a taxpayer if:
(a) the taxpayer is an individual (other than an individual who is acting as a trustee); and
(b) the company is, in respect of a year of income in which the share is acquired by the taxpayer, a private company that is a resident; and
(c) the taxpayer is the controlling individual of the company immediately after the share is acquired by the taxpayer; and
(d) the total of the market values of all the active assets of the company at the time of the acquisition of the share by the taxpayer is not less than 80% of the total of the market values of all the company's assets at that time.
A unit in a unit trust is an approved asset in respect of a taxpayer if:
(a) the taxpayer is an individual (other than an individual who is acting as a trustee); and
(b) the trust is, in respect of a year of income in which the unit is acquired by the taxpayer, a resident unit trust that is not a publicly traded unit trust; and
(c) the taxpayer is the controlling individual of the trust immediately after the unit is acquired by the taxpayer; and
(d) the total of the market values of all the active assets of the trust at the time of the acquisition of the unit by the taxpayer is not less than 80% of the total of the market values of all the assets of the trust at that time.
A nomination of a replacement asset must be made before the end of 2 years after the last disposal by the taxpayer of any roll-over asset in the year of income to which the net roll-over amount relates.
If the taxpayer disposes of, and immediately re-acquires, a roll-over asset, the taxpayer cannot nominate that asset as a replacement asset.
160ZZPT(3) [Nomination]A taxpayer cannot nominate a replacement goodwill asset for the purposes of the application of this Division in respect of a net non-goodwill roll-over amount.
160ZZPT(4) Consequences of nomination of replacement assets.If the taxpayer duly nominates a replacement asset or replacement assets for the purposes of the application of this Division in respect of a net roll-over amount, whichever of sections 160ZZPU, 160ZZPV and 160ZZPW is relevant applies to the taxpayer in respect of the disposal year of income.
160ZZPT(5) Capital gain to accrue if no nomination of replacement assets.If the taxpayer does not duly nominate a replacement asset or replacement assets for the purposes of the application of this Division in respect of a net roll-over amount, a capital gain equal to the net roll-over amount is taken to have accrued to the taxpayer in the disposal year of income.
This section applies to a taxpayer in relation to a disposal year of income if the taxpayer nominates only a replacement goodwill asset or replacement goodwill assets for the purposes of the application of this Division in respect of the net roll-over amount or the net roll-over amounts applying to the taxpayer in respect of that year of income.
Note:
Replacement goodwill assets can only be nominated in respect of a net goodwill roll-over amount (see subsection 160ZZPT(3) ).
160ZZPU(2) If total goodwill cost base is not less than net goodwill roll-over amount.If the total goodwill cost base in relation to the taxpayer in respect of the disposal year of income is equal to or greater than the net goodwill roll-over amount applying to the taxpayer in respect of that year of income:
(a) the taxpayer must apportion the whole of the net goodwill roll-over amount among the nominated replacement assets in such manner as the taxpayer determines but so that the amount apportioned to a particular asset does not exceed the sum of:
(i) the amount that, at the time of the acquisition of the asset, was the consideration in respect of the acquisition of the asset; and
(ii) the amount that, at that time, was the total of the incidental costs to the taxpayer of the acquisition of the asset; and
(b) if an amount is apportioned to an asset - the amount is to be applied, at the time of the acquisition of the asset by the taxpayer, in reduction of the following amounts in such proportions as the taxpayer determines:
(i) the amount that, at the time of the acquisition of the asset, was the consideration in respect of the acquisition of the asset;
(ii) the amount that, at that time, was the total of the incidental costs to the taxpayer of the acquisition of the asset.
If the total goodwill cost base in relation to the taxpayer in respect of the disposal year of income is less than the net goodwill roll-over amount applying to the taxpayer in respect of that year of income, the following provisions have effect:
(a) the taxpayer must apportion so much of the net goodwill roll-over amount as is equal to the total goodwill cost base among the nominated replacement assets so that the amount apportioned to a particular asset does not exceed the sum of:
(i) the amount that, at the time of the acquisition of the asset, was the consideration in respect of the acquisition of the asset; and
(ii) the amount that, at that time, was the total of the incidental costs to the taxpayer of the acquisition of the asset;
(b) if an amount is apportioned to an asset - the consideration in respect of the acquisition of the asset and the incidental costs to the taxpayer of the acquisition of the asset are each taken, at the time of the acquisition of the asset by the taxpayer, to be nil;
(c) an amount equal to thedifference between the total goodwill cost base and the net goodwill roll-over amount is taken to be a capital gain that accrued to the taxpayer during the disposal year of income.
This section applies to a taxpayer in relation to a disposal year of income if the taxpayer nominates only a replacement non-goodwill asset or replacement non-goodwill assets for the purposes of the application of this Division in respect of the net roll-over amount or net roll-over amounts applying to the taxpayer in respect of that year of income.
160ZZPV(2) If total non-goodwill cost base is not less than total net roll-over amount.If this section applies, the following provisions have effect:
(a) the taxpayer must apportion the total net roll-over amount among the nominated replacement assets in such manner as the taxpayer determines but so that the amount apportioned to a particular asset does not exceed the lesser of:
(i) the sum of the acquisition amounts set out in subsection (2B); and
(ii) if the asset is a share in a company or a unit in a unit trust - the maximum apportionment amount for the share or unit worked out under subsection (3);
(b) if an amount is apportioned to an asset that is not a depreciable asset - the amount is to be applied in reduction of the acquisition amounts for the asset in such proportions as the taxpayer determines;
(c) if an amount is apportioned to an asset that is a depreciable asset and section 160ZZPX does not apply in relation to the asset before it is disposed of - the amount is taken to be a capital gain that accrues to the taxpayer during the year of income in which the asset is disposed of;
(d) if the amount apportioned to assets under paragraph (a) is less than the total net roll-over amount - an amount equal to the difference is taken to be a capital gain that accrued to the taxpayer during the disposal year of income.
The reductions set out in paragraph (2)(b) are taken to have been made at the time of the acquisition of the asset by the taxpayer.
The acquisition amounts for an asset are:
(a) the amount that, at the time of the acquisition of the asset, was the consideration in respect of the acquisition of the asset; and
(b) the amount that, at that time, was the total of the incidental costs to the taxpayer of the acquisition of the asset.
The maximum apportionment amount for a share in a particular company or a unit in a particular unit trust is:
| Total market value
of active assets |
× |
Market value of share or unit
Total of market values of shares in the company or units in the unit trust |
where:
active assets are those assets of the company or trust that were active assets of the company or trust, as the case may be, at the time of the acquisition of the shares or units.
market value means the market value at that time.
In this section:
residual net roll-over amount
, in relation to a taxpayer in relation to a disposal year of income, means the sum of:
(a) the net goodwill roll-over amount applying to the taxpayer in respect of that year of income as reduced under paragraph (4)(c); and
(b) the net non-goodwill roll-over amount applying to the taxpayer in respect of that year of income. 160ZZPW(2) Application of section.
This section applies to a taxpayer in relation to a disposal year of income if the taxpayer nominates both one or more replacement goodwill assets and one or more replacement non-goodwill assets for the purposes of the application of this Division in respect of a net roll-over amount or net roll-over amounts applying to the taxpayer in respect of that year of income.
Note:
Replacement goodwill assets can only be nominated in respect of a net goodwill roll-over amount (see subsection 160ZZPT(3) ).
160ZZPW(3) If total goodwill cost base is not less than net goodwill roll-over amount.If the total goodwill cost base in relation to the taxpayer in respect of the disposal year of income is equal to or greater than the net goodwill roll-over amount applying to the taxpayer in respect of that year of income:
(a) the taxpayer must apportion the whole of the net goodwill roll-over amount among the replacement assets that are nominated in respect of the net goodwill roll-over amount in such manner as the taxpayer determines but so that the amount apportioned to a particular asset does not exceed the sum of:
(i) the amount that, at the time of the acquisition of the asset, was the consideration in respect of the acquisition of the asset; and
(ii) the amount that, at that time, was the total of the incidental costs to the taxpayer of the acquisition of the asset;
(b) if an amount is apportioned to an asset - the amount is to be applied, at the time of the acquisition of the asset by the taxpayer, in reduction of the following amounts in such proportions as the taxpayer determines:
(i) the amount that, at the time of the acquisition of the asset, was the consideration in respect of the acquisition of the asset;
(ii) the amount that, at that time, was the total of the incidental costs to the taxpayer of the acquisition of the asset.
If the total goodwill cost base in relation to the taxpayer in respect of the disposal year of income is less than the net goodwill roll-over amount applying to the taxpayer in respect of that year of income:
(a) the taxpayer must apportion so much of the net goodwill roll-over amount as is equal to the total goodwill cost base among the replacement assets that are nominated in respect of the net goodwill roll-over amount so that the amount apportioned to a particular asset does not exceed the sum of:
(i) the amount that, at the time of the acquisition of the asset, was the consideration in respect of the acquisition of the asset; and
(ii) the amount that, at that time, was the total of the incidental costs to the taxpayer of the acquisition of the asset; and
(b) if an amount is apportioned to an asset - the consideration in respect of the acquisition of the asset and the incidental costs to the taxpayer of the acquisition of the asset are each taken, at the time of the acquisition of the asset by the taxpayer, to be nil; and
(c) the net goodwill roll-over amount is taken to be reduced by an amount equal to the total goodwill cost base.
If this section applies, the following provisions also have effect:
(a) the taxpayer must apportion the residual net roll-over amount among the nominated non-goodwill replacement assets in such manner as the taxpayer determines but so that the amount apportioned to a particular asset does not exceed the lesser of:
(i) the sum of the acquisition amounts set out in subsection (5B); and
(ii) if the asset is a share in a company or a unit in a unit trust - the maximum apportionment amount for the share or unit worked out under subsection (6);
(b) if an amount is apportioned to an asset thatis not a depreciable asset - the amount is to be applied in reduction of the acquisition amounts for the asset in such proportions as the taxpayer determines;
(c) if an amount is apportioned to an asset that is a depreciable asset and section 160ZZPX does not apply in relation to the asset before it is disposed of - the amount is taken to be a capital gain that accrues to the taxpayer during the year of income in which the asset is disposed of;
(d) if the amount apportioned to assets under paragraph (a) is less than the residual net roll-over amount - an amount equal to the difference is taken to be a capital gain that accrued to the taxpayer during the disposal year of income.
The reductions set out in paragraph (5)(b) are taken to have been made at the time of the acquisition of the asset by the taxpayer.
The acquisition amounts for an asset are:
(a) the amount that, at the time of the acquisition of the asset, was the consideration in respect of the acquisition of the asset; and
(b) the amount that, at that time, was the total of the incidental costs to the taxpayer of the acquisition of the asset; and
The maximum apportionment amount for a share in a particular company or a unit in a particular unit trust is:
| Total market value
of active assets |
× |
Market value of share or unit
Total of market values of shares in the company or units in the unit trust |
where:
active assets are those assets of the company or trust that were active assets of the company or trust, as the case may be, at the time of the acquisition of the shares or units.
market value means the market value at that time.
(a) there is a roll-over asset in respect of a taxpayer in respect of a year of income; and
(b) there is a net roll-over amount that applies to the taxpayer in respect of the year of income; and
(c) a replacement asset is nominated by the taxpayer under section 160ZZPT in respect of the net roll-over amount; and
(d) at a time (the change time ) after the taxpayer nominated the replacement asset, the asset:
(i) if the replacement asset is not a share in a company or a unit in a unit trust - ceases to be an active asset; or
(ii) becomes an asset in respect of whose disposal this Part would not apply because of a provision of section 160L ; or
(iii) becomes an asset in respect of whose disposal a capital gain would not be taken to have been incurred because of subsection 160Z(6) .
An amount (the adjustment amount ) equal to the amount that was apportioned to the asset by the taxpayer under section 160ZZPU , 160ZZPV or 160ZZPW, as the case may be, is taken to be a capital gain that accrued to the taxpayer in the year of income in which the relevant change time occurred.
160ZZPX(3) Consideration to be increased.If the replacement asset is not a depreciable asset, the amount that, at the time of the acquisition of the asset, was the consideration in respect of the acquisition of the asset is to be increased, at the change time, by the adjustment amount.
(a) there is a roll-over asset in respect of a taxpayer in respect of a year of income; and
(b) there is a net roll-over amount that applies to the taxpayer in respect of the year of income; and
(c) a replacement asset is nominated by the taxpayer under section 160ZZPT in respect of the net roll-over amount; and
(d) the replacement asset is a share in a company or a unit in a unit trust; and
(e) at a time (the change time ) after the taxpayer nominated the replacement asset:
(i) the taxpayer ceases to be the controlling individual of the company or trust; or
(ii) the total of the market values of the active assets of the company or trust falls below 80% of the total of the market values of all the assets owned by the company or the assets of the trust, as the case may be; or
(iii) the company ceases to be a private company that is a resident, the trust ceases to be a resident unit trust or the trust becomes a publicly traded unit trust, as the case may be; and
(f) the replacement asset is owned by the taxpayer immediately after the change time. 160ZZPXA(2) Exception.
Subparagraph (1)(e)(ii) does not apply if the total of the market values of the active assets referred to in that subparagraph fell below the percentage so referred to only because of changes in the market values of assets owned by the company or trust at the time of the nomination.
160ZZPXA(3) Capital gain accrues when change of circumstances occurs.An amount (the adjustment amount ) equal to the amount that was apportioned to the asset by the taxpayer under section 160ZZPV or 160ZZPW, as the case may be, is taken to be a capital gain that accrued to the taxpayer in the year of income in which the relevant change time occurred.
160ZZPXA(4) Consideration to be increased.The amount that, at the time of the acquisition of the asset, was the consideration in respect of the acquisition of the asset is increased, at the change time, by the adjustment amount.
(a) a replacement asset is disposed of; and
(b) this Part does not apply to the disposal because of a provision of this Part (other than this Division and section 160X). 160ZZPY(2) Capital gain accrues when asset disposed of.
An amount (the adjustment amount ) equal to the amount that was apportioned to the asset by the taxpayer under section 160ZZPU , 160ZZPV or 160ZZPW, as the case may be, is taken to be a capital gain that accrued to the taxpayer in the year of income in which the disposal of the replacement asset occurs.
160ZZPY(3) Consideration to be increased.If the replacement asset is not a depreciable asset, the amount that, at the time of the acquisition of the asset, was the consideration in respect of the acquisition of the asset is taken, for the purposes of the application of this Part in relation to the person who acquired the asset, to be increased, from the time of the acquisition, by the adjustment amount.
(a) a replacement asset that formed part of the estate of a dead person has passed to the dead person's legal personal representative; and
(b) sections 160ZZPX and 160ZZPXA had never applied to the dead person in relation to that asset;
anything done or omitted to be done by the dead person in relation to the asset is taken for the purposes of this Division to have been done or omitted to be done by the legal personal representative.
(a) a replacement asset that formed part of the estate of a dead person has passed to a beneficiary in that estate; and
(b) sections 160ZZPX and 160ZZPXA had never applied to the dead person, or to the dead person's legal personal representative, in relation to that asset;
anything done or omitted to be done by the dead person or the dead person's legal personal representative in relation to the asset is taken for the purposes of this Division to have been done or omitted to be done by the beneficiary.
(Omitted by No 94 of 1999)
Broadly, a capital gain accruing on the disposal of an asset by a small business is exempt from tax under this Part, if the proceeds of the disposal are used in connection with the retirement of an individual, or 2 individuals, who control that business. The amount of the gain will be treated as a special kind of eligible termination payment made to the individuals.
For a taxpayer who is an individual (carrying on business as a sole trader or as a partner in a partnership) to get an exemption, and for the other consequences set out in this Division to apply, the conditions in Subdivision B must be satisfied.
160ZZPZB(2) Companies and trusts.For a taxpayer that is a private company or trust to get an exemption, and for the other consequences set out in this Division to apply, the conditions in Subdivision C must be satisfied.
160ZZPZB(3) Lifetime exemption limit.There is a lifetime limit of $500,000 on the total of amounts that may be exempt in relation to a particular individual under this Division (see section 160ZZPZN ). The single limit applies to all exempt amounts involving the individual, whether under Subdivision B or C.
160ZZPZB(4) Previousyears' net capital losses.An exemption under this Division is not available to the extent that the taxpayer has net capital losses from previous years of income available to set off against the capital gain (see Subdivision D).
160ZZPZB(5) Definitions.Definitions of various expressions used in the Division are in Subdivision E.
The consequences set out in section 160ZZPZE apply to a taxpayer who is an individual if the conditions in section 160ZZPZD are met.
(a) the requirements of paragraphs 160ZZPQ(1)(a) to (c) must be satisfied in relation to the disposal of an asset by the taxpayer other than as a trustee; and
(aa) the asset is a roll-over asset within the meaning of subsection 160ZZPL(7) ; and
(b) the taxpayer must receive all of the actual consideration (see section 160ZZPZO ), if any, in respect of the disposal within the period beginning one year before, and ending 2 years after, the disposal.
The whole of the actual consideration mentioned in paragraph (b) need not be received all at once; parts of the actual consideration may be received at different times during the period.
(a) the taxpayer must elect in writing, on or before the date of lodgment of the taxpayer's return of income for the year of income mentioned in paragraph 160ZZPQ(1)(a) , that this Division is to apply to the taxpayer in respect of the disposal; and
(b) the election must specify an amount as the asset's CGT exempt amount ; and
(c) that amount must not be greater than the amount of the capital gain concerned (possibly as reduced by Subdivision D, which deals with previous years' net capital losses); and
(d) the asset's CGT exempt amount must not exceed the individual's CGT retirement exemption limit (see section 160ZZPZN ) immediately before the election is made; and
(e) the taxpayer must not have already made an election under section 160ZZPQ in respect of the disposal.
If the conditions in section 160ZZPZD are met, the following consequences apply.
160ZZPZE(2) Capital gain reduced by asset's CGT exempt amount.The amount of the capital gain that otherwise would have accrued to the taxpayer in respect of the disposal of the asset concerned is reduced (but not below nil) by the asset's CGT exempt amount.
160ZZPZE(3) Other CGT exemptions/concessions are not available.Divisions 15, 17, 17A, 18 and 19 do not apply in respect of the disposal.
160ZZPZE(4) Proceeds of disposal taken to be an ETP.Also, for each amount the taxpayer receives as actual consideration in respect of the disposal at a particular time, an ETP of that amount (but possibly reduced by subsection (5)) is taken, for the purposes of this Act, to have been made in relation to the taxpayer at the later of the following times:
(a) the time the election is made;
(b) the time the actual consideration is received.
Note:
For the rules about ETPs (eligible termination payments), see Subdivision AA of Division 2 of Part III .
160ZZPZE(5) No ETP to the extent that the total actual consideration received exceeds the asset's CGT exempt amount.(a) the amount of the actual consideration; and
(b) the total amount of any actual consideration the taxpayer received earlier in respect of the disposal;
exceeds the asset's CGT exempt amount, the amount of the ETP is reduced by the amount of the excess.
Note:
In some cases, this will reduce the amount of the ETP to nil.
Example:
Assume that the asset's CGT exempt amount is $1,000. Assume that the taxpayer receives an amount of actual consideration of $300, and has previously received $900 as actual consideration in respect of the disposal. The sum of that actual consideration is $1,200, which exceeds the asset's CGT exempt amount by $200. Therefore the amount of this ETP is reduced by $200 to $100.
If the taxpayer was under 55 immediately before the disposal, an amount equal to the amount of each ETP that is taken to have been made under subsection 160ZZPZE(4) must be rolled over (within the meaning of Subdivision AA of Division 2 of Part III , but assuming that paragraph 27A(12)(c) had not been enacted) by the taxpayer.
160ZZPZF(2) [Election taken as never made]If the taxpayer does not comply with subsection (1), the election is taken never to have been made.
Note:
Because making the election is a condition (see paragraph 160ZZPZD(2)(a)), the taxpayer will lose the benefit of this Subdivision in such a case.
The consequences set out in section 160ZZPZJ apply to a taxpayer that is a company (other than a public company) or a trust (other than a publicly traded unit trust) if either:
(a) the single-controller conditions set out in section 160ZZPZH are met; or
(b) the dual-controller conditions set out in section 160ZZPZI are met.
This section sets out the conditions that are the single-controller conditions .
160ZZPZH(2) First condition.(a) the requirements of paragraphs 160ZZPQ(1)(a) to (c) must be satisfied in relation to the disposal of an asset by the taxpayer; and
(aa) the asset is a roll-over asset within the meaning of subsection 160ZZPL(7) ; and
(b) the taxpayer must receive all of the actual consideration (see section 160ZZPZO ), if any, in respect of the disposal within the period beginning one year before, and ending 2 years after, the disposal.
The whole of the actual consideration mentioned in paragraph (b) need not be received all at once; parts of the actual consideration may be received at different times during the period.
The second condition is that, immediately before the disposal, there must be one, and only one, controlling individual (see section 160ZZPZP ) of the taxpayer.
160ZZPZH(4) Third condition.(a) the taxpayer must elect in writing, on or before the date of lodgment of the taxpayer's return of income for the year of income mentioned in paragraph 160ZZPQ(1)(a) , that this Division is to apply to the taxpayer in respect of the disposal; and
(b) the election must specify an amount as the asset's CGT exempt amount ; and
(c) that amount must not be greater than the amount of the capital gain concerned (possibly as reduced by Subdivision D, which deals with previous years' net capital losses); and
(d) the asset's CGT exempt amount must not exceed the controlling individual's CGT retirement exemption limit (see section 160ZZPZN ) immediately before the election is made; and
(e) the taxpayer must not have already made an election under section 160ZZPQ in respect of the disposal. 160ZZPZH(5) Fourth condition.
The fourth single-controller condition is that, within:
(a) 7 days after making the election; or
(b)7 days after the taxpayer receives the whole or a part (the payment amount ) of the actual consideration as mentioned in paragraph (2)(b);
whichever comes later, the taxpayer must make an ETP in relation to the controlling individual whose amount is at least equal to the payment amount.
Note:
The payment amount may be reduced under subsection (8).
160ZZPZH(6) If there are 2 or more ETPs required.If, at a particular time, subsection (5) requires a taxpayer to make 2 or more ETPs to the controlling individual (whether or not by the same time), the taxpayer may meet that requirement either:
(a) by making separate ETPs whose amounts are in total at least equal to the sum of the payment amounts; or
(b) by making a single ETP whose amount is at least equal to the sum of the payment amounts. 160ZZPZH(7) Fifth condition.
The fifth condition is that, if the controlling individual was under 55 immediately before the disposal, an amount, in relation to the ETP, at least equal to the payment amount must be rolled over (within the meaning of Subdivision AA of Division
2
of Part
III
, reading references in that Subdivision to ``the taxpayer'' as references to the controlling individual instead, and assuming that paragraph
27A(12)(c)
had not been enacted) by the controlling individual.
Note:
The payment amount may be reduced under subsection (8).
160ZZPZH(8) ETP not required to the extent that the total actual consideration received exceeds the asset's CGT exempt amount.(a) the payment amount; and
(b) the total amount of any actual consideration the taxpayer received, as mentioned in paragraph (2)(b), earlier in respect of the disposal;
exceeds the asset's CGT exempt amount, the payment amount is reduced, for the purposes of subsections (5), (6) and (7), by the amount of the excess.
Note:
In some cases, this will reduce that amount to nil.
Example:
Assume that the asset's CGT exempt amount is $1,000. Assume that the taxpayer receives a payment amount of $300, and has previously received $900 as actual consideration in respect of the disposal. The sum of those amounts is $1,200, which exceeds the asset's CGT exempt amount by $200. Therefore the amount of this payment amount is reduced by $200 to $100.
This section sets out the conditions that are the dual-controller conditions .
160ZZPZI(2) First condition.(a) the requirements of paragraphs 160ZZPQ(1)(a) to (c) must be satisfied in relation to the disposal of an asset by the taxpayer; and
(aa) the asset is a roll-over asset within the meaning of subsection 160ZZPL(7) ; and
(b) the taxpayer must receive all of the actual consideration (see section 160ZZPZO ), if any, in respect of the disposal within the period beginning one year before, and ending 2 years after, the disposal.
The whole of the actual consideration mentioned in paragraph (b) need not be received all at once; parts of the actual consideration may be received at different times during the period.
The second condition is that, immediately before the disposal, there must be 2 controlling individuals (see section 160ZZPZP ) of the taxpayer.
160ZZPZI(4) Third condition.(a) the taxpayer must elect in writing, on or before the date of lodgment of the taxpayer's return of income for the year of income mentioned in paragraph 160ZZPQ(1)(a) , that this Division is to apply to the taxpayer in respect of the disposal; and
(b) the election must specify an amount as the asset's CGT exempt amount ; and
(c) that amount must not be greater than the amount of the capital gain concerned (possibly as reduced by Subdivision D, which deals with previous years' net capital losses); and
(d) the election must specify the percentages (the exemption percentages ) of the asset's CGT exempt amount that are to be regarded as attributable to each of the 2 controlling individuals. One of the percentages may be nil, but the 2 percentages must add up to 100%; and
(e) for each of the 2 controlling individuals, the individual's exemption percentage of the asset's CGT exempt amount must not exceed that individual's CGT retirement exemption limit immediately before the election is made; and
Example:
Fiona is a controlling individual of a taxpayer. Her exemption percentage is 10% (which means that the other controlling individual's exemption percentage must be 90%). Fiona's CGT retirement exemption limit is $500,000. To determine whether paragraph (e) is complied with, she would take 10% of the asset's CGT exempt amount and see whether that amount exceeds $500,000.
(f) the taxpayer must not have already made an election under section 160ZZPQ in respect of the disposal. 160ZZPZI(5) Fourth condition.
The conditions in subsections 160ZZPZH(5) to (8) are also dual-controller conditions, except that the subsections apply separately in respect of each of the 2 controlling individuals as if:
(a) each were the only controlling individual; and
(b) references (other than in paragraph (5)(b) and subsection (8)) to the payment amount were, in relation to each controlling individual, instead a reference to the following amount:
| Controlling individual's
exemption percentage |
× | Payment amount |
If the conditions in section 160ZZPZH or 160ZZPZI are met, the following consequences apply.
160ZZPZJ(2) Capital gain reduced by asset's CGT exempt amount.The amount of the capital gain that otherwise would have accrued in respect of the disposal concerned is reduced (but not below nil) by the asset's CGT exempt amount.
160ZZPZJ(3) Other CGT exemptions/concessions are not available.Divisions 15, 17, 17A, 18 and 19 do not apply in respect of the disposal.
160ZZPZJ(4) Treatment of ETP.Any ETP, or part of an ETP, the taxpayer makes, to the extent required to comply with subsection 160ZZPZH(5) (including as it is applied by subsection 160ZZPZI(5) :
(a) is taken, for the purposes of this Act, to consist solely of a CGT exempt component; and
(b) is not an allowable deduction of the taxpayer.
Note:
For the rules about ETPs (eligible termination payments), see Subdivision AA of Division 2 of Part III .
(a) immediately before the disposal of the asset concerned, there was only one controlling individual of the taxpayer; and
(b) at any time during the period (the ownership period ) from the later of:
(i) the start of the 1992-93 year of income; and
until immediately before the disposal, the individual was not the controlling individual of the taxpayer;
(ii) the time when the taxpayer acquired the asset;
the asset's CGT exempt amount is reduced by the following amount:
| Asset's CGT exempt amount | × |
Part of ownership period when
individual was not controlling individual of the taxpayer Ownership period |
However, if, disregarding subparagraph (1)(b)(i), the asset's CGT exempt amount would be reduced by a lesser amount, the asset's CGT exempt amount is instead reduced by that lesser amount.
160ZZPZK(3) If there are 2 controlling individuals.If, immediately before the disposal, there were 2 controlling individuals of the taxpayer, the asset's CGT exempt amount is reduced by the sum of the amounts, worked out for each controlling individual, using the formula:
| Individual's exemption percentage
(see paragraph 160ZZPZI(4)(d)) |
× | Reduction required under subsection
(1) or (2) if the individual were the only controlling individual |
(a) a taxpayer makes one or more elections under paragraph 160ZZPZD(2)(a), 160ZZPZH(4)(a) or 160ZZPZI(4)(a) in respect of disposals of assets during a particular year of income (the current year ); and
(b) the taxpayer incurred one or more net capital losses in respect of years of income before the current year, but after the 1994-95 year of income, that have not been fully applied under section 160ZC in respect of years of income before the current year; and
(c) the losses would, apart from this Division, be fully or partly applied in determining whether a net capital gain accrues to the taxpayer in respect of the current year (if sufficient capital gains accrue in the current year). The extent to which a loss would be so applied is called the unapplied loss . 160ZZPZL(2) Capital gains are reduced.
The capital gain in respect of each of the disposals is reduced (but not below nil) by an amount (the reduction amount ) equal to so much of the total amount of the unapplied losses as has not already (see subsection (4)) been applied in reducing other capital gains under this subsection for the current year or an earlier year of income.
160ZZPZL(3) Losses are also reduced, in the order in which they were incurred.The net capital losses are reduced (but not below nil) by the reduction amount, in the order in which the taxpayer incurred the losses.
160ZZPZL(4) Order of reduction of capital gains is the order in which elections were made.Capital gains in respect of disposals are to be reduced under subsection (2) in the order in which the taxpayer made the elections as mentioned in paragraph (1)(a) in respect of the disposals.
160ZZPZL(5) This section applies before other net capital loss provisions.For any given year of income, this section is to be applied in reduction of net capital losses before section 160ZC and Division 17A are to be applied in relation to those losses.
160ZZPZL(6) Example.The following is an example of how this section works:
Example:
Assume that a taxpayer has net capital losses from previous years of income of $200 and $300 (incurred in that order). Assume that the taxpayer made elections in respect of the disposal of assets A, B and C (in that order) and that the amounts of the respective capital gains were $200, $400 and $700.
First, the capital gain in respect of asset A is reduced to nil by the $200 loss. (Note that the election for asset A must therefore specify nil as that asset's CGT exempt amount.) The $300 loss is then applied againstthe capital gain in respect of asset B, reducing it to $100.
Now that all of the total amount of the losses has been applied, the capital gain in respect of asset C is not reduced under this section.
In this Division:
actual consideration
has the meaning given by section
160ZZPZO
.
asset
has the same meaning as in Division 17A.
CGT retirement exemption limit
has the meaning given by section
160ZZPZN
.
controlling individual
has the meaning given by section
160ZZPZP
.
ETP
means an eligible termination payment within the meaning of section
27A
.
pattern of distributions test
has the meaning given by subsection
160ZZPZQ(1)
.
public company
has the same meaning as in Division 17A.
publicly traded unit trust
has the same meaning as in Division 17A.
test year
has the meaning given by subsection
160ZZPZQ(2)
.
trust
has the same meaning as in Division 17A.
An individual's CGT retirement exemption limit at a particular time is the amount worked out as follows:
| $500,000 | − | Total of CGT exempt amounts
specified in previous elections |
where:
previous elections means elections under paragraph 160ZZPZD(2)(a) , 160ZZPZH(4)(a) or 160ZZPZI(4)(a) made before the particular time by:
(a) the individual; or
(b) a company or trust whose controlling individual, or one of whose controlling individuals, was the individual. 160ZZPZN(2) If there are 2 controlling individuals.
If the individual was one of 2 controlling individuals of a company or trust that made a previous election, only the individual's exemption percentage (see paragraph 160ZZPZI(4)(d) ) of the CGT exempt amount specified in the election is to be taken into account under subsection (1).
For the purposes of this Division, actual consideration means consideration disregarding the effect of subsection 160ZD(2) .
160ZZPZO(2) [Obligations to pay or do]For the purposes of this Division, if the actual consideration in respect of the disposal of an asset is an obligation to pay money or do any other thing, the actual consideration is taken to be received when the money is paid or the other thing is done.
This section sets out the meaning of controlling individual of (in turn) a company, a fixed trust and any other trust.
160ZZPZP(2) Companies.An individual is the controlling individual of a company at a particular time if, at that time, the individual:
(a) is an employee (see subsection (6)) of the company; and
(b) holds all of the legal and equitable interests in shares that carry (between them) the right to exercise at least 50% of the voting power in the company; and
(c) holds all of the legal and equitable interests in shares that carry (between them) the right to receive at least 50% of any dividends that the company may pay; and
(d) holds all of the legal and equitable interests in shares that carry (between them) the right to receive at least 50% of any distribution of capital of the company. 160ZZPZP(3) Control of fixed trusts.
An individual is the controlling individual of a fixed trust (see subsection (5)) at a particular time if, at that time, the individual:
(a) is an employee (see subsection (6)) of the trust; and
(b) has, for his or her own benefit, entitlements to at least a 50% share of the income of the trust; and
(c) has, for his or her own benefit, entitlements to at least a 50% share of the capital of the trust. 160ZZPZP(4) Control of other trusts.
An individual is the controlling individual of a trust, other than a fixed trust, at a particular time (the test time ) if:
(a) the individual is an employee (see subsection (6)) of the trust at the test time; and
(b) the trust passes the pattern of distributions test, for the test year, in relation to the individual (see section 160ZZPZQ ). 160ZZPZP(5) Fixed trust.
A trust is a fixed trust if persons have entitlements to all of the income and capital of the trust.
160ZZPZP(6) Employee.In this section:
employee
has the same meaning as in the
Superannuation Guarantee (Administration) Act 1992
, except that subsection
12(11)
of that Act is to be disregarded.
For the purposes of subsection (2), a person who, at a particular time, holds a legal or equitable interest in a share:
(a) that is liable to be redeemed; or
(b) that, at the option of the company that issued it, is liable to be redeemed;
is taken not to hold the interest at that time.
A trust passes the pattern of distributions test for the test year (see subsection (2)) in relation to an individual if:
(a) during the test year, the trust made a distribution of income, a distribution of capital or both; and
(b) if the trust made at least one such distribution of income - the trust distributed to the individual, for the individual's benefit, at least a 50% share of all distributions of income made by the trust during the test year; and
(c) if the trust made at least one such distribution of capital - the trust distributed to the individual, for the individual's benefit, at least a 50% share of all distributions of capital made by the trust during the test year. 160ZZPZQ(2) Test year.
For the purposes of subsection (1), the test year is:
(a) if the test time concerned (see subsection 160ZZPZP(4) ) is in the same year of income as the disposal concerned - the year of income immediately before that year of income; or
(b) in any other case - the year of income in which the test time occurs.
In this section:
"dependent child"
, in relation to a taxpayer, means a child of the taxpayer who is under the age of 18 years and is dependent on the taxpayer for economic support;
(a) a unit of accommodation constituted by, or contained in, a building, being a unit that consists, in whole or in substantial part, of residential accommodation; and
(b) a caravan, houseboat or other mobile home;
"relevant period"
, in relation to the disposal of a dwelling by a taxpayer other than a taxpayer in the capacity of a trustee, means the period after 19 September 1985 during which the dwelling was owned by the taxpayer and includes any period during which land acquired after that date on which the dwelling is erected was owned by the taxpayer before the erection of the dwelling.
For the purposes of this section, if:
(a) land or a dwelling is acquired or disposed of under a contract entered into at a particular time; and
(b) legal ownership of the land or dwelling does not pass until a later time;
then, in spite of any other provision of this Part, the ownership of the land or dwelling is to be worked out on the basis of the legal ownership.
If, under the contract mentioned in subsection (1AA) or another contract entered into in relation to it, the person to whom the legal ownership is to pass has a right or licence to occupy the land or dwelling before legal ownership passes, then that subsection has effect in relation to that person as if the legal ownership began when the licence or right was first exercisable.
For the purposes of this section, where:
(a) an asset was disposed of by a company or a trustee of a trust estate to a taxpayer;
(b) the asset was acquired by the company or the trustee on or after 20 September 1985; and
(c) because of section 160ZZMA , this Part (other than that section) does not apply in respect of the disposal;
the following provisions have effect:
(d) the taxpayer shall be treated as having owned the asset at all times during the period (in this subsection called the ``prior ownership period'' ) commencing at the time when the company or trustee acquired the asset and ending at the time of the disposal of the asset;
(e) a dwelling to which the asset relates shall not be treated as the sole or principal residence of the taxpayer during the prior ownership period.
For the purposes of this section, a person shall be taken to own, or to have acquired, a dwelling constituted by or contained in a building if the person owns or has acquired, as the case may be:
(a) in the case of a dwelling other than a flat or home unit:
(i) a legal or equitable estate or interest in the land on which the dwelling is erected; or
(ii) a licence or right to occupy the dwelling; or
(b) in the case of a flat or home unit:
(i) a legal or equitable estate or interest in a stratum unit in relation to the flat or home unit;
(ii) a licence or right to occupy the flat or home unit; or
(iii) a share in a company that owns alegal or equitable estate or interest in the land on which the building containing the flat or home unit is erected, being a share that entitles the holder to a right of occupancy of the flat or home unit.
For the purposes of this section, a dwelling owned by a person shall be deemed to include -
(a) any land owned by the person that is adjacent to the dwelling to the extent that:
(i) that land is used by the person primarily for private or domestic purposes in association with the dwelling; and
(ii) the sum of the area of that land and the area of the land on which the dwelling is situated does not exceed 2 hectares; and
(b) in the case of a dwelling being a flat or home unit - a garage, storeroom or other structure owned by the person that forms part of or is attached to or otherwise associated with the building containing the flat or home unit and is used by the person primarily for private or domestic purposes. 160ZZQ(4) [Disposal of adjacent land]
(a) land that by virtue of paragraph (3)(a) forms part of a dwelling owned by a person is disposed of by the person separately from the rest of the dwelling; or
(b) a garage, storeroom or other structure that forms part of a dwelling owned by a person is disposed of by the person separately from the rest of the dwelling;
this section does not apply in respect of the disposal.
160ZZQ(5) [Erection of dwelling by taxpayer](a) a taxpayer has at any time (in this subsection called the ``relevant time'' ), whether before or after the commencement of this subsection, acquired a legal or equitable estate or interest (other than a life interest) in land; and
(b) one of the following subparagraphs is applicable:
(i) no dwelling or partly erected dwelling was on the land at the relevant time and, after that time, the taxpayer:
(A) erected a dwelling on the land; or
(B) commenced to erect a dwelling on the land but died before the erection of the dwelling was completed;
(ii) a partly erected dwelling was on the land at the relevant time and, after that time, the taxpayer:
(A) completed the erection of the dwelling; or
(B) commenced to complete the erection of the dwelling but died before the erection of the dwelling was completed;
(iii) a dwelling or partly erected dwelling was on the land at the relevant time and, after that time, the taxpayer demolished the dwelling or partly erected dwelling and:
(A) erected a new dwelling on the land; or
(B) commenced to erect a new dwelling on the land but died before the erection of the dwelling was completed;
(iv) a dwelling was on the land at the relevant time and, after that time, the taxpayer:
(A) repaired or renovated the dwelling; or
(B) commenced to repair or renovate the dwelling but died before the repairs or renovations were completed; and
(c) if sub-subparagraph (b)(i)(A), (ii)(A), (iii)(A) or (iv)(A) applies:
(i) the dwelling became the sole or principal residence of the taxpayer for the purposes of this Part as soon as practicable after the dwelling was erected, the erection of the dwelling was completed or the repair or renovation of the dwelling was completed, as the case requires and continued to be the sole or principalresidence of the taxpayer for the purposes of this Part for not less than 3 months; or
(ii) the taxpayer died after the dwelling was erected, the erection of the dwelling was completed or the repair or renovation of the dwelling was completed, as the case requires and the taxpayer's death occurred:
(A) before it was practicable for the dwelling to become the taxpayer's sole or principal residence; or
(B) during the period of 3 months referred to in subparagraph (i); and
(d) an election that this subsection is to apply in relation to the dwelling is made in accordance with subsection (5A) or (5B) by:
(i) in a case where subparagraph (ii) does not apply - the taxpayer; or
(ii) in a case where sub-subparagraph (b)(i)(B), (ii)(B), (iii)(B) or (iv)(B) or subparagraph (c)(ii) applies or any other case where the taxpayer died before the end of the period allowed for making an election without having made an election:
(A) if the taxpayer held the estate or interest as a joint tenant - the surviving joint tenant; or
(B) otherwise - the trustee of the estate of the taxpayer;
the following provisions have effect:
(e) if subparagraph (c)(i) applies:
whichever period (in this paragraph called the ``construction period'' ) is the shorter period; and
(i) the period during which the dwelling was the sole or principal residence of the taxpayer for the purposes of this Part includes:
(A) the period on and from the relevant commencing date to and including the date on which the dwelling was erected, the erection of the dwelling was completed or the repair or renovation of the dwelling was completed, as the case requires (other than any part of that period during which the taxpayer was the dependent child of another taxpayer); or
(B) the period of 4 years immediately before the dwelling became the sole or principal residence of the taxpayer (other than any part of that period during which the taxpayer was the dependent child of another taxpayer);
(ii) no other dwelling is to be treated as having been the sole or principal residence of the taxpayer during the construction period;
(f) if sub-subparagraph (b)(i)(B), (ii)(B), (iii)(B) or (iv)(B) or subparagraph (c)(ii) applies:
(i) this Part has effect as if the dwelling was the sole or principal residence of the taxpayer at the time of his or her death; and
whichever period (in this paragraph called the ``construction period'' ) is the shorter period; and
(ii) the period during which the dwelling was the sole or principal residence of the taxpayer for the purposes of this Part includes:
(A) the period on and from the relevant commencing date to and including the date of the death of the taxpayer (other than any part of that period during which the taxpayer was the dependent child of another taxpayer); or
(B) the period of 4 years immediately before the death of the taxpayer (other than any part of that period during which the taxpayer was the dependent child of another taxpayer);
(iii) no other dwelling is to be treated as having been the sole or principal residence of the taxpayer during the construction period.
For the purposes of subsection (5):
(a) a reference to the relevant commencing date is a reference to:
(i) if subparagraph (5)(b)(iii) applies and the dwelling, or partly completed dwelling, that was demolished was occupied by the taxpayer or another person after the relevant time - the date on which the dwelling ceased, or last ceased, to be so occupied; or
(ia) if:
(A) subparagraph (5)(b)(iv) applies; and
(B) the dwelling was occupied by the taxpayer or another person after the relevant time; andthe date on which the dwelling ceased, or last ceased, to be so occupied; or
(C) the dwelling ceased to be so occupied for the purpose of allowing the repairs or renovations to be carried out;
(ii) otherwise - the date on which the taxpayer acquired the estate or interest in the land; and
(b) a taxpayer who has, whether before or after the commencement of this subsection, entered into a contract or contracts for the erection of, or for the completion of the erection of, a dwelling is taken to have commenced to erect, or to have commenced to complete the erection of, the dwelling at the time when the contract or the first contract was entered into; and
(c) a taxpayer who has, whether before or after the commencement of this paragraph, entered into a contract or contracts for the repair or renovation of a dwelling is taken to have commenced to repair or renovate the dwelling at the time when the contract or the first contract was entered into.
An election for the purposes of subsection (5) does not have any effect unless it is made on or before the date of lodgment of the taxpayer's return of income of the later of the following years of income:
(a) the year of income in which the dwelling first became the sole or principal residence of the taxpayer for the purposes of this Part;
(b) the year of income in which this subsection commenced;
or within such further period as the Commissioner allows.
An election by a surviving joint tenant, or a trustee, in relation to a deceased taxpayer for the purposes of subsection (5) does not have any effect unless it is made on or before whichever is the later of the following dates:
(a) the date of lodgment of the return of income of the deceased taxpayer's estate for the year of income in which the taxpayer died;
(b) the last day of the year of income in which the Act that inserted this subsection received the Royal Assent;
or within such further period as the Commissioner allows.
A reference in this section to a taxpayer having acquired a dwelling as a beneficiary in the estate of a deceased person is a reference to a taxpayer having acquired a dwelling:
(a) under the will of a deceased person, or under such a will as varied by an order of a court; or
(b) by operation of a law as a result of the intestacy of a deceased person, or by operation of law as a result of such an intestacy as the operation of the law is varied by an order of a court; or
(c) under a deed of arrangement where:
(i) the deed was entered into in settlement of a claim to participate in the distribution of the estate of the deceased person; and
(ii) the consideration (if any) given by the taxpayer for the dwelling consisted of the variation or waiver of a claim to one or more other assets that formed part of that estate;
whether the dwelling was transmitted directly to the taxpayer or was transferred to the taxpayer by the executor of the will, or by the administrator of the estate, of the deceased person.
(a) a taxpayer and another person owned a dwelling as joint tenants; and
(b) the other person died;
this section applies according to its tenor to the acquisition by the taxpayer of the dwelling as a result of the death of the other person as it applies to a taxpayer who acquired the dwelling as a beneficiary in the estate of a deceased person.
A reference in this section to the acquisition or disposal by a person of a dwelling or to the transmission or transfer of a dwelling to a person includes a reference to the acquisition or disposal by a person or to the transmission or transfer to a person, as the case may be, of the asset the ownership of which, by virtue of subsection (2), constitutes ownership of the dwelling.
160ZZQ(8) [Sole or principal residence]For the purposes of this section -
(a) a dwelling shall be deemed to be the sole or principal residence of a person at a particular time notwithstanding that it is used at that time both for that purpose and another purpose or other purposes; and
(b) where -
(i) a taxpayer disposes of a dwelling that -
(A) was the sole or principal residence of the taxpayer for a continuous period of not less than 3 months included in the period of 12 months ending at the time of disposal; and
(B) the dwelling was not used for gaining or producing assessable income in any part of that period of 12 months other than the part of that period in which the dwelling was also the sole or principal residence of the taxpayer; and
each of those dwellings shall be deemed to be the sole or principal residence of the taxpayer during -
(ii) before disposing of the dwelling, the taxpayer acquired another dwelling and that other dwelling became the next sole or principal residence of the taxpayer,
(iii) in a case where the taxpayer acquired that other dwelling more than 3 months before the time of disposal - the period of 3 months ending at the time of disposal; or
160ZZQ(9) [Spouses with different sole or principal residences]
(iv) in any other case - the period commencing on the day on which the taxpayer acquired that other dwelling and ending at the time of disposal.
(a) a dwelling is the sole or principal residence of a taxpayer at a particular time; and
(b) at that time, another dwelling is the sole or principal residence of the taxpayer's spouse or of a dependent child of the taxpayer,
whichever of those dwellings is nominated by the taxpayer and the taxpayer's spouse, or by the taxpayer, as the case may be, shall, for the purposes of this section, be deemed to be the sole or principal residence of the taxpayer and the taxpayer's spouse, or the taxpayer and the dependent child of the taxpayer, as the case may be, at that time.
160ZZQ(10) [Spouses nominating different dwellings]Where, under subsection (9), a taxpayer nominates a dwelling, and the taxpayer's spouse nominates a different dwelling, in relation to the same period -
(a) in the case of the dwelling nominated by the taxpayer -
(i) if the interest of the taxpayer in the dwelling throughout that period did not exceed one-half of the total of all the interests in the dwelling - the dwelling shall, for the purposes of this section, be deemed to have been the sole or principal residence of the taxpayer during that period; or
(ii) in any other case - the dwelling shall, for the purposes of this section, be deemed to have been the sole or principal residence of the taxpayer during one-half of that period; or
(b) in the case of the dwelling nominated by the taxpayer's spouse -
(i) if the interest of the spouse in the dwelling throughout that period did not exceed one-half of the total of all the interests in the dwelling - the dwelling shall, for the purposes of this section, be deemed to have been the sole or principal residence of the spouse during that period; or
160ZZQ(11) [Cessation of use as sole or principal residence]
(ii) in any other case - the dwelling shall, for the purposes of this section, be deemed to have been the sole or principal residence of the spouse during one-half of that period.
(a) at a particular time (in this subsection called the ``cessation time'' ), a dwelling owned by a taxpayer ceases to be the sole or principal residence of the taxpayer (disregarding subsection (20D)); and
(b) an election that this subsection is to apply in relation to the taxpayer and in relation to the dwelling is made in accordance with subsection (11A) by:
(i) if the taxpayer died before the end of the period allowed for making an election without having made an election:
(A) if the taxpayer and another person owned the dwelling as joint tenants - the surviving joint tenant; or
(B) otherwise - the trustee of the estate of the taxpayer; or
(ii) in any other case - the taxpayer;
then, for the purposes of this section (other than this subsection and subsection (20D)), during the period:
(c) commencing at the cessation time; and
(d) ending at the earliest of the following later times:
(i) the time when the dwelling again became the sole or principal residence of the taxpayer;
(ii) the end of the relevant period;
(iii) the end of the period of 6 years (whether that period is continuous or represents the aggregation of 2 or more periods):
(A) commencing at or after the cessation time; and
(B) during which the part of the dwelling that was the sole or principal residence of the taxpayer before the cessation time was used for the purpose of gaining or producing assessable income;
the following provisions have effect:
(e) the dwelling is taken to have been the sole or principal residence of the taxpayer;
(f) no other dwelling is taken as having been the sole or principal residence of the taxpayer;
(g) any use for the purpose of gaining or producing assessable income of the part of the dwelling that was the sole or principal residence of the taxpayer before the cessation time is to be disregarded.
An election for the purposes of subsection (11) must be made:
(a) in the case of an election by a taxpayer - on or before the date of lodgment of the taxpayer's return of income for the later of the following years of income:
(i) the year of income in which the disposal of the dwelling takes place;
(ii) the year of income in which this subsection commenced; or
(b) in the case of an election by a surviving joint tenant, or a trustee, in relation to a deceased taxpayer - on or before whichever is the later of the following dates:
(i) the date of lodgment of the return of income of the deceased taxpayer's estate for the year of income in which the taxpayer died;
(ii) the last day of the year of income in which this subsection commenced;
or, in either case, within such further period as the Commissioner allows.
Subject to subsection (21), where -
(a) a dwelling owned by a taxpayer, being a natural person other than -
(i) a person who acquired the dwelling as a beneficiary in the estate of a deceased person; or
is disposed of; and
(ii) a person in the capacity of a trustee,
(b) the dwelling was, throughout the relevant period, the sole or principal residence of the taxpayer,
a capital gain shall not be deemed to have accrued to the taxpayer, and a capital loss shall not be deemed to have been incurred by the taxpayer, as the case requires, in respect of the disposal of the dwelling.
160ZZQ(13) [Beneficiary using dwelling as sole or principal residence]Subject to subsection (21), where:
(a) a dwelling owned by a taxpayer, being a natural person who acquired the dwelling as a beneficiary in the estate of a deceased person, is disposed of;
(b) the dwelling was the sole or principal residence of the taxpayerthroughout that part of the relevant period during which the taxpayer was (disregarding section 160X ) the owner of the dwelling;
(c) if the dwelling was acquired by the deceased person after 19 September 1985 - the dwelling was, immediately before the death of the deceased person, the sole or principal residence of the deceased person; and
(d) the dwelling was, throughout the period from the death of the deceased person during which the dwelling was owned by the legal personal representative of the deceased person, the sole or principal residence of any one or more of the following:
(i) the person who was, immediately before the death of the deceased person, the spouse of the deceased person;
(ii) a person who, under the will of the deceased person, had a right to occupy the dwelling;
a capital gain shall not be deemed to have accrued to the taxpayer, and a capital loss shall not be deemed to have been incurred by the taxpayer, as the case requires, in respect of the disposal of the dwelling.
Subject to subsection (21), where:
(a) a dwelling owned by a taxpayer, being a natural person who acquired the dwelling as a beneficiary in the estate of a deceased person, is disposed of;
(b) the dwelling was, throughout the period from the death of the deceased person to the disposal of the dwelling, the sole or principal residence of the taxpayer; and
(c) if the dwelling was acquired by the deceased person after 19 September 1985 - the dwelling was, immediately before the death of the deceased person, the sole or principal residence of the deceased person;
a capital gain shall not be deemed to have accrued to the taxpayer, and a capital loss shall not be deemed to have been incurred by the taxpayer, as the case requires, in respect of the disposal of the dwelling.
Subject to subsection (21), where:
(a) a taxpayer, being a natural person, disposes of a dwelling that the taxpayer acquired as a beneficiary in the estate of a deceased person;
(b) the disposal took place within 2 years after the date of the death of the deceased person; and
(c) if the dwelling was acquired by the deceased person after 19 September 1985, the dwelling was, immediately before the death of the deceased person, the sole or principal residence of the deceased person,
a capital gain shall not be deemed to have accrued to the taxpayer, and a capital loss shall not be deemed to have been incurred by the taxpayer, as the case requires, in respect of the disposal of the dwelling.
Subject to subsection (21), where:
(a) a dwelling owned by a taxpayer in the capacity of the trustee of the estate of a deceased person is disposed of;
(b) either of the following subparagraphs is applicable:
(i) the disposal took place within 2 years after the date of the death of the deceased person; or
(ii) the dwelling was, throughout the period from the death of the deceased person to the time of disposal of the dwelling by the taxpayer, the sole or principal residence of any one or more of the following:
(A) the person who was, immediately before the death of the deceased person, the spouse of the deceased person;
(B) a person who, under the will of the deceased person, had a right to occupy the dwelling; and
(c) if the dwelling was acquired by the deceased person after 19 September 1985, the dwelling was, immediately before the death of the deceased person, the sole or principal residence of the deceased person;
a capital gain shall not be deemed to have accrued to the taxpayer, and a capital loss shall not be deemed to have been incurred by the taxpayer, as the case requires, in respect of the disposal of the dwelling.
Subject to subsection (21), where:
(a) a dwelling owned by a taxpayer referred to in paragraph (12)(a) is disposed of;
(b) the dwelling was the sole or principal residence of the taxpayer during part only of the relevant period; and
(c) but for this section and subsection 160ZA(1) , a capital gain would have accrued to the taxpayer, or the taxpayer would have incurred a capital loss, in respect of the disposal;
a capital gain shall be deemed to have accrued to the taxpayer, or the taxpayer shall be deemed to have incurred a capital loss, as the case may be, in respect of the disposal of the dwelling, of an amount calculated in accordance with the formula
|
AB
C |
, |
where:
A is the amount of the capital gain or of the capital loss, as the case may be, referred in paragraph (c);
B is the number of days in the part of the relevant period during which the dwelling was not the sole or principal residence of the taxpayer; and
C is the number of days in the relevant period.
160ZZQ(17) [Beneficiary - partial exemption]Subject to subsections (20A) and (21), where:
(a) a dwelling owned by a taxpayer referred to in paragraph (13)(a) is disposed of;
(aa) the disposal is not covered by subsection (13), (13A) or (14);
(b) any one or more of the following subparagraphs is or are applicable:
(i) the dwelling was the sole or principal residence of the taxpayer during the whole or a portion of the part of the relevant period referred to in paragraph (13)(b);
(ii) in a case to which paragraph (13)(c) applies - the dwelling was the sole or principal residence of the deceased person referred to in that paragraph during the whole or part of the period during which the deceased person owned the dwelling;
(iii) in a case to which paragraph (13)(d) applies - the dwelling was the sole or principal residence of any one or more of the persons referred to in subparagraphs (13)(d)(i) and (ii) during the whole or part of the period during which the deceased person owned the dwelling; and
(c) but for this section and subsection 160ZA(1) , a capital gain would have accrued to the taxpayer, or the taxpayer would have incurred a capital loss, in respect of the disposal,
a capital gain shall be deemed to have accrued to the taxpayer, or the taxpayer shall be deemed to have incurred a capital loss, as the case may be, in respect of the disposal of the dwelling, of an amount calculated in accordance with the formula
|
AB
C |
, |
where:
A is the amount of the capital gain or of the capital loss, as the case may be, referred to in paragraph (c);
B is the sum of the following:
(d) the number of days (if any) in the relevant period during which the taxpayer owned the dwelling (disregarding section 160X), but the dwelling was not the taxpayer's sole or principal residence;
(e) if the deceased person acquired the dwelling on or after 20 September 1985 - the number of days (if any) in the period during which the deceased person owned the dwelling, but the dwelling was not the deceased person's sole or principal residence;
(f) the number of days (if any) in the period mentioned in paragraph (13)(d) during which the dwelling was not the sole or principal residence of any of the persons mentioned in subparagraphs (13)(d)(i) and (ii).
C is:
Note:
The number of days worked out under paragraphs (e) and (j) is modified in some cases: see subsection (20AA).
Subject to subsections (20A) and (21) where:
(a) a dwelling owned by a taxpayer referred to in paragraph (13A)(a) is disposed of;
(aa) the disposal is not covered by subsection (13), (13A) or (14);
(b) either or both of the following subparagraphs is or are applicable:
(i) the dwelling was the sole or principal residence of the taxpayer during the whole or part of the period referred to in paragraph (13A)(b);
(ii) in a case to which paragraph (13A)(c) applies - the dwelling was the sole or principal residence of the deceased person referred to in that paragraph during the whole orpart of the period during which the deceased person owned the dwelling; and
(c) but for this section and subsection 160ZA(1) , a capital gain would have accrued to the taxpayer, or the taxpayer would have incurred a capital loss, as the case may be, in respect of the disposal;
a capital gain shall be deemed to have accrued to the taxpayer, or the taxpayer shall be deemed to have incurred a capital loss, as the case may be, in respect of the disposal of the dwelling, of an amount calculated in accordance with the formula
|
AB
C |
, |
where:
A is the amount of the capital gain or of the capital loss, as the case may be, referred to in paragraph (c);
B is the sum of the following:
C is:
Note:
The number of days worked out under paragraphs (e) and (h) is modified in some cases: see subsection (20AA).
Subject to subsections (20A) and (21), where:
(a) a dwelling owned by a taxpayer referred to in paragraph (14)(a) is disposed of;
(b) the disposal took place within 2 years after the date of death of the deceased person;
(c) the dwelling was the sole or principal residence of the deceased person referred to in paragraph (14)(a) during part only of the period during which the deceased person owned the dwelling; and
(d) but for this section and subsection 160ZA(1) a capital gain would have accrued to the taxpayer, or the taxpayer would have incurred a capital loss, in respect of the disposal;
a capital gain shall be deemed to have accrued to the taxpayer, or the taxpayer shall be deemed to have incurred a capital loss, as the case may be, in respect of the disposal of the dwelling, of an amount calculated in accordance with the formula
|
AB
C |
, |
where:
A is the amount of the capital gain or of the capital loss, as the case may be, referred to in paragraph (d);
B is the number of days in the part of the period during which the deceased person owned the dwelling during which the dwelling was not the sole or principal residence of the deceased person; and
C is the number of days in the period during which the deceased person owned the dwelling.
Subject to subsections (20A) and (21), where:
(a) a dwelling owned by a taxpayer in the capacity of the trustee of the estate of a deceased person is disposed of;
(aa) the disposal is not covered by subsection (15);
(b) either or both of the following subparagraphs is or are applicable:
(i) the dwelling was the sole or principal residence of any one or more of the persons referred to in sub-subparagraphs (15)(b)(ii)(A) and (B), during the whole or part of the period referred to in subparagraph (15)(b)(ii);
(ii) in a case to which paragraph (15)(c) applies - the dwelling was the sole or principal residence of the deceased person during the whole or part of the period during which the deceased person owned the dwelling; and
(c) but for this section and subsection 160ZA(1) , a capital gain would have accrued to the taxpayer, or the taxpayer would have incurred a capital loss, as the case may be, in respect of the disposal,
a capital gain shall be deemed to have accrued to the taxpayer, or the taxpayer shall be deemed to have incurred a capital loss, as the case may be, in respect of the disposal of the dwelling, of an amount calculated in accordance with the formula
|
AB
C |
, |
where:
A is the amount of the capital gain or of the capital loss, as the case may be, referred to in paragraph (c);
B is the sum of the following:
(d) the number of days (if any) in the period mentioned in subparagraph (15)(b)(ii) during which the dwelling was not the sole or principal residence of any of the persons mentioned in sub-subparagraphs (15)(b)(ii)(A) and (B);
(e) if the deceased person acquired the dwelling on or after 20 September 1985 - the number of days (if any) in the period during which the deceased person owned the dwelling, but the dwelling was not the deceased person's sole or principal residence.
C is:
Note:
The number of days worked out under paragraphs (e) and (h) is modified in some cases: see subsection (20AA).
Subject to subsections (20A) and (21), where:
(a) a dwelling owned by a taxpayer referred to in paragraph (15)(a) is disposed of;
(b) the disposal took place within 2 years after the date of death of the deceased person;
(c) the dwelling was the sole or principal residence of the deceased person referred to in paragraph (15)(a) during part only of the period during which the deceased person owned the dwelling; and
(d) but for this section and subsection 160ZA(1) a capital gain would have accrued to the taxpayer, or the taxpayer would have incurred a capital loss, in respect of the disposal,
a capital gain shall be deemed to have accrued to the taxpayer, or the taxpayer shall be deemed to have incurred a capital loss, as the case may be, in respect of the disposal of the dwelling, of an amount calculated in accordance with the formula
|
AB
C |
, |
where:
A is the amount of the capital gain or of the capital loss, as the case may be, referred to in paragraph (d);
B is the number of days in the part of the period during which the deceased person owned the dwelling during which the dwelling was not the sole or principal residence of the deceased person; and
C is the number of days in the period during which the deceased person owned the dwelling.
Where both subsections (17) and (18), both subsections (17A) and (18) or both subsections (19) and (20) would, but for this subsection, apply to a taxpayer in respect of the disposal of a dwelling owned by the taxpayer:
(a) if each of the subsections that would so apply has the effect of deeming a capital gain to have accrued to the taxpayer in respect of the disposal - only that subsection applies which deems the smaller capital gain to have accrued; or
(b) if each of the subsections that would so apply has the effect of deeming the taxpayer to have incurred a capital loss in respect of the disposal - only that subsection applies which deems the larger capital loss to have been incurred.
For the purposes of subsections (17), (17A) and (19), if, immediately before the death of the deceased person concerned, the dwelling concerned:
(a) was the deceased person's sole or principal residence; and
(b) was not being used for the purpose of gaining or producing assessable income;
then:
(c) the number of days mentioned in paragraphs (17)(e), (17A)(e) or (19)(e) (as appropriate) is taken to be nil; and
(d) the number of days mentioned in paragraphs (17)(j), (17A)(h) or (19)(h) (as appropriate) is worked out from and including the date of the death, instead of the date on which the deceased person acquired the dwelling.
(a) but for this subsection a capital gain would be deemed to have accrued to a taxpayer, or a taxpayer would be deemed to have incurred a capital loss, in respect of the disposal of a dwelling by the taxpayer; and
(b) the taxpayer owned the dwelling as the trustee of, or acquired the dwelling as a beneficiary in, the estate of a deceased person (in this subsection called the ``relevant deceased person'' ); and
(ba) subparagraph 160X(5)(a)(ii) does not apply to the taxpayer's acquisition of the dwelling;
then:
(c) in the case of a dwelling disposed of on or before 15 August 1989 - that capital gain is to be reduced or that capital loss is to be increased; or
(d) in the case of a dwelling disposed of after that date - that capital gain is to be increased or reduced or that capital loss is to be increased or reduced;
by such amount as the Commissioner considers appropriate to take into account the extent to which the dwelling was, during any period that occurred after 19 September 1985 and before the dwelling was acquired by the relevant deceased person, the sole or principal residence of any one or more of the following:
(e) any person who owned the dwelling at the time of his or her death;
(f) any person who, immediately before the death of a person referred to in paragraph (e), was the spouse of that person;
(g) any person who, under the will of a person, had a right to occupy the dwelling;
(h) any person who acquired the dwelling as a beneficiary in the estate of a deceased person.
Subject to subsection (21), where, pursuant to the will of a deceased person, a taxpayer in the capacity of a trustee of the estate of the deceased person acquired a dwelling after 19 September 1985 for occupation by another person (in this subsection called the ``beneficiary'' ):
(a) if the taxpayer disposes of the dwelling to the beneficiary for no consideration:
(i) the taxpayer is not taken for the purposes of this Part other than this subsection to have disposed of the dwelling; and
(ii) the beneficiary is taken for the purposes of this Part to have acquired the dwelling on the date on which it was acquired by the taxpayer; and
(iii) the cost base, the indexed cost base or the reduced cost base to the beneficiary of the dwelling for the purposes of this Part includes any amount that would, if the taxpayer had disposed of the dwelling for the purposes of this Part at the time when ownership of the dwelling passed to the beneficiary, have been included in the cost base, the indexed cost base or the reduced cost base, as the case may be, of the dwelling to the taxpayer as a result of the taxpayer having incurred expenditure in respect of the dwelling; or
(b) if the taxpayer disposes of the dwelling to a person otherwise than as mentioned in paragraph (a):
(i) if the dwelling was the sole or principal residence of the beneficiary during the whole of the period from the time when the dwelling was acquired by the taxpayer to the time when it was so disposed of - a capital gain is not to be deemed to have accrued to the taxpayer, and a capital loss is not to be deemed to have been incurred by the taxpayer, as the case requires, in respect of the disposal of the dwelling; or
(ii) if the dwelling was the sole or principal residence of the beneficiary during part only of the period referred to in subparagraph (i) and, but for this section and subsection 160ZA(1) , a capital gain would have accrued to the taxpayer or the taxpayer would have incurred a capital loss, in respect of the disposal - a capital gain is to be deemed to have accrued to the taxpayer, or the taxpayer is to be deemed to have incurred a capital loss, as the case may be, in respect of the disposal of the dwelling, of an amount calculated in accordance with the formula
AB
C,
where:
A is the amount of the capital gain or of the capital loss, as the case may be, first mentioned in this subparagraph; B is the number of days in the part of the period referred to in subparagraph (i) during which the dwelling was not the sole or principal residence of the beneficiary; C is the number of days in the period referred to in subparagraph (i).
Despite subparagraphs (20C)(a)(ii) and (iii) and subsection 160X(5), if:
(a) a taxpayer acquires a dwelling on or after 20 September 1985; and
(b) for the first time (the first income time ) since the acquisition, the dwelling begins to be used for the purpose of gaining or producing assessable income; and
(c) assuming that the taxpayer had disposed of the dwelling immediately before the first income time, the disposal would have been covered by any of the following provisions:
(i) subsection (12) or (13A);
(ii) subsection (13);
(iii) if subparagraph (15)(b)(ii) would then have applied to the dwelling - subsection (15);
(iv) subparagraph (20C)(b)(i); and
(d) the taxpayer later disposes of the dwelling; and
(e) that later disposal is not covered by:
(i) subsection (14); or
(ii) if subparagraph (15)(b)(i) applies to the disposal - subsection (15);
then:
(f) for the purposes of this Part, the taxpayer is taken to have acquired the dwelling at the first income time for a consideration equal to its market value at that time; and
(g) for the purposes of this section, the taxpayer is taken not to have acquired the dwelling as a beneficiary in, or a trustee of, the estate of a deceased person; and
(h) if subparagraph (c)(ii) or (iii) of this subsection applies - throughout the period mentioned in paragraph (13)(d) or subparagraph (15)(b)(ii) (as appropriate) during which the dwelling was the sole or principal residence of any one or more of the following:
(i) the person who was, immediately before the deceased person's death, the deceased person's spouse;
the dwelling is taken, for the purposes of this section, to have been the taxpayer's sole or principal residence.
(ii) a person who, under the deceased person's will, had a right to occupy the dwelling;
Note:
This means that, in applying this Part to the disposal, the period before the first income time (including any time when a deceased person owned the dwelling ) is to be disregarded. Subsection (12) or (16) might apply to the disposal (subject to subsection (21), which deals with use of the dwelling for the purpose of gaining or producing assessable income).
(a) a dwelling owned by a taxpayer is disposed of;
(b) but for this subsection, subsection (12), (13), (13A), (14), (15), (16), (17), (17A), (18), (19), (20) or (20C) would apply in respect of the disposal because the dwelling was, during a particular period, the sole or principal residence of the taxpayer or of another person; and
(c) the dwelling was, during the whole or a part of that period, also used for the purpose of gaining or producing assessable income,
that subsection does not apply in respect of the disposal of the dwelling but a capital gain shall be deemed to have accrued to the taxpayer, or the taxpayer shall be deemed to have incurred a capital loss, as the case may be, in respect of the disposal of the dwelling, of such amount as the Commissioner determines having regard to:
(d) if, apart from this subsection and subsection 160ZA(1) , a capital gain would be deemed to have accrued to the taxpayer, or a capital loss would be deemed to have been incurred by the taxpayer, in respect of the disposal of the dwelling - the amount of that capital gain or capital loss; and
(e) the extent to which, and the period for which, the dwelling was used in the first-mentioned period for the purpose of gaining or producing assessable income; and
(f) if subsection (13), (13A), (14) or (15) would have applied in respect of the disposal - the extent to which, and the period for which, the dwelling was used for the purpose of gaining or producing assessable income in the period during which both:
(i) the deceased person mentioned in whichever of those subsections would have applied owned the dwelling; and
(ii) the dwelling was the deceased person's sole or principal residence.
Note:
This paragraph means that, in determining the amount of the capital gain or capital loss, the Commissioner must have regard to certain use of the dwelling for the purpose of gaining or producing assessable income before the death. However, this rule is subject to subsection (22).
(a) apart from subsection (21), subsection (13), (13A), (14), (15), (17), (17A), (18), (19), (20) or (20C) would apply in respect of the disposal of a dwelling; and
(b) during all or part of the period (the exemption period ) mentioned in paragraph (21)(b), the dwelling was the sole or principal residence of the deceased person mentioned in whichever of those subsections would have applied; and
(c) immediately before the deceased person's death, the dwelling:
(i) was the deceased person's sole or principal residence; and
(ii) was not being used for the purpose of gaining or producing assessable income;
then:
(d) in having regard to the matter mentioned in paragraph (21)(e), the Commissioner must disregard so much of the exemption period as occurred before the death; and
(e) paragraph (21)(f) does not apply in respect of the disposal.
Note:
This means that, in determining the amount of the capital gain or capital loss under subsection (21), the Commissioner must disregard any use of the dwelling before the death for the purpose of gaining or producing assessable income.
To avoid doubt, for the purposes of subsection (21), a period may consist of a particular instant in time.
(a) a taxpayer disposes of, or of an interest in, a business (in this section referred to as the ``relevant business'' ), being a disposal that includes, or includes an interest in, the goodwill of the business;
(b) in a case to which paragraph (c) does not apply - the net value of the relevant business, or the value of the taxpayer's interest in the net value of the relevant business, as the case may be, is less than the exemption threshold for the year of income in which the disposal takes place;
(c) if, at the time of the disposal, there is another business that is, or there are other businesses that are, associated with the relevant business - the sum of the net values of the relevant business and the associated business or associated businesses, or the sum of the values of the taxpayer's interests in the net values of the relevant business and the associated business or associated businesses, as the case may be, is less than the exemption threshold for the year of income in which the disposal takes place; and
(d) a capital gain is deemed for the purposes of this Part to have accrued to the taxpayer in respect of the disposal of, or of the taxpayer's interest in, the goodwill;
the amount of the capital gain shall be deemed to be reduced by half.
For the purposes of subsection (1):
(a) a business (in this paragraph referred to as the ``associated business'' ) shall be taken to be associated with the relevant business if:
(i) where the taxpayer is not a company and does not carry on the relevant business in the capacity of a trustee - the associated business is carried on by the taxpayer otherwise than in the capacity of a trustee;
(ii) where the taxpayer is a company (other than a company in the capacity of a trustee) - the associated business is carried on by the company, or by another company that is related to the company, otherwise than in the capacity of a trustee; or
(iii) where the taxpayer carries on the relevant business in the capacity of a trustee of a trust estate - the associated business is carried on by the taxpayer in the capacity of a trustee of that trust estate or of an associated trust estate; and
(b) a reference to the net value of a business is a reference to the amount by which the sum of the values of the assets (including goodwill) of the business exceeds the sum of the liabilities of the business; and
(c) the expression ``exemption threshold'' has the meaning given by section 160ZZRAA .
If a taxpayer makes an election under paragraph 160ZZPQ(1)(f) in relation to the disposal of an interest in goodwill, this section does not apply, and is taken never to have applied, in respect of the disposal.
For the purposes of section 160ZZR , the exemption threshold for a year of income is calculated as follows.
160ZZRAA(2) Exemption threshold before 1993-94.The exemption threshold for years of income before the 1993-94 year of income is $2,000,000.
160ZZRAA(3) Exemption threshold from 1993-94 onwards.For each later year of income, the exemption threshold is calculated by:
(a) taking the exemption threshold for the year of income before it (ignoring any application of paragraph (d)); and
(b) multiplying the exemption threshold by the indexation factor for the later year of income (see subsection (4)); and
(c) rounding the result to the nearest $1,000 or multiple of $1,000 (rounding upwards an amount ending in $500); and
(d) if the result is less than $2,000,000 - increasing it to $2,000,000. 160ZZRAA(4) Calculating the indexation factor in subsection (3).
The indexation factor for the later year of income is calculated, to 3 decimal places, using the following formula:
|
Sum of index numbers for quarters in period 1
Sum of index numbers for quarters in period 2 |
where:
`` index number '', for a quarter, means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of the quarter (ignoring any later number that may be published by the Australian Statistician in substitution for it);
`` period 1 '' means the period of 12 months ending on 31 March immediately before the later year of income (ignoring any substituted accounting period);
`` period 2 '' means the period of 12 months immediately before period 1.
160ZZRAA(5) Indexation factor: rounding.If the indexation factor would end with a number greater than 4 if it were calculated to 4 decimal places (instead of 3 decimal places as mentioned in subsection (4)), then the indexation factor must be increased by 0.001.
160ZZRAA(6) Indexation factor: change in CPI reference base.For the purposes of applying the formula component ``index number'' , if at any time, whether before or after the commencement of this section, the Australian Statistician has changed or changes the reference base for the Consumer Price Index, then, after the change only index numbers published in terms of the new base are to be used.
160ZZRAA(7) Publication of indexation factor and exemption threshold.Before the beginning of each year of income (ignoring any substituted accounting period) the Commissioner must publish by written notice the indexation factor and the exemption threshold for the year of income.
(Omitted by No 94 of 1999)
This Division adjusts the cost bases of shares and loans in certain cases where assets are transferred between companies under common ownership and the transfer is likely to reduce the value of the share or loan.
The following chart shows the operative provisions that will apply to particular assets:
In this Division, unless the contrary intention appears:
"consideration"
, in relation to the disposal of the first asset, means consideration worked out as if subsection
160ZD(2)
had not been enacted;
"eligible debt interest"
, in relation to a company, means:
(a) a loan to the company; or
(b) an underlying interest in a loan to the company;
"eligible equity interest"
, in relation to a company, means:
(a) a share in the company; or
(b) an underlying interest in a share in the company;
"first asset"
has the meaning given by section
160ZZRD
;
"first asset disposal time"
has the meaning given by section
160ZZRD
;
indexed threshold amount
has the meaning given by subsection
160ZZRE(1B)
.
"non-finance shares"
means shares other than shares where, having regard to:
(a) the manner in which the amount of dividends in respect of the share is to be calculated; and
(b) the conditions applicable to the payment of dividends in respect of the share; and
(c) any other relevant matters;
the payment of dividends in respect of the share may reasonably be regarded as equivalent to the payment of interest on a loan;
original cost
, of an asset to a taxpayer, means the consideration for the last acquisition of the asset by the taxpayer.
"subsidiary"
has the same meaning as in section
160G
;
"total underlying share interests"
, in relation to particular shares in a company, means all of the beneficial interests held by natural persons (whether directly or through one or more interposed companies or trusts) in the shares;
"transferee"
has the meaning given by section
160ZZRD
;
"transferor"
has the meaning given by section
160ZZRD
;
"under common ownership"
has the meaning given by section
160ZZRB
;
"underlying interest"
has the meaning given by section
160ZZRC
.
written down value
, for an asset of a taxpayer at a particular time, means the greater of:
(a) the depreciated value of that asset at that time as recorded in the books of the taxpayer; and
(b) the depreciated value of the asset, within the meaning of section 62 of this Act, or the written down value of the asset under Division 42 of the Income Tax Assessment Act 1997 , at that time.
For the purposes of this Division, a company (in this section called the ``first company'' ) and another company (in this section called the ``second company'' ) are under common ownership at a particular time if, and only if:
(a) the first company was related to the second company at that time; or
(b) at that time:
(i) the total underlying share interests in the non-finance shares in the first company were held by natural persons who, at that time, held the total underlying share interests in the non-finance shares in the second company; and
(ii) the proportion of the total underlying share interests in the non-finance shares in the first company held by each natural person was the same as the proportion of the total underlying share interests in the non-finance shares in the second company held by that person.
For the purpose of this Division, the cost base, the indexed cost base and the reduced cost base, at a particular time, of an asset to which subsection 160M(6) applies are taken to be equal to the market value of the asset at that time.
The indexed common ownership market value of an asset is worked out by multiplying the market value of the asset at the common ownership time by the following indexation factor:
|
Index number for the CPI quarter in which the first asset
disposal time occurred Index number for the CPI quarter in which the common ownership time occurred |
The indexation factor is to be worked out to 3 decimal places, but increased by 0.001 if the 4th decimal place is 5 or more.
160ZZRBB(3) [Index numbers]Calculations under subsection (1):
(a) are to be made using only the index numbers published in terms of the most recently published reference base for the Consumer Price Index; and
(b) are to disregard indexation numbers that are published in substitution for previously published index numbers (except where the substituted numbers are published to take account of changes in the reference base). 160ZZRBB(4) [Definitions]
In this section:
CPI quarter
means a period of 3 months ending on 31 March, 30 June, 30 September or 31 December.
index number
means the All Groups Consumer Price Index Number (being the weighted average of the 8 capital cities) published by the Australian Statistician.
For the purposes of this Division, an asset held by a taxpayer is taken to be an underlying interest in particular property if, because of the holding of that asset, the taxpayer holds an interest (whether directly or through one or more interposed companies or trusts) in the property.
Subject to this section, this Division applies where:
(a) at a particular time (in this Division called the ``first asset disposal time'' ), a company (in this Division called the ``transferor'' ) disposes of an asset (in this Division called the ``first asset'' ) to another company (in this Division called the ``transferee'' ); and
(b) at the first asset disposal time , the transferor and the transferee are under common ownership; and
(c) the transferee is not a subsidiary of the transferor .
(Omitted by No 171 of 1995)
160ZZRD(3) [Disposal on winding-up of company]
This Division does not apply if:
(a) the disposal is a distribution to shareholders of a company by a liquidator in the course of winding-up the company; and
(b) the company is dissolved within 3 years after the winding-up commenced, or within such further time as the Commissioner considers appropriate for the purposes of the application of this subsection in relation to the company.
Subdivision C sets out how this Division applies to groups of assets and to assets that are in a group of assets.
160ZZRDA(2) [Application of Subdivision]Subdivision C applies Subdivisions D and E to the assets as a group. Those Subdivisions do not have any other operation in relation to an asset included in a group of assets.
Subdivision D only applies to the disposal of the first asset if:
(a) the asset is a depreciable asset; and
(b) the consideration for the disposal of the asset is less than the written down value of the asset at the time of the disposal; and
(c) the market value of the asset is not more than 10% greater than the written down value of the asset at the time of the disposal; and
(d) the original cost of the asset to the transferor was less than $1 million; and
(e) the asset is not a building.
Note 1:
Written down value and original cost are defined in section 160ZZRA .
Note 2:
Subdivision D also applies to some depreciable assets as part of depreciable asset groups as a result of Subdivision C.
160ZZRDB(2) [Application of Subdiv E]Subdivision E does not have any operation in relation to an asset to which Subdivision D applies.
Subdivision E applies in relation to assets that are covered by this Division but not by Subdivision C or D.
Note:
Subdivision E also applies to some assets as part of pre-common ownership groups or post-common ownership groups as a result of Subdivision C.
Subdivision F only applies to the disposal of an asset if Subdivision C, D or E applied in relation to that disposal.
Grouping provides taxpayers with a simplified method of applying this Division to 2 or more assets that are transferred from the transferor to the transferee. It may also reduce the cases in which adjustments have to be made to cost bases of shares or loans under this Division and may reduce the amount of those adjustments.
160ZZRDE(2) The 3 kinds of groups.(a) a depreciable property group (see section 160ZZRDF ); and
(b) a pre-common ownership group (see section 160ZZRDG ); and
(c) a post-common ownership group (see section 160ZZRDH ).
The groups are mutually exclusive. An asset that could be included in the depreciable property group can not be included in either of the other groups.
160ZZRDE(3) [Election by transferor]The transferor may elect to allocate assets to which this Division applies that are transferred to a transferee to groups of assets. All of the assets in a group must be disposed of to the same transferee in the same year of income of the transferor.
160ZZRDE(4) [Form and manner of elections]An election under subsection (3) must be made in writing on or before the lodgment of the transferor's return for the year of income in which the relevant disposals occurred. The Commissioner may allow the election to be made at a later time.
An asset can be allocated to a depreciable property group if:
(a) the asset is a depreciable asset; and
(b) the asset is the first asset to be allocated to the group or is disposed of to the transferee in the same year of income of the transferor as the year in which other assets in the group are disposed of; and
(c) the original cost of the asset to the transferor was less than $1 million; and
(d) the asset is not a building. 160ZZRDF(2) How and when Subdivision D applies to depreciable property groups.
Subdivision D applies in a way specified in subsection (3) to all of the assets in a depreciable property group if:
(a) the sum of the consideration for the disposal of the assets in the group is less than the sum of the written down values of the assets in the group; and
(b) the sum of the market values of the assets in the group is not more than 10% greater than the sum of the written down values of the assets in the group.
The written down value and the market value of each asset is to be worked out when that asset is disposed of by the transferor.
160ZZRDF(3) [Grouped assets deemed one asset]Subdivision D applies to all of the assets in a depreciable property group as if all of the grouped assets were one asset that:
(a) was disposed of at the earliest first asset disposal time for any asset in the group; and
(b) was disposed of for consideration equal to the sum of the consideration for the disposal of each of the assets; and
(c) had a written down value equal to the sum of the written down values of each of the assets.
In calculating the sums of written down values, the written down value of each asset at the first asset disposal time for that asset is to be used.
An asset can be allocated to a pre-common ownership group if:
(a) the asset was acquired by the transferor before the time at which the transferor and the transferee last came under common ownership; and
(b) the asset is the first asset to be allocated to the group or is disposed of to the transferee in the same year of income of the transferor as the year in which that asset is disposed of; and
(c) the original cost of the asset to the transferor was less than $1 million; and
(d) the asset is not land or a building. 160ZZRDG(2) How and when section 160ZZRF applies to pre-common ownership groups.
Section 160ZZRF applies to all of the assets in a pre-common ownership group in the way specified in subsection (3) if the sum of the consideration for the disposal of the assets in the group is less than the sum of the indexed common ownership market values of the assets in the group.
160ZZRDG(3) [Grouped assets deemed one asset]Section 160ZZRF applies as if all of the grouped assets were one asset that:
(a) was acquired on or after 20 September 1985; and
(b) was disposed of at the earliest first asset disposal time for any asset in the group; and
(c) was disposed of for consideration equal to the sum of the consideration for the disposal of each of the assets; and
(d) had a market value at the common ownership time equal to the sum of the market values of the assets at that time.
In applying section 160ZZRF to the grouped assets the matters in subsection (6) of that section must be used to determine what amount is reasonable.
An asset can be allocated to a post-common ownership group if:
(a) the asset was acquired by the transferor at or after the time at which the transferor and the transferee last came under common ownership; and
(b) the asset was last acquired by the transferor on or after 20 September 1985; and
(c) the asset is the first asset to be allocated to the group or is disposed of to the transferee in the same year of income of the transferor as the year in which the first asset is disposed of; and
(d) the original cost of the asset to the transferor was less than $1 million; and
(e) the asset is not land or a building. 160ZZRDH(2) How and when section 160ZZRE applies to post-common ownership groups.
Section 160ZZRE applies to all of the assets in a post-common ownership group in the way specified in subsection (3) if the sum of the consideration for the disposal of the assets in the group is less than the sum of the indexed threshold amount of each asset in the group. The indexed threshold amount of each asset is to be worked out when that asset is disposed of by the transferor.
160ZZRDH(3) [Grouped assets deemed one asset]Section 160ZZRE applies as if all of the grouped assets were one asset that:
(a) was acquired by the transferor on or after 20 September 1985; and
(b) was disposed of at the earliest first asset disposal time for any asset in the group; and
(c) was disposed of for consideration equal to the sum of the consideration for the disposal of each of the assets; and
(d) had an indexed threshold amount equal to the sum of the indexed threshold amount for each of the assets; and
(e) had a reduced threshold amount equal to the sum of the reduced threshold amounts for each of the assets.
In calculating the sums of reduced threshold amounts, or indexed threshold amounts, the reduced threshold amount, or indexed threshold amounts, of each asset at the first asset disposal time for that asset is to be used.
This section applies if a share in the transferor, or a loan to the transferor, comes into existence after the first time (the adjustment time ) in a year of income at which an asset in the group is disposed of by the transferor but before the last time in the year of income at which such an asset is actually disposed of.
160ZZRDI(2) [Share issued to replace cancelled share]This section does not apply to a share that is issued to replace a share that is, or is to be, cancelled.
160ZZRDI(3) [Attributes of share or loan](a) the share or loan had been in existence immediately before the adjustment time; and
(b) the share or loan had all the same attributes at that time as it had immediately after it came into existence.
This section applies to each share in the transferor acquired by a taxpayer (the second taxpayer ) on or after 20 September 1985 that is held by the second taxpayer at the first asset disposal time.
160ZZRDJ(2) [Share disposed for consideration equal to indexed cost base]For each share to which this section applies, the second taxpayer is taken to have disposed of the share at the first asset disposal time for a consideration equal to the indexed cost base to the second taxpayer of the share.
160ZZRDJ(3) [Capital gain on subsequent disposal of share]For the purpose of ascertaining whether a capital gain accrued to the second taxpayer in the event of a subsequent disposal of the share by the second taxpayer, the second taxpayer is taken to have immediately re-acquired the share for a consideration equal to the indexed cost base to the second taxpayer of the share, reduced by the share reduction amount (see subsection (5)).
160ZZRDJ(4) [Capital loss on subsequent disposal of share]For the purpose of ascertaining whether the second taxpayer incurred a capital loss in the event of a subsequent disposal of the share by the second taxpayer, the second taxpayer is taken to have immediately re-acquired the share for a consideration equal to the reduced cost base to the second taxpayer of the share, reduced by the share reduction amount (see subsection (5)).
160ZZRDJ(5) [Share reduction amount]The share reduction amount is worked out, immediately before the first asset disposal time, using the formula:
160ZZRDJ(6) [Share disposed of within 12 months of acquisition]
If the second taxpayer or another taxpayer disposed of a share (otherwise than because of the application of this section) within 12 months after the taxpayer acquired the share (otherwise than because of the application of this section), subsections (2) and (3) have effect as if the references to the indexed cost base to the taxpayer in respect of the share were a reference to the cost base to the taxpayer in respect of the share.
If:
(a) at the first asset disposal time, a taxpayer (the second taxpayer ) held a share of a particular class in the transferor that was acquired by the second taxpayer on or after 20 September 1985 (the post-CGT share ); and
(b) at the first asset disposal time, the second taxpayer or another taxpayer held a share of another class in the transferor; and
(c) the application of section 160ZZRDJ to the post-CGT share would be unreasonable;
then, that section does not apply to the post-CGT share and the cost base, the indexed cost base or the reduced cost base of the post-CGT share to the second taxpayer is instead reduced by such amount (if any) as is reasonable having regard to:
(d) the circumstances in which the post-CGT share was acquired by the second taxpayer; and
(e) the extent (if any) to which the market value of the post-CGT share was reduced as a result of the disposal of the first asset at the first asset disposal time.
Section 160ZZRDM applies to a loan to the transferor acquired by a taxpayer (the second taxpayer ) if the 3 conditions below are satisfied.
160ZZRDL(2) [Loan acquired on or after 20 September 1985]The first condition is that the loan was acquired by the second taxpayer on or after 20 September 1985 and is held by the second taxpayer at the first asset disposal time.
160ZZRDL(3) [Parties not dealing at arm's length](a) the parties to the loan were not dealing with each other at arm's length in relation to the loan; or
(b) the value of the loan was reduced as a result of the disposal of the first asset. 160ZZRDL(4) [Shares deemed to have nil cost base]
(a) one or more shares in the transferor (the excess shares ) are taken, because of section 160ZZRDJ or 160ZZRDK to have a cost base, indexed cost base or reduced cost base of nil immediately after the first asset disposal time; or
(b) at the first asset disposal time, there were no shares in the transferor that were acquired (by the second taxpayer or otherwise) on or after 20 September 1985.
If this section applies (see section 160ZZRDL ), the second taxpayer is taken to have disposed of the loan at the first asset disposal time for a consideration equal to the indexed cost base to the second taxpayer of the loan.
160ZZRDM(2) [Capital gain on subsequent disposal of loan]For the purpose of ascertaining whether a capital gain accrued to the second taxpayer in the event of a subsequent disposal of the loan by the second taxpayer, the second taxpayer is taken to have immediately re-acquired the loan for a consideration equal to the indexed cost base to the second taxpayer of the loan, reduced by the reduction (capital gain) amount.
160ZZRDM(3) [Reduction (capital gain) amount]The reduction (capital gain) amount is worked out, immediately before the first asset disposal time, using the formula:
|
Market value of loan
Total of market values of all loans to transferor |
× |
Total excess share reduction
(capital gain) amount |
The total excess share reduction (capital gain) amount is:
(a) if paragraph 160ZZRDL(4)(a) applies - so much of the total share reduction amounts for the excess shares as was not applied in making reductions to the indexed cost bases of the excess shares in accordance with subsection 160ZZRDJ(3) or section 160ZZRDK ; or
(b) if paragraph 160ZZRDL(4)(b) applies - the amount worked out using the formula:
|
Written down value
of first asset |
− |
Consideration for
disposal of first asset |
For the purpose of ascertaining whether a capital loss accrued to the second taxpayer in the event of a subsequent disposal of the loan by the second taxpayer, the second taxpayer is taken to have immediately re-acquired the loan for a consideration equal to the reduced cost base to the second taxpayer of the loan, reduced by the reduction (capital loss) amount.
160ZZRDM(6) [Reduction (capital loss) amount]The reduction (capital loss) amount is worked out, immediately before the first asset disposal time, using the formula:
|
Market value of loan
Total of market values of all loans to transferor |
× |
Total excess share reduction
(capital gain) amount |
The total excess share reduction (capital loss) amount is:
(a) if paragraph 160ZZRDL(4)(a) applies - so much of the total share reduction amounts for the excess shares as was not applied in making reductions to the reduced cost bases of the excess shares in accordance with subsection 160ZZRDJ(4) or section 160ZZRDK ; or
(b) if paragraph 160ZZRDL(4)(b) applies and the written down value of the first asset exceeds the consideration in respect of the disposal of the first asset - the amount of the excess; or
(c) in any other case - 0. 160ZZRDM(8) [Loan disposed of within 12 months of acquisition]
If the second taxpayer or another taxpayer disposed of a loan (otherwise than because of the application of this section) within 12 months after the taxpayer acquired the loan (otherwise than because of the application of this section), subsections (1) and (2) have effect as if the references to the indexed cost base to the taxpayer in respect of the loan were a reference to the cost base to the taxpayer in respect of the loan.
If:
(a) at the first asset disposal time, a taxpayer (the second taxpayer ) held a loan to the transferor that was acquired by the second taxpayer on or after 20 September 1985 (the post-CGT loan ); and
(b) at the first asset disposal time, the second taxpayer or another taxpayer held:
(i) a share in the transferor that was acquired by that taxpayer before 20 September 1985; or
(ii) another loan to the transferor; and
(c) the application of section 160ZZRDM to the post-CGT loan would be unreasonable;
then, that section does not apply to the post-CGT loan and the cost base, the indexed cost base or the reduced cost base of the post-CGT loan to the second taxpayer is instead reduced by such amount (if any) as is reasonable having regard to:
(d) the circumstances in which the post-CGT loan was acquired by the second taxpayer; and
(e) the extent (if any) to which the market value of the post-CGT loan was reduced as a result of the disposal of the first asset at the first asset disposal time.
This section only applies to a share in, or a loan to, the transferor acquired by a taxpayer if no reduction to the cost base, the indexed cost base or the reduced cost base of the share or the loan to the taxpayer is made under section 160ZZRF .
160ZZRE(1A) [Disposal of asset acquired on or after 20 September 1985]This section only applies in relation to the disposal of the first asset if the first asset was acquired by the transferor on or after 20 September 1985.
This section only applies if the consideration for the disposal of the first asset is less than the indexed threshold amount being the lesser of:
(a) the indexed cost base to the transferor of the first asset, or the amount that would have been the indexed cost base if this Part had applied in respect of the disposal of the first asset; and
(b) the market value of the first asset immediately before the first asset disposal time.
This section only applies to a loan to the transferor if:
(a) the parties to the loan were not dealing with each other at arm's length in relation to the loan; or
(b) the value of the loan was reduced as a result of the disposal of the first asset. 160ZZRE(3) [Consideration re transfer of share]
If, at the first asset disposal time, a taxpayer (in this subsection called the ``second taxpayer'' ) held a share in the transferor that was acquired by the second taxpayer on or after 20 September 1985, the second taxpayer is taken:
(a) to have disposed of the share at the first asset disposal time for a consideration equal to the indexed cost base to the second taxpayer of the share; and
(b) for the purpose of ascertaining whether a capital gain accrued to the second taxpayer in the event of a subsequent disposal of the share by the second taxpayer - to have immediately re-acquired the share for a consideration equal to the indexed cost base to the second taxpayer of the share, reduced by the amount (in this section called the ``indexed share reduction amount'' ) calculated using the formula:
where:
(c) for the purpose of ascertaining whether the second taxpayer incurred a capital loss in the event of a subsequent disposal of the share by the second taxpayer - to have immediately re-acquired the share for a consideration equal to:
(i) if the consideration in respect of the disposal of the first asset is less than the lesser of the following amounts:
(A) the reduced cost base to the transferor of the first asset;
(B) the amount that would have been the reduced cost base to the transferor of the first asset for the purposes of this Part if this Part had applied in respect of the disposal of the first asset;(which lesser amount is in this paragraph called the ``reduced threshold amount'' ) - the reduced cost base to the second taxpayer of the share, reduced by the amount (in this section called the ``reduced share reduction amount'' ) calculated using the formula:
(C) the market value, immediately before the first asset disposal time, of the first asset;
where:
`` Share MV '' means the market value of the share immediately before the first asset disposal time; `` Total post-CGT share MV '' means the total market value, immediately before the first asset disposal time, of all of the shares in the transferor that were acquired (by the second taxpayer or otherwise) on or after 20 September 1985; `` Reduced threshold amount '' means the reduced threshold amount; `` First asset consideration '' means the amount of the consideration in respect of the disposal of the first asset; or
160ZZRE(4) [Consideration re transfer of loan]
(ii) in any other case - the reduced cost base to the second taxpayer of the share.
(a) at the first asset disposal time, a taxpayer (in this subsection called the ``second taxpayer'' ) held a loan to the transferor, being a loan that was acquired by the second taxpayer on or after 20 September 1985; and
(b) either of the following conditions is satisfied:
(i) one or more shares in the transferor (in this subsection called the ``excess shares'' ) are taken, because of paragraph (3)(b) or (c), to have been re-acquired, by the second taxpayer or by another taxpayer, at the first asset disposal time, for nil consideration;
(ii) at the first asset disposal time, there were no shares in the transferor that were acquired (by the second taxpayer or otherwise) on or after 20 September 1985;
the second taxpayer is taken:
(c) to have disposed of the loan at the first asset disposal time for a consideration equal to the indexed cost base to the second taxpayer of the loan; and
(d) for the purpose of ascertaining whether a capital gain accrued to the second taxpayer in the event of a subsequent disposal of the loan by the second taxpayer - to have immediately re-acquired the loan for a consideration equal to the indexed cost base to the second taxpayer of the loan, reduced by the amount calculated using the formula:
|
Loan MV
Total post-CGT loan MV |
× | Total excess share reduction amount |
where:
| Indexed threshold amount − First asset consideration |
(e) for the purpose of ascertaining whether the second taxpayer incurred a capital loss in the event of a subsequent disposal of the loan by the second taxpayer - to have immediately re-acquired the loan for a consideration equal to the reduced cost base to the second taxpayer of the loan, reduced by the amount calculated using the formula:
|
Loan MV
Total post-CGT loan MV |
× | Total excess share reduction amount |
where:
If the second taxpayer or another taxpayer disposed of a share or loan (otherwise than because of the application of this section) within 12 months after the taxpayer acquired the share or loan (otherwise than because of the application of this section), subsections (3) and (4) have effect as if the references in the subsection concerned to the indexed cost base to the taxpayer in respect of the share or loan were a reference to the cost base to the taxpayer in respect of the share or loan.
160ZZRE(6) [Modified cost base adjustments](a) at the first asset disposal time, a taxpayer (in this subsection called the ``second taxpayer'' ) held an asset, being:
(i) a share in the transferor that was acquired by the second taxpayer on or after 20 September 1985 (in this subsection called a ``post-CGT share'' ); or
(ii) a loan to the transferor that was acquired by the second taxpayer on or after 20 September 1985 (in this subsection called a ``post-CGT loan'' ); and
(b) either:
(i) at the first asset disposal time, the second taxpayer or another taxpayer held a share in the transferor that was acquired by that taxpayer before 20 September 1985; or
(ii) whichever of the following is applicable:
(A) in the case of a post-CGT share - at the first asset disposal time, shares in the transferor belonging to 2 or more classes were in existence;
(B) in the case of a post-CGT loan - at the first asset disposal time, at least one other loan to the transferor was held by the second taxpayer, a company related to the transferor, or a person mentioned in paragraph 160ZZRB(b) in relation to the transferor; and
(c) the application of subsection (3) to the post-CGT share, or the application of subsection (4) to the post-CGT loan, as the case may be, would be unreasonable;
then:
(d) in the case of a post-CGT share - subsection (3) does not apply to the post-CGT share; and
(e) in the case of a post-CGT loan - subsection (4) does not apply to the post-CGT loan; and
(f) the cost base, the indexed cost base or the reduced cost base of the post-CGT share or the post-CGT loan to the second taxpayer is reduced by such amount (if any) as is reasonable having regard to:
(i) the circumstances in which the post-CGT share or the post-CGT loan was acquired by the second taxpayer; and
(ii) the extent (if any) to which the market value of the post-CGT share or the post-CGT loan was reduced as a result of the disposal of the first asset at the first asset disposal time.
This section applies where the transferor acquired the first asset before the latest time (in this section called the ``common ownership time'' ):
(a) earlier than the first asset disposal time, and
(b) at which the transferor and the transferee came under common ownership. 160ZZRF(2) [Where asset acquired on or after 20 September 1985]
(aa) the first asset was acquired by the transferor on or after 20 September 1985 (otherwise than because of section 160ZZS ); and
(a) at the first asset disposal time, a taxpayer (in this subsection called the ``second taxpayer'' ) held an asset, being:
(i) a share in the transferor that was acquired by the second taxpayer on or after 20 September 1985; or
(ii) a loan to the transferor that was acquired by the second taxpayer on or after 20 September 1985; and
(b) at the common ownership time, the market value of the assets of the transferor substantially exceeded the total indexed cost bases to the transferor of those assets;
the cost base, the indexed cost base or the reduced cost base of the share or the loan to the second taxpayer is reduced by such amount (if any) as is reasonable.
(a) either of the following conditions is satisfied:
(i) the first asset was acquired by the transferor before 20 September 1985;
(ii) the first asset was acquired by the transferor on or after 20 September 1985 because of section 160ZZS ; and
(b) at the first asset disposal time, a taxpayer (in this subsection called the ``second taxpayer'' ) held an asset, being:
(i) a share in the transferor that was acquired by the second taxpayer on or after 20 September 1985; or
(ii) a loan to the transferor that was acquired by the second taxpayer on or after 20 September 1985;
the cost base, the indexed cost base or the reduced cost base of the share or the loan to the second taxpayer is reduced by such amount (if any) as is reasonable.
The second taxpayer must choose whether to use the matters set out in subsection (5) or the matters set out in subsection (6) to determine what amount is reasonable.
The matters in this subsection are:
(a) the circumstances in which the share or the loan was acquired by the second taxpayer; and
(b) the extent (if any) to which the market value of the share or the loan was reduced as a result of the disposal of the first asset at the first asset disposal time; and
(c) the extent (if any) to which any consideration paid or given by the second taxpayer for the acquisition of the share or the loan was attributable to the first asset.
The matters in this subsection are:
(a) the indexed common ownership market value of the first asset (see section 160ZZRBB ); and
(b) the amount of the consideration for the disposal of the first asset to the transferee.
This section applies where the transferor acquired the first asset at or after the latest time (in this section called the ``common ownership time'' ):
(a) earlier than the first asset disposal time; and
(b) at which the transferor and the transferee came under common ownership. 160ZZRFA(2) [Reduction in cost base etc]
(a) the first asset was acquired by the transferor before 20 September 1985; and
(b) at the first asset disposal time, a taxpayer (in this subsection called the ``second taxpayer'' ) held an asset, being:
(i) a share in the transferor that was acquired by the second taxpayer on or after 20 September 1985; or
(ii) a loan to the transferor that was acquired by the second taxpayer on or after 20 September 1985;
the cost base, the indexed cost base or the reduced cost base of the share or the loan to the second taxpayer is reduced by such amount (if any) as is reasonable having regard to:
(c) the circumstances in which the share or the loan was acquired by the second taxpayer; and
(d) the extent (if any) to which the market value of the share or the loan was reduced as a result of the disposal of the first asset at the first asset disposal time.
If:
(a) at the first asset disposal time, a taxpayer (in this section called the ``second taxpayer'' ) held an asset, being:
(i) an eligible equity interest (other than a share) in the transferor that was acquired by the second taxpayer on or after 20 September 1985; or
(ii) an eligible debt interest (other than a loan) in the transferor that was acquired by the second taxpayer on or after 20 September 1985; and
(b) the second taxpayer disposes of that asset;
the cost base, the indexed cost base or the reduced cost base of the asset to the second taxpayer is reduced by such amount as is reasonable having regard to the reduction in value of the asset resulting from the disposal of the first asset.
(a) at the first asset disposal time, a taxpayer (in this section called the ``third taxpayer'' ) (who may be the second taxpayer mentioned in section 160ZZRE , 160ZZRF , 160ZZRFA or 160ZZRG ) holds an eligible equity interest in the transferee that was acquired by the third taxpayer on or after 20 September 1985; and
(b) the third taxpayer disposes of the eligible equity interest;
the cost base, the indexed cost base or the reduced cost base of the eligible equity interest to the third taxpayer is increased by such amount (if any) as is reasonable having regard to:
(c) the increase in the value of the interest resulting from the acquisition of the first asset; and
(d) the amount of any relevant reductions made under Subdivision C, D or E; and
(e) in the case of the indexed cost base - inflation as measured using the method in section 160Q .
The total of increases made under subsection (1) in relation to the first asset is not to exceed the total of adjustments made in relation to that asset under Subdivisions C, D and E.
The object of this Division is to remove the capital gains tax advantages of share value shifting arrangements.
The following diagram is a simplified outline of this Division:
The following is a list of expressions defined for the purposes of this Division and their location:
| arrangement . | subsection 160ZZRM(3) |
| associate . | subsection 160ZZRN(2) |
| controller . | subsection 160ZZRN(1) |
| decreased value share . | paragraph 160ZZRM(1)(b) |
| different person share . | paragraph 160ZZRQ(2)(a) |
| entity . | subsection 160ZZRN(2) |
| group . | subsection 160ZZRN(2) |
| increase . | subparagraph 160ZZRM(1)(c)(ii) |
| increased value share . | paragraph 160ZZRM(1)(c) |
| material decrease . | subsection 160ZZRO(1) |
| material increase . | subsection 160ZZRO(2) |
| post-CGT share . | subsection 160ZZRM(6) |
| pre-CGT share . | subsection 160ZZRM(5) |
| same person share . | paragraph 160ZZRQ(6)(b) |
| share . | subsection 160ZZRM(4) |
| share value shift . | subsection 160ZZRM(1) |
| total market value increase . | subsection 160ZZRO(3). |
In order for the operative provisions of this Division (sections 160ZZRP and 160ZZRQ ) to apply, the following requirements must be satisfied:
(a) first, a share value shift must take place under an arrangement involving a company and a taxpayer (see section 160ZZRM );
(b) secondly, the taxpayer must be a controller (see subsection 160ZZRN(1)) of the company at some time during the period beginning when the arrangement is entered into and ending when it has been implemented;
(c) thirdly, there must be a material decrease (see subsection 160ZZRO(1)) in the market value of a share involved in the share value shift.
A ``share value shift'' takes place under an arrangement (see subsection (3)) involving a company and a taxpayer if:
(a) under the arrangement, the company, the taxpayer or an associate of the taxpayer, either alone or with one or more other persons, does something in relation to a share or shares (including issuing a share or shares ) in the company (for example, changing voting rights attached to a share, buying-back shares or issuing new shares at a discount on their market value); and
(b) at the same time as, or after, the thing is done, one or more shares (each of which is a ``decreased value share'' ) in the company (whether or not shares to which paragraph (a) applies) that are post-CGT shares held by the taxpayer or an associate of the taxpayer decrease in market value; and
(c) at the same time as, or after, the thing is done, either or both of the following happen:
(i) one or more existing shares (each of which is an ``increased value share'' ) in the company (whether post-CGT shares or pre-CGT shares and whether or not shares to which paragraph (a) applies) held by:
(A) in any case - the taxpayer or an associate of the taxpayer; orincrease in market value; or
(B) if any decreased value share was held by an associate of the taxpayer - an associate of that associate;
(ii) one or more new shares (each of which is also an ``increased value share'' ) in the company are issued to:
(A) in any case - the taxpayer or an associate of the taxpayer; orwhere the market value of each new share exceeds the consideration (if any) given by the taxpayer or other person for its issue (the excess is referred to in this Division as an ``increase'' in its market value); and
(B) if any decreased value share was held by an associate of the taxpayer - an associate of that associate;
(d) it is reasonable to conclude that the decrease and increase were caused by the doing of the thing mentioned in paragraph (a). 160ZZRM(2) Increase or decrease partly due to arrangement.
If it is reasonable to conclude that an increase or decrease in the market value of one or more shares is partly caused by the doing of the thing under the arrangement and partly caused by something else, subsection (1) applies to the decrease or increase to the extent only that it is reasonable to conclude that the decrease or increase is caused by the doing of the thing under the arrangement.
160ZZRM(2A) Where subsection 159GZZZQ(2) applies to share buy-back.(a) it is reasonable to conclude that a decrease in the market value of a share is caused by a proposed buy-back of the share by the company; and
(b) the buy-back of the share takes place; and
(c) subsection 159GZZZQ(2) applies in respect of the buy-back;
then the decrease in market value is disregarded for the purposes of this section.
(a) any arrangement, agreement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; or
(b) any scheme, plan, proposal, action, course of action, or course of conduct, whether of one person or more than one person. 160ZZRM(4) ``Share''.
The expression ``share'' includes:
(a) an interest in a share; or
(b) a right or option (including a contingent right or option) to acquire a share or an interest in a share. 160ZZRM(5) ``Pre-CGT share''.
A share is a ``pre-CGT share'' if it was acquired by the shareholder before 20 September 1985.
160ZZRM(6) ``Post-CGT share''.A share is a ``post-CGT share'' if it was acquired by the shareholder on or after 20 September 1985.
A taxpayer is a ``controller'' of a company if:
(a) the taxpayer has an associate-inclusive control interest in the company of not less than 50%; or
(b) both the following subparagraphs apply:
(i) the taxpayer has an associate-inclusive control interest in the company of not less than 40%;
(ii) the company is not controlled by a group of entities other than a group consisting of or including the taxpayer or any of the taxpayer's associates; or
(c) the taxpayer controls the company, either alone or together with an associate or associates. 160ZZRN(2) ``Associate'', ``entity'' and ``group''.
The expressions ``associate'' , ``entity'' and ``group'' have the same respective meanings as in Part X.
160ZZRN(3) ``Associate-inclusive control interest''.Subject to the modifications in subsection (4), whether a taxpayer has an associate-inclusive control interest of not less than 50%, or not less than 40%, in a company is to be determined by applying Division 3 of Part X.
160ZZRN(4) Modifications of applied provisions.The modifications are as follows:
(a) that Division 3 of Part X applies for the purpose of determining the associate-inclusive control interests in a company whether or not in the capacity of trustee;
Note:
The expression ``company'' in Part X does not include a company in the capacity of trustee.
(b) that the purpose of making the determination is one of the purposes for which subsection 349(4) is to be applied;
(c) that subsections 350(6) and (7) and 355(1) do not apply;
(d) that the reference in subsection 352(2) to a CFE is a reference to:
(i) a company of which the taxpayer or an associate is a controller; or
(ii) a partnership; or
(iii) a trust;
(e) that references in section 354 to a CFP are references to any partnership;
(f) that references in section 355 to a CFT are references to any trust.
A decrease (the ``current decrease'' ) in the market value of a share involved in a share value shift is a ``material decrease'' if:
(a) the sum of the percentage of the current decrease and the percentages of all other decreases (if any) in the market value of the share as a result of share value shifts under the same arrangement (whether before or after the current decrease) is at least 5%; or
(b) the sum of all decreases in the market value of all shares whose market value is decreased as a result of share value shifts at any time under the same arrangement is at least $100,000. 160ZZRO(2) ``Material increase''.
An increase (the ``current increase'' ) in the market value of a share involved in a share value shift is a ``material increase'' if:
(a) the sum of the percentage of the current increase and the percentages of all other increases (if any) in the market value of the share as a result of share value shifts under the same arrangement (whether before or after the current increase) is at least 5%; or
(b) the sum of all increases in the market value of all shares whose market value is increased as a result of share value shifts at any time under the same arrangement is at least $100,000. 160ZZRO(3) ``Total market value increase''.
The ``total market value increase'' in respect of an arrangement under which one or more share value shifts take place is the sum of:
(a) all increases in market value of all shares whose market value is increased as a result of the share value shifts; and
(b) all increases in market value of all other shares whose market value is increased, where it is reasonable to conclude that the doing of the thing mentioned in paragraph 160ZZRM(1)(a) in relation to any of the share value shifts caused the increase.
If the requirements of section 160ZZRL are satisfied and a particular increased value share is a pre-CGT share, the following are the consequences.
160ZZRP(2) Deemed capital gain.(a) in respect of each decreased value share for which there was a material decrease in market value, this Part were applied on the following assumptions:
(i) that a part of the share had been disposed of by its holder immediately after the decrease in value of the share;
(ii) that the consideration for the disposal was an amount worked out using the formula:
Increase in market value of
particular increased value
share
Total market value increase× Decrease in market
value of decreased
value share
(iii) that the cost base or indexed cost base of the part was the amount worked out by multiplying the amount that would be the cost base or indexed cost base for the whole of the share if it were being disposed of at the time, by the fraction worked out using the formula:
Amount worked out under
subparagraph (ii)
Market value of the share
immediately before the decrease
(b) as a result a capital gain would accrue to the holder;
then, for the purposes of this Act, a capital gain of that amount is taken to accrue to the holder for the year of income in respect of the disposal of an asset (even though no asset was actually disposed of).
160ZZRP(3) Adjustment to acquisition consideration etc. for decreased value share.Regardless of whether subsection (2) applies, for the purposes of any application of this Part to a later disposal by the holder of any decreased value share for which there was a material decrease in market value:
(a) all amounts that, under section 160ZH (which deals with cost base, indexed cost base and reduced cost base) are attributable to the share in relation to the period before the decrease in value took place;
are taken to be reduced by:
(b) the fraction worked out using the formula:
|
Increase in market value of
particular increased value share Total market value increase |
× |
Decrease in market value
of decreased value share Market value of decreased value share immediately before the decrease |
If the requirements of section 160ZZRL are satisfied and a particular increased value share is a post-CGT share, the following are the consequences.
160ZZRQ(2) Deemed capital gain.(a) in respect of each decreased value share (a ``different person share'' ):
(i) held by a person other than the holder of the particular increased value share; and
(ii) for which there was a material decrease in market value;
this Part were applied on the following assumptions:
(iii) that a part of the different person share had been disposed of by its holder immediately after the decrease in value of the share;
(iv) that the consideration for the disposal was an amount worked out using the formula:
Increase in market value
of particular increased
value share
Total market value
increase× Decrease in market value
of different person share
(v) that the cost base or indexed cost base of the part was the amount worked out by multiplying the amount that would be the cost base or indexed cost base for the whole of the share if it were being disposed of at the time, by the fraction worked out using the formula:
Amount worked out under
subparagraph (iv)
Market value of the share immediately
before the decrease
(b) as a result a capital gain would accrue to the holder;
then, for the purposes of this Act, a capital gain of that amount is taken to accrue to the holder for the year of income in respect of the disposal of an asset (even though no asset was actually disposed of).
160ZZRQ(3) Adjustment to acquisition consideration etc. for decreased value share.For the purpose of any application of this Part to a later disposal by the holder of any decreased value share for which there was a material decrease in market value:
(a) all amounts that, under section 160ZH (which deals with cost base, indexed cost base and reduced cost base) are attributable to any such share in relation to the period before the decrease in value took place;
are taken to be reduced by:
(b) the fraction worked out using the formula:
|
Increase in market
value of particular increased value share Total market value increase |
× |
Decrease in market value of
decreased value share Market value of decreased value share immediately before the decrease |
If there is a material increase (see subsection 160ZZRO(2) ) in the market value of the particular increased value share then, for the purposes of any application of this Part to a later disposal of the particular increased value share by the holder, the holder is taken to have incurred in relation to the share, at the time of the increase in its market value, expenditure to which paragraph 160ZH(1)(c) , (2)(c) or (3)(c) applies that is equal to the sum of the amounts qualifying under subsections (5) and (6) of this section.
160ZZRQ(5) Deemed expenditure referable to decreased value shares of different persons.One amount qualifying for the purposes of subsection (4) is the smaller of the following:
(a) the amount worked out by multiplying the increase in market value of the particular increased value share, to the extent that the increase is reflected in its market value at the time of the later disposal, by the following fraction:
|
Sum of decreases in market value of all
different person shares Sum of decreases in market value of all decreased value shares |
(b) the sum of the amounts worked out for each different person share using the following formula:
|
Increase in market value of
particular increased value share Total market value increase |
× |
Decrease in market value
of different person share |
The other amount qualifying for the purposes of subsection (4) is the smallest of the following:
(a) the amount worked out by multiplying the increase in market value of the particular increased value share, to the extent that the increase is reflected in its market value at the time of the later disposal, by the following fraction:
| 1 − fraction in paragraph (5)(a) |
(b) the sum of the amounts worked out for each share (a ``same person share'' ):
(i) held by the person who holds the particular increased value share; and
using the following formula:
(ii) for which there was a material decrease in market value;
|
Increase in market value of
particular increased value share Total market value increase |
× |
Decrease in market value
of same person share |
(c) the sum of the amounts of reductions that would result from the application of subsection (3) if that subsection applied only to same person shares.
In this Division:
abnormal trading
has the meaning given by Subdivision D.
approved stock exchange
has the same meaning as in section
470
.
base time
, in relation to a public entity, means:
(a) the last moment of a day within the period beginning on 1 July 1985 and ending on 30 June 1986 that is chosen by the entity and is a day the choice of which will result in a determination that gives a reasonable approximation of the natural persons who held underlying interests in the assets of the entity at the last moment of 19 September 1985; or
(b) if no day within that period is so chosen - the last moment of 19 September 1985.
business day
, in relation to the application of paragraph (b) of the definition of
test time
to a public entity, means a day other than:
(a) a Saturday; or
(b) a Sunday; or
(c) a day that is a public holiday or a bank holiday in the place where the records of ownership of shares or other interests in the entity are kept.
capital shareholding of less than 1%
has the meaning given by subsection
160ZZSN(1)
.
capital unitholding of less than 1%
has the meaning given by subsection
160ZZSO(1)
.
complying approved deposit fund
means a complying approved deposit fund within the meaning of section
47
of the
Superannuation Industry (Supervision) Act 1993
.
complying superannuation fund
means a complying superannuation fund within the meaning of section
45
of the
Superannuation Industry (Supervision) Act 1993
.
dividend shareholding of less than 1%
has the meaning given by subsection
160ZZSN(2)
.
first test time
means the last moment of 20 January 1997.
(a) the Commonwealth, a State or a Territory; or
(b) a municipal corporation or other local government body; or
(c) a foreign state.
head company
has the meaning given by section
160ZZSK
.
head trust
has the meaning given by section
160ZZSK
.
in a position to affect rights
has the meaning given by section
160ZZRRB
.
income unitholding of less than 1%
has the meaning given by subsection
160ZZSO(2)
.
indirect beneficial interest
:
(a) in relation to an asset, has the meaning given by section 160ZZRS; and
(b) in relation to income derived from an asset, has the meaning given by section 160ZZRT .
interposed entity
has the meaning given by section
160ZZSL
.
last moment
, in relation to a day, has the meaning given by subsection (3).
listed public company
means a company in which any of the shares (except shares that carry the right to a fixed rate of dividend) are listed for quotation in the official list of an approved stock exchange.
majority underlying interests
, in relation to an asset, means more than one-half of:
(a) the beneficial interests that natural persons hold (whether directly or indirectly) in the asset; and
(b) the beneficial interests that natural persons hold (whether directly or indirectly) in any income that may be derived from the asset.
mutual insurance organisation
means:
(a) a mutual insurance company within the meaning of section 121AB; or
(b) a mutual affiliate company within the meaning of section 121AC.
part of a substantial shareholding
has the meaning given by section
160ZZSP
.
prescribed period
, in relation to a test time, means:
(a) the period of 6 months beginning on the day after the day on which that time occurs; or
(b) the period of 3 months beginning on the day after the day on which the Taxation Laws Amendment Act (No. 1) 1997 received the Royal Assent;
whichever period ends last.
(a) a listed public company; or
(b) a company (other than a listed public company) all the shares in which are beneficially owned by any one or more of the following:
(i) listed public companies;
(ii) mutual insurance organisations;
(iii) publicly traded unit trusts; or
(c) a 100% subsidiary of a company to which paragraph (b) applies.
(a) a public company; or
(b) a mutual insurance organisation; or
(c) a publicly traded unit trust.
publicly traded unit trust
means a unit trust the units in which:
(a) are listed for quotation in the official list of an approved stock exchange; or
(b) are ordinarily available for subscription or purchase by the public.
relevant interest
has the meaning given by Division 5 of Part 1.2 of the Corporations Law.
(a) a mutual insurance organisation; or
(b) a company whose constituent document prevents it from making any distribution, whether in money, property or otherwise, to its members; or
(c) a company that is prescribed by the regulations.
subsidiary
: the expression
100% subsidiary
has the meaning given by section
160ZZRRA
.
test time
, in relation to a public entity, means:
(a) the last moment of 20 January 1997; or
(b) the last moment of a day that is 5 years (or a multiple of 5 years) after the day referred to in paragraph (a) or, if a day worked out under this paragraph is not a business day, the last moment of the next day that is a business day; or
(c) if the public entity is a public company or a publicly traded unit trust - the last moment of any day after 20 January 1997 on which:
(i) there is abnormal trading in shares in the company or in units in the trust; or
(ii) in respect of a public entity that is, or is a 100% subsidiary of, a public company all the shares in which are beneficially owned by a listed public company or are beneficially owned by a publicly traded unit trust - there is abnormal trading in shares in the listed public company or in the publicly traded unit trust.
trading
, in relation to shares in a public company or units in a publicly traded unit trust, has the meaning given by subsections 160ZZSE(2) and (3).
underlying interest
, in relation to an asset, means a beneficial interest that a natural person holds (whether directly or indirectly) in the asset or in any income that may be derived from the asset.
A reference in this Division to a requirement having, or not having, been made of a public entity, or to a public entity having done or failed to do any thing, is, if the entity is a publicly traded unit trust, taken to be a reference to the requirement having, or not having, been made of the trustee of the trust or to the trustee of the trust having done or failed to do that thing, as the case may be.
160ZZRR(3) [Legal time]A reference in the definition of base time or test time , for the purposes of the application of that definition to a public entity, to the last moment of a day is a reference to the last moment of that day by legal time in the place where the records of ownership of shares or other interests in the entity are kept.
160ZZRR(4) [Natural persons]For the purposes of this Division, the following are taken to be natural persons:
(a) a government body;
(b) a company whose constituent document prevents it from making any distribution, whether in money, property or otherwise, to its members.
A company (the subsidiary company ) is a 100% subsidiary of another company (the holding company ) if all the shares in the subsidiary company are beneficially owned by:
(a) the holding company; or
(b) one or more 100% subsidiaries of the holding company; or
(c) the holding company and one or more 100% subsidiaries of the holding company. 160ZZRRA(2) [Where person may affect rights]
However, the subsidiary company is not a 100% subsidiary of the holding company if a person is in a position to affect rights, in relation to the subsidiary company, of:
(a) the holding company; or
(b) a 100% subsidiary of the holding company. 160ZZRRA(3) [Future time]
The subsidiary company is also not a 100% subsidiary of the holding company if at some future time a person will be in a position to affect rights as described in subsection (2).
160ZZRRA(4) [When a 100% subsidiary]A company (other than the subsidiary company) is a 100% subsidiary of the holding company if, and only if:
(a) it is a 100% subsidiary of the holding company; or
(b) it is a 100% subsidiary of a 100% subsidiary of the holding company;
because of any other application or applications of this section.
A person is in a position to affect rights of a company in relation to another company if the person has the right, power or option:
(a) to acquire those rights from one or other of those companies; or
(b) to do something that would prevent one or other of those companies from exercising its rights for its own benefit, or from receiving any benefit arising from having those rights. 160ZZRRB(2) [Origin of right does not matter]
It does not matter whether the person has the right, power or option because of the constituent document of one or other of those companies, any agreement or otherwise.
A natural person is taken to hold an indirect beneficial interest in an asset of an entity (other than another natural person) for the purposes of this Division where:
(a) if the entity were to distribute any of its capital; and
(b) in the case where another entity or other entities are interposed between the first-mentioned entity and the person - if the capital were then distributed by the other entity or successively distributed by each of the other entities;
the person would have the right to receive any of the capital for the person's own benefit.
A natural person is taken to hold an indirect beneficial interest in income that may be derived from an asset of an entity (other than another natural person) for the purposes of this Division where:
(a) if the entity were to pay a dividend or otherwise distribute any of its income; and
(b) in the case where another entity or other entities are interposed between the first-mentioned entity and the person - if the dividend or income were then paid or distributed by the other entity or successively paid or distributed by each of the other entities;
the person would have the right to receive any of the dividend or income for the person's own benefit.
For the purposes of this Division, if, because of a person's death, a natural person acquires a percentage (the acquired percentage ) of the underlying interests in an asset, the natural person is taken to have held (in addition to any other part of the total underlying interests that the person held or is taken to have held), at any time when the dead person held a percentage (the dead person's percentage ) of the total underlying interests in the asset, a percentage of the total underlying interests in the asset equal to the acquired percentage, or the dead person's percentage at that time, whichever is the less.
This section does not apply to a taxpayer that is a public entity in respect of an asset to which Subdivision C applies.
For the purposes of the application of this Part in relation to a taxpayer, an asset acquired by the taxpayer on or before 19 September 1985 shall be deemed to have been acquired by the taxpayer after that date unless the Commissioner is satisfied, or considers it reasonable to assume, that, at all times after that date when the asset was held by the taxpayer, majority underlying interests in the asset were held by natural persons who, immediately before 20 September 1985, held majority underlying interests in the asset.
160ZZS(1A) [Time when change in majority underlying interests occurred]If subsection (1) applies so as to deem an asset to have been acquired by a taxpayer after 19 September 1985:
(a) the time when the taxpayer is taken, for the purposes of this Part, to have acquired the asset is the time when the natural persons who, immediately before 20 September 1985, held majority underlying interests in the asset ceased, or first ceased, to hold those interests; and
(b) the taxpayer is taken to have acquired the asset for a consideration equal to the market value of the asset as at the time mentioned in paragraph (a).
(Omitted by No 122 of 1997)
160ZZS(2A)
(Omitted by No 122 of 1997)
160ZZS(3)
(Omitted by No 122 of 1997)
Subdivision C - Provisions applying to public entities
This section applies to a public entity in relation to a test time in respect of an asset acquired on or before 19 September 1985 if, and only if:
(a) the entity was the owner of the asset at the test time; and
(b) the asset was not, immediately before 20 January 1997, taken, under subsection 160ZZS(1) , to have been acquired by the entity after 19 September 1985; and
(c) if the test time was a time referred to in paragraph (b) or (c) of the definition of test time in subsection 160ZZRR(1) - the asset was not, immediately before the day on which the test time occurred, taken, under section 160ZZS or under a previous application of this Subdivision, to have been acquired by the entity after 19 September 1985. 160ZZSA(2) Entity to examine its records to determine whether continuity exists.
The entity must, within the prescribed period after the test time or within such further period (if any) as the Commissioner approves, make a determination, by an examination of its records, showing whether majority underlying interests in the asset at the test time were held by natural persons who held majority underlying interests in the asset at the base time.
160ZZSA(3) Interests whose holders cannot be identified.If there were, at the base time, underlying interests in the asset the holders of which cannot be identified by the entity from an examination of its records, those interests are taken, for the purposes of the determination, to have been held at the base time by natural persons who did not hold underlying interests in the asset at the test time.
This section applies if a public entity that is required under subsection 160ZZSA(2) to make a determination in respect of an asset in respect of a test time fails duly to make the determination within the period applying under that subsection.
160ZZSB(2) Failure to determine in respect of first test time.If the test time is the first test time, the asset is taken for the purposes of this Part to have been acquired by the entity on 20 September 1985.
160ZZSB(3) Failure of public entity to determine in respect of first test time after it becomes a public entity.(a) a public entity becomes a public entity after 20 January 1997; and
(b) the test time is the first time it is required to make a determination under subsection 160ZZSA(2) after it became a public entity;
the asset is taken for the purposes of this Part to have been acquired by the entity at the time when it became a public entity.
160ZZSB(4) Failure to determine in respect of later test time.If the test time is later than the test time applicable under subsection (2) or (3), as the case may be, the asset is taken for the purposes of this Part to have been acquired by the entity on the most recent day in respect of which both the following conditions were satisfied:
(a) the day must have been a day on which a test time occurred;
(b) at the test time that occurred on the day, majority underlying interests in the asset must have been held by natural persons who held majority underlying interests in the asset at the base time. 160ZZSB(5) Consideration for acquisition of asset.
If an asset is taken by subsection (2), (3) or (4) to have been acquired by a public entity on a particular day, the entity is taken to have acquired the asset for a consideration equal to the market value of the asset on that day.
If a determination by a public entity under subsection 160ZZSA(2) in relation to the first test time shows that majority underlying interests in an asset of the entity at that test time were not held by natural persons who held majority underlying interests in the asset at the base time, the asset is taken for the purposes of this Part:
(a) to have been acquired by the entity at the time applicable under this section; and
(b) to have been so acquired for a consideration equal to the market value of the asset at that time. 160ZZSC(2) Commissioner may accept that the same natural persons held majority underlying interests in an asset at the base time and the first test time.
A determination referred to in subsection (1) is taken not to show that majority underlying interests in an asset of a public entity at the first test time were not held by natural persons who held majority underlying interests in the asset at the base time if the Commissioner is satisfied, or considers it reasonable to assume, that majority underlying interests in the asset at that test time were held by natural persons who held majority underlying interests in the asset at the base time.
160ZZSC(3) If no requirement to test before 20 January 1997.If the entity was not required before 20 January 1997, under a ruling given by the Commissioner that was made available to the public, to determine whether, at a time after the base time and before the first test time, majority underlying interests in the asset were held by natural persons who held majority underlying interests in the asset at the base time, the asset is taken to have been acquired by the entity on 20 January 1997.
160ZZSC(4) If requirement to test before 20 January 1997.If the entity was required before 20 January 1997, under a ruling given by the Commissioner that was made available to the public, to determine whether, at a time (the previous determination time ) after the base time and before the first test time, majority underlying interests in the asset were held by natural persons who held majority underlying interests in the asset at the base time, the asset is taken to have been acquired by the entity on:
(a) the earliest day in respect of which:
(i) the entity was required under the ruling to determine whether majority underlying interests in the asset were held by natural persons who held majority underlying interests in the asset at the base time; and
(ii) the entity is unable to show that majority underlying interests were so held; and
(b) if there is no day applicable under paragraph (a) - 20 January 1997.
If a determination by a public entity under subsection 160ZZSA(2) in relation to a later test time shows that majority underlying interests in an asset of the entity at that test time were not held by natural persons who held majority underlying interests in the asset at the base time, the asset is taken for the purposes of this Part:
(a) to have been acquired by the entity at the later test time; and
(b) to have been so acquired for a consideration equal to the market value of the asset at that time. 160ZZSD(2) Commissioner may accept that the same natural persons held majority underlying interests in an asset at the base time and the later test time.
A determination referred to in subsection (1) is taken not to show that majority underlying interests in an asset of a public entity at a later test time were not held by natural persons who held majority underlying interests in the asset at the base time if the Commissioner is satisfied, or considers it reasonable to assume, that majority underlying interests in the asset at that test time were held by natural persons who held majority underlying interests in the asset at the base time.
This Subdivision applies for the purpose of determining whether there has been abnormal trading in shares in a public company or in units in a publicly traded unit trust for the purposes of this Division.
160ZZSE(2) [Issue, redemption or transfer etc]There is taken for the purposes of this Division to have been a trading in shares in the company, or in units in the trust, if there was an issue, redemption or transfer of, or any other dealing in, those shares or units.
160ZZSE(3) [When dealing not taken to be trading for application of Division]However, an issue, redemption or transfer of, or another dealing in, shares in the company or units in the trust is not a trading in the shares or units to which this Division applies if the issue, redemption, transfer or other dealing does not change the proportions in which natural persons hold underlying interests in assets of the company or trust.
There is taken to have been an abnormal trading in shares in the company, or in units in the trust, if a trading in the shares or units was abnormal having regard to all relevant factors, including these:
(a) the timing of the trading, when compared with the normal timing for trading in the company's shares or in the trust's units;
(b) the number of shares or units traded, when compared with the normal number of the company's shares, or the trust's units, traded;
(c) any connection between the trading and any other trading in the company's shares or in the trust's units. 160ZZSF(2) [Other sections may define]
There may also be an abnormal trading under section 160ZZSG, 160ZZSH or 160ZZSI.
There is taken to have been an abnormal trading in shares in the company, or in units in the trust, if 5% or more of the shares or units were traded in one transaction.
There is taken to have been an abnormal trading in shares in the company, or in units in the trust, if there was a trading in those shares or units that the company or trustee knows or reasonably suspects was part of an acquisition or merger of the company with another company or of the trust with another trust.
There is taken to have been an abnormal trading in shares in the company, or in units in the trust, if more than 20% of the shares or units were traded during a 60 day period.
160ZZSI(2) [When taken to happen]The abnormal trading is taken to have happened at the end of the 60 day period concerned.
This Subdivision has rules that make it easier for a public company or the trustee of a publicly traded unit trust to determine, as at a test time or the base time, the holders of majority underlying interests in its assets.
All holdings of shares or units of less than 1% in the company or trust are treated as if they were held by a single notional natural person. This means that the company or trustee does not have to trace through to the actual natural persons who beneficially hold underlying interests in the assets of the company or trust.
A similar rule applies if another public company or publicly traded unit trust is interposed between the company or trust and those persons. All holdings of less than 1% in the interposed company or interposed trust are treated as if they were held by a different single notional natural person. This means that the company or trustee does not have to trace through the interposed company or interposed trust to the actual natural persons who beneficially hold underlying interests in the assets of the head company or the head trust.
This Subdivision modifies the way in which a public company (the head company ) or a publicly traded unit trust (the head trust ) may determine under subsection 160ZZSA(2) the natural persons who, at a test time or the base time, held underlying interests in:
(a) an asset of the head company if there were at that time:
(i) capital shareholdings of less than 1%; or
in the head company; or
(ii) dividend shareholdings of less than 1%;
(b) an asset of the head trust if there were at that time:
(i) capital unit holdings of less than 1%; or
in the head trust.
(ii) income unit holdings of less than 1%;
This Subdivision also modifies the way in which the head company or the head trust may determine under subsection 160ZZSA(2) the natural persons who, at a test time or the base time, held underlying interests in an asset of the head company or of the head trust if at that time another entity (the interposed entity ) that is a public company or a publicly traded unit trust met the conditions in subsections (2) and (3).
160ZZSL(2) [Interposition]The interposed entity must have been interposed between the head company or head trust and natural persons who held indirectly beneficial interests in the asset or in any income that may be derived from the asset.
160ZZSL(3) [Holdings of less than 1%](a) if the interposed entity was a public company:
(i) capital shareholdings of less than 1%; or
in the interposed public company; or
(ii) dividend shareholdings of less than 1%;
(b) if the interposed entity was a publicly traded unit trust:
(i) capital unitholdings of less than 1%; or
in the interposed publicly traded unit trust.
(ii) income unitholdings of less than 1%;
The head company or the head trust may apply the provisions of this section in determining the natural persons who held underlying interests in an asset of the head company or of the head trust at the base time and at a test time.
160ZZSM(2) Notional shareholder or unitholder of head company or head trust.Subject to subsection (6), the natural persons who held underlying interests in the asset at the respective times may be determined as if a single notional natural person (the notional holder ) had the right to receive, for the person's own benefit and directly:
(a) in respect of a determination in relation to an asset of the head company:
(i) any distributions of capital of the head company in respect of each capital shareholding of less than 1% in the company at each such time; and
(ii) any dividends the head company may pay in respect of each dividend shareholding of less than 1% in the company at each such time; and
(b) in respect of a determination in relation to an asset of the head trust:
(i) any distributions of capital of the head trust in respect of each capital unitholding of less than 1% in the trust at each such time; and
160ZZSM(3) Notional shareholder or unitholder of the interposed entity.
(ii) any income that may be distributed by the head trust in respect of each income unitholding of less than 1% in the trust at each such time.
Subject to subsection (6), the natural persons who held underlying interests in the asset at the respective times may also be determined as if, for each interposed entity, a different single notional natural person (the notional holder ) had the right to receive, for the person's own benefit and directly:
(a) if the interposed entity is a public company:
(i) any distributions of capital of the interposed entity in respect of each capital shareholding of less than 1% in the interposed entity at each such time; and
(ii) any dividends the interposed entity may pay in respect of each dividend shareholding of less than 1% in the interposed entity at each such time; or
(b) if the interposed entity is a publicly traded unit trust:
(i) any distributions of capital of the interposed entity in respect of each capital unitholding of less than 1% in the interposed entity at each such time; or
160ZZSM(4) People who actually had rights in respect of head company or head trust are taken not to have had the rights.
(ii) any income that may be distributed by the interposed entity in respect of each income unitholding of less than 1% in the interposed entity at each such time.
If subsection (2) is applied in determining the natural persons who held underlying interests in the asset at a particular time, the determination is to be made as if the natural persons who at that time had the right to receive for their own benefit (whether directly or indirectly):
(a) any distributions of capital of the head company or head trust in respect of each capital shareholding of less than 1% or each capital unitholding of less than 1% in the company or trust; and
(b) any dividends that may be paid by the head company, or any income that may be distributed by the head trust, in respect of each dividend shareholding of less than 1% in the company or each income unitholding of less than 1% in the trust;
did not have that right.
160ZZSM(5) People who actually had rights in respect of interposed entity are taken not to have had the rights.If subsection (3) is applied in determining the natural persons who held underlying interests in the asset at a particular time, the determination is also to be made as if the natural persons who at that time had the right to receive for their own benefit (whether directly or indirectly):
(a) any distributions of capital of the interposed entity in respect of each capital shareholding of less than 1% or each capital unitholding of less than 1% in the entity; and
(b) any dividends that may be paid by, or any income that may be distributed by, the interposed entity in respect of each dividend shareholding of less than 1% or each income unitholding of less than 1% in the entity;
did not have that right.
160ZZSM(6) Reduction of percentage of notional holder's rights to distributions.(a) the percentage of the distributions of capital, dividends or income of the head company or head trust, or of the interposed entity, that the notional holder had the right to receive at a test time;
is greater than:
(b) the percentage (the lower percentage ) of the distributions of capital, dividends or other income of the head company or head trust, or of the interposed entity, that the notional holder had the right to receive at the base time;
the notional holder is taken to have the right to receive the lower percentage of the distributions of capital, dividends or other income at the test time.
If all the shares in the head company, or in an interposed entity that is a public company, of which an entity is the registered holder at a test time or the base time carry (between them) the right to receive less than 1% of any distribution of capital of the company, those shares (except shares that are part of a substantial shareholding) constitute a capital shareholding of less than 1% in the company at that time.
160ZZSN(2) Meaning of dividend shareholding of less than 1% .If all the shares in the head company, or in an interposed entity that is a public company, of which an entity is the registered holder at a test time or the base time carry (between them) the right to receive less than 1% of any dividends that the company may pay, those shares (except shares that are part of a substantial shareholding) constitute a dividend shareholding of less than 1% in the company at that time.
If all the units in the head trust, or in an interposed entity that is a publicly traded unit trust, of which an entity is the registered holder at a test time or the base time carry (between them) the rights to receive less than 1% of any distribution of capital of the trust, those units constitute a capital unitholding of less than 1% in the trust at that time.
160ZZSO(2) Meaning of income unitholding of less than 1% .If all the units in the head trust, or in an interposed entity that is a publicly traded unit trust, of which an entity is the registered holder at a test time or the base time carry (between them) the rights to receive less than 1% of any distribution of income of the trust, those units constitute an income unitholding of less than 1% in the trust at that time.
Shares in a company begin to be part of a substantial shareholding of a person when the person gives the company:
(a) a notice under section 709 of the Corporations Law from which it appears that the person or an associate (within the meaning of that section) had a relevant interest in the shares as at the day when the person became a substantial shareholder in the company; or
(b) a notice under section 710 of the Corporations Law from which it appears that the person or an associate (within the meaning of that section) had a relevant interest in the shares after the change in relevant interests because of which the notice had to be given;
whichever happens first.
160ZZSP(2) When shares stop being part of substantial shareholding.The shares stop being part of the substantial shareholding when the person gives the company:
(a) a notice under section 710 of the Corporations Law from which it appears that neither the person nor an associate (within the meaning of that section) had a relevant interest in the shares after the change in relevant interests because of which the notice had to be given; or
(b) a notice under section 711 of the Corporations Law from which it appears that the person had stopped being a substantial shareholder in the company;
whichever happens first.
(Omitted by No 94 of 1999)
This Subdivision has rules that make it easier for a public company or the trustee of a publicly traded unit trust to determine, as at a test time or the base time, the holders of underlying interests in its assets.
The company or trustee does not have to trace through any complying superannuation funds, complying approved deposit funds, special companies or government bodies that are interposed between the company or trust and the natural persons who beneficially hold underlying interests in the assets of the company or trust.
A public company or a publicly traded unit trust may apply the provisions of this section in determining the natural persons who held underlying interests in an asset of the company or in an asset of the trust, as the case may be, at a test time or the base time if:
(a) a superannuation fund, approved deposit fund, special company or government body was interposed, at that time, between natural persons and the company or trust; and
(b) at that time, those persons had the right to receive for their own benefit, and indirectly through the fund, special company or government body (or through entities including it), a percentage (the relevant percentage ) of:
(i) any distributions of capital of the public company or publicly traded unit trust; or
(ii) any dividends that the public company may pay or any income that the publicly traded unit trust may distribute; and
(c) where a superannuation fund was interposed as mentioned in paragraph (a) - at the test time the fund was a complying superannuation fund or was a foreign superannuation fund; and
(d) where an approved deposit fund was interposed as mentioned in paragraph (a) - at the test time the fund was a complying approved deposit fund. 160ZZSS(2) If fund, special company or government body has more than 50 members.
If, at the test time or the base time, the fund, special company or government body had more than 50 members, the public company or the publicly traded unit trust may determine the natural persons who held underlying interests in the asset of the company or trust at that time as if the fund, special company or government body were a natural person who had the right to receive, for the person's own benefit, the relevant percentage of those distributions of capital, those dividends or that income of the public company or publicly traded unit trust.
160ZZSS(3) If fund or special company has not more than 50 members.If, at the test time or the base time, the fund or special company did not have more than 50 members, the public company or the publicly traded unit trust may determine the natural persons who held underlying interests in the asset of the company or trust at that time as if each member were a natural person who had a right to receive, for the person's own benefit, an equal proportion of those distributions of capital, those dividends or that income.
160ZZSS(4) Persons who actually had the right are taken not to have had the right.If the public company or the publicly traded unit trust applies subsection (2) or (3) in determining the natural persons who held underlying interests in an asset of the company or trust at a test time or the base time, those interests are to be determined as if, at that time, the natural persons who had the right to receive that percentage of those distributions of capital, those dividends or that income did not have that right (except as provided by subsection (3)).
160ZZSS(5) Notional membership of government body.For the purposes of this section, a government body is taken to have more than 50 members.
A public entity may apply the provisions of this section in determining the natural persons who held underlying interests in an asset of the entity at a test time or the base time if:
(a) the entity was a mutual insurance organisation at the base time; and
(b) the entity has, whether before or after the commencement of this section, ceased to be such an organisation but has continued in existence as a public company or a publicly traded unit trust; and
(c) at the time of the cessation (the cessation time ) the entity had more than 50 members. 160ZZST(2) [When deemed to hold interest]
(a) immediately before the cessation time was a member of the entity; and
(b) immediately after the cessation time held:
(i) an underlying interest in an asset of the entity; or
(ii) an underlying interest, through the entity, in an asset of another entity that was a public entity;
is taken, for the purposes of the application of this Division in determining, after the cessation time, the natural persons who held underlying interests in assets of the entity or the other entity at a test time or the base time, to have held the interest at all times from and including the base time until immediately after the cessation time.
(a) a taxpayer has, whether before or after the commencement of this Part, disposed of an asset being:
(i) shares in a private company; or
(ii) (Omitted by No 48 of 1991)
(iii) an interest in a private trust estate;
(b) the taxpayer acquired the asset before 20 September 1985;
(c) immediately before the disposal of the asset by the taxpayer:
(i) in a case where the asset disposed of by the taxpayer consisted of shares in a private company or an interest in a private trust estate, the property of the company or trust estate, as the case may be, included property (in this subsection referred to as the ``underlying property'' ) that:
(A) was acquired by the company or trustee of the trust estate, as the case may be, on or after 20 September 1985; and
(B) was not trading stock of the company or trust estate; or
(ii) the company or trustee of the trust estate, as the case may be, held an interest, through one or more interposed companies or trusts, in property (in this subsection also referred to as the ``underlying property'' ) that:
(A) was acquired by another private company or trustee of a private trust estate on or after 20 September 1985; and
(B) was not trading stock of the company or trust estate referred to in sub-subparagraph (A); and
(d) immediately before the disposal of the asset by the taxpayer, the value of:
(i) in a case to which subparagraph (c)(i) applies - the underlying property referred to in that subparagraph; or
was not less than 75% of the net worth of the company or trust estate referred to in paragraph (a),
(ii) in a case to which subparagraph (c)(ii) applies - the interest referred to in that subparagraph;
a capital gain shall be deemed to have accrued to the taxpayer during the year of income in which the taxpayer disposed of the asset equal to so much of the consideration received or receivable by the taxpayer in respect of the disposal as may reasonably be attributed to the amount (if any) by which the value of the underlying property immediately before the disposal exceeds the sum of the amounts that would be the indexed cost bases to the company or trustee referred to in sub-subparagraph (c)(i)(A) or to the company or trustee referred to in sub-subparagraph (c)(ii)(A), as the case requires, of the underlying property if the underlying property had been disposed of immediately before the disposal of the asset.
For the purposes of this section:
(a) a company is taken to have been a private company at a particular time (in this paragraph called the ``relevant time'' ) after 19 September 1985 if the company was an unlisted company:
(i) at the relevant time; or
(ii) at any time during:
(A) where the relevant time was later than 15 August 1994 - the period of 5 years immediately preceding the relevant time; or
(B) in any other case - the period that commenced on 15 August 1989 and ended at the relevant time; and
(b) a trust estate is taken to have been a private trust estate at a particular time (in this paragraph called the ``relevant time'' ) after 19 September 1985 if the relevant trust is not a unit trust or, where the relevant trust is a unit trust, if the unit trust was an unlisted unit trust:
(i) at the relevant time; or
(ii) at any time during:
(A) where the relevant time was later than 15 August 1994 - the period of 5 years immediately preceding the relevant time; or
(B) in any other case - the period that commenced on 15 August 1989 and ended at the relevant time; and
(c) a company is taken to have been an unlisted company at a particular time if at that time no shares in the company were listed for quotation in the official list of a stock exchange in Australia or elsewhere; and
(d) a unit trust is taken to have been an unlisted unit trust at a particular time if at that time no units in the unit trust were listed for quotation in the official list of a stock exchange in Australia or elsewhere or were ordinarily available for subscription or purchase by the public.
For the purposes of this section:
(a) a reference to property generally or to a particular kind of property includes a reference to an estate or interest in property, or in that kind of property; and
(b) a reference to the net worth of a company or trust estate is a reference to the total value of the assets of the company or trust estate as reduced by the total liabilities of the company or trust estate; and
(c) if a share is acquired by way of subscription of capital (with or without the payment of any other consideration), it is taken to have been purchased; and
(d) if a company issues shares in itself to a person as, or as part of, the consideration for the sale of property by the person to the company, the person is taken to have purchased those shares; and
(e) if one or more persons (the ``transferors'' ) transfer property, with or without consideration, to one or more other persons (the ``transferees'' ) the transfer is taken to constitute:
(i) the sale of the property by the transferors; and
(ii) the purchase of the property by the transferees; and
(f) if, under a contract, land is sold or purchased, it is taken to be sold or purchased on the day the contract is made.
In calculating the net worth of a company or trust estate for the purposes of this section, the Commissioner shall, if satisfied that liabilities were discharged or released or assets acquired for the purpose, or for purposes that included the purpose, of ensuring that this section would not apply in relation to a taxpayer, disregard the discharge or release of those liabilities or the values of those assets, as the case may be.
For the purposes of this section, if:
(a) after 15 August 1989, a company (in this subsection called the ``transferor'' ) disposes of an asset to another company (in this subsection called the ``transferee'' ) that is a non-resident; and
(b) the transferor acquired the asset before 20 September 1985; and
(c) the asset is not a taxable Australian asset; and
(d) the transferee is related to the transferor when the disposal takes place;
the transferee is taken to have acquired the asset before 20 September 1985.
A person who has at any time after 19 September 1985 owned an asset other than an excepted asset shall keep such records in the English language as are necessary to enable the ready ascertainment of:
(a) the date on which the person acquired the asset;
(b) if the asset has not been disposed of:
(i) in any case - any amount that would, if the asset were disposed of, form part of the cost base to the person in respect of the asset; and
(ii) if the asset is a share whose market value has suffered a material decrease under an arrangement where the requirements of section 160ZZRL (which deals with share value shifting arrangements) are satisfied:
(A) the essential features of the arrangement; and
(B) the dates of the decreases in market value of all shares involved in share value shifts under the arrangement; and
(C) the amounts of the decreases in market value of all shares involved in share value shifts under the arrangement; and
(D) the amounts of the increases in market value of all shares involved in share value shifts under the arrangement and of any other shares covered by paragraph 160ZZRO(3)(b) ; and
(E) any amount that would, if the share were disposed of at the time of the decrease in market value, form part of the cost base to the person in respect of the asset; and
(c) if the asset has been disposed of by the person:
(i) the date of disposal;
(ii) any amount that formed part of the cost base to the person in respect of the asset; and
(iii) the consideration in respect of the disposal.
Penalty: $3,000.
For the purpose of the application of subsection (1) in relation to a person, an asset is an excepted asset if:
(a) where the asset has been disposed of by the person - this Part did not apply in respect of the disposal; or
(b) where the asset has not been disposed of by the person - this Part would not, in the event of the disposal of the asset, apply in respect of the disposal. 160ZZU(3) [Records of company group relationship with transferor]
A transferee (within the meaning of section 160ZZO ) who acquires an asset (other than an excepted asset) as a result of a disposal mentioned in paragraph 160ZZO(1)(a) to which section 160ZZO applies (assuming that paragraph 160ZZO(1)(bb) had not been enacted), must keep such records in the English language as are necessary to enable the ready ascertainment of:
(a) the acts, transactions and other circumstances (including the identity of the transferor concerned) that resulted in section 160ZZO applying in relation to the disposal (assuming that paragraph 160ZZO(1)(bb) had not been enacted); and
(b) the transferee's status as a subsidiary (within the meaning of section 160ZZOA ) in relation to the ultimate holding company (within the meaning of section 160ZZOA ) in respect of the disposal at a time before the earliest of the following:
(i) the break-up time mentioned in section 160ZZOA ;
(ia) if section 160ZZO does not actually apply to the disposal but would have applied if paragraph 160ZZO(1)(bb) had not been enacted - the time when the derived asset mentioned in that paragraph was acquired by the transferee;
(ii) the time when the asset was disposed of by the transferee; and
(c) the earliest of the times mentioned in paragraph (b) of this subsection.
Penalty: $3,000.
(Omitted by No 17 of 1993)
160ZZU(4) [Records not required]
Paragraphs (3)(b) and (c) do not require a person to keep a record of information if the person did not know, and made all reasonable efforts to obtain, the information.
For the purpose of the application of subsection (3) in relation to a person, an asset is an excepted asset if this Part would not, in the event of the disposal of the asset by the person, apply in respect of the disposal.
A person who has possession of any records kept under subsection (1) or (3) must retain those records, an asset register entry for those records, or a combination of both, containing all the information required to be contained in those records under that subsection, until:
(a) if subsection (1) applies - the end of 5 years after the asset to which the records relate was disposed of by the person; or
(b) if subsection (3) applies - the end of 5 years after the earliest of the times mentioned in paragraph (3)(b);
(c) (Omitted by No 17 of 1993).
Penalty: $3,000.
Note:
Asset register entry is defined in subsection (9).
If section 160ZZPI applies to the disposal of an asset by a transferor (within the meaning of that section) to a transferee (within the meaning of that section), the transferor must keep such records in the English language as are necessary to establish that that section applies to the disposal, including:
(a) records relating to the identity of the transferee; and
(b) the election under paragraph 160ZZPI(1)(c) .
If subsection 160ZZPI(3) or (4) applies to a subsequent disposal of the asset by the transferee, the transferee must keep such records in the English language as are necessary to establish that the subsection applies to the subsequent disposal, including:
(a) records relating to the identity of the transferor; and
(b) a copy of the election under paragraph 160ZZPI(1)(c) .
A person who has possession of any records kept under subsection (6A) or (6B) must retain the records, an asset register entry for the records, or a combination of both, containing all the information required to be contained in the records under that subsection, until:
(a) if subsection (6A) applies - the end of 5 years after the end of the merger period (within the meaning of section 160ZZPIA ); or
(b) if subsection (6B) applies - the end of 5 years after the subsequent disposal of the asset by the transferee.
Note:
Asset register entry is defined in subsection (9).
A person who, without reasonable excuse, contravenes subsection (6A), (6B) or (6C) commits an offence punishable on conviction by a penalty not exceeding 30 penalty units.
Subsection (6) or (6C) does not require a person to retain records where:
(a) the Commissioner has notified the person that retention of the records is not required; or
(b) the person is a company that has gone into liquidation and been finally dissolved.
Subsections 262A(4) and (5) do not apply in relation to records kept under this section.
160ZZU(9) [Asset register entry](a) a person (the record keeper ) is required by subsection (1), (3), (6A) or (6B) to keep records containing particular information; and
(b) the record keeper makes an entry in a register, in English, setting out some or all of the information; and
(c) a registered tax agent (within the meaning of section 251A ) or other person approved by the Commissioner certifies in the register that the information entered is information from those records (so long as the person certifying is not the record keeper); and
(d) the record keeper retains the records that contain the information entered for at least 5 years after the entry is certified;
the entry is an asset register entry for those records.