Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-95 - VALUE SHIFTING  

Division 727 - Indirect value shifting affecting interests in companies and trusts, and arising from non-arm ' s length dealings  

Subdivision 727-G - The realisation time method  

Operative provisions

SECTION 727-645   Effect of CGT roll-over  

727-645(1)    
If:

(a) this Subdivision applies to a ^* realisation event that is a ^* CGT event that happens to an ^* affected interest in the ^* losing entity; and

(b) section 727-615 reduces a loss that would, apart from this Division, be ^* realised for income tax purposes by the CGT event; and

(c) there is a roll-over for the CGT event;

the interest ' s ^* reduced cost base at the time of the CGT event is taken to have been reduced by the amount by which section 727-615 reduces that loss, but is so taken only for the purposes of working out:

(d) the interest ' s reduced cost base, from time to time after the roll-over, for the entity that ^* acquired the interest because of the CGT event; and

(e) in the case of a ^* replacement-asset roll-over - the reduced cost base of the replacement CGT asset, from time to time after the roll-over, for the entity that ^* disposed of the interest.

Note:

Because of the roll-over, the loss reduction under section 727-615 will have no tax effect. This subsection ensures that the loss reduction is passed on, through the reduction in reduced cost base, to prevent or reduce a loss arising on a later CGT event.

727-645(2)    
If:

(a) this Subdivision applies to a ^* realisation event that is a ^* CGT event that happens to an ^* affected interest in the ^* gaining entity; and

(b) section 727-620 reduces a gain that would, apart from this Division, be ^* realised for income tax purposes by the CGT event; and

(c) there is a roll-over for the CGT event;

the interest ' s ^* cost base at the time of the CGT event is taken to have been uplifted by the amount by which section 727-620 reduces that gain, but is so taken only for the purposes of working out:

(d) the interest ' s cost base, from time to time after the roll-over, for the entity that ^* acquired the interest because of the CGT event; and

(e) in the case of a ^* replacement-asset roll-over - the cost base of the replacement CGT asset, from time to time after the roll-over, for the entity that ^* disposed of the interest.

Note:

Because of the roll-over, the gain reduction under section 727-620 will have no tax effect. This subsection ensures that the gain reduction is passed on, through the uplift in cost base, to prevent or reduce a gain arising on a later CGT event.