INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 3 - Determination of capital gains and capital losses  

SECTION 160ZFB   ADJUSTMENT WHERE CHANGE OF RESIDENCE BY A COMPANY FROM UNLISTED COUNTRY TO LISTED COUNTRY  

160ZFB(1)   [Adjustment of consideration]  

Where:

(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.

160ZFB(2)   [Reduction of consideration]  

Where:

(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:

(c) the company disposed of all of its assets at the residence-change time for their market value; and

(d) the total of the profits from only those disposals that would have resulted in a profit to the company were calculated.

`` DP creation/increase amount '' means the DP creation/increase amount.

160ZFB(3)   [Increase of consideration]  

Where:

(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:

(c) the company disposed of all of its assets at the residence-change time for their market value; and

(d) the total of the losses from only those disposals that would have resulted in a loss to the company were calculated;

`` 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.