Cap Gain
Cap Gain
Cap Gain
Section 124-1
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-5
(2) Second, find out what the consequences are for being able to obtain
a roll-over: see Subdivision 124-A.
Note: The consequences of a scrip for scrip roll-over are set out in
Subdivision 124-M. The consequences of the new owner roll-overs in
Subdivision 124-O (about FSR transitions) are set out in that
Subdivision.
(3) Third, find out if there are any special rules relevant to your
situation: see the Subdivision under which you can get the
roll-over.
Table of sections
124-10 Your ownership of one CGT asset ends
124-15 Your ownership of more than one CGT asset ends
(1A) A *car, motor cycle or similar vehicle must not be one of the new
assets.
(2) A *capital gain or a *capital loss you make from the original asset
is disregarded.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-15
The first element of each new asset’s *reduced cost base is worked
out similarly.
Example: To continue the example, suppose the cost base of the fishing licence
that expires is $5,000. This becomes the first element of the new one’s
cost base.
Note 1: In some cases the amount you paid to acquire the new asset also forms
part of the first element: see Subdivisions 124-C (about statutory
licences), Subdivision 124-D (about strata title conversion) and
Subdivision 124-O (about FSR transitions).
Note 2: There are modifications to the consequences in Subdivision 124-B
(about compulsory acquisition, loss or destruction), Subdivision 124-J
(about Crown leases), Subdivision 124-L (about prospecting and
mining) and Subdivision 124-O (about FSR transitions).
Note 3: No other elements of the cost base of the new asset are affected by the
roll-over.
Note 4: There are special indexation rules for roll-overs: see Division 114.
Note 5: The reduced cost base may be modified for a roll-over happening after
a demerger: see section 125-175.
(4) If you *acquired the original asset before 20 September 1985, you
are taken to have acquired each new asset before that day.
Note: A capital gain or loss you make from a CGT asset you acquired before
20 September 1985 is generally disregarded: see Division 104. This
exemption is removed in some situations: see Division 149.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-15
Example: You own 100 shares in a company. The company cancels these shares
and issues you with 10 shares in return.
(1A) A *car, motor cycle or similar vehicle must not be one of the new
assets.
(2) A *capital gain or a *capital loss you make from each original asset
is disregarded.
(3) If you *acquired all the original assets on or after 20 September
1985, the first element of each new asset’s cost base is:
The total of the cost bases of all the original assets
(worked out when your ownership of them ended)
Number of new assets
The first element of each new asset’s *reduced cost base is worked
out similarly.
Note 1: No other elements of the cost base of the new asset are affected by the
roll-over.
Note 2: There are special indexation rules for roll-overs: see Division 114.
(4) If you *acquired all the original assets before 20 September 1985,
you are taken to have acquired each new asset before that day.
Note: A capital gain or loss you make from a CGT asset you acquired before
20 September 1985 is generally disregarded: see Division 104. This
exemption is removed in some situations: see Division 149.
If the result is less than one, none of the new assets are taken to
have been *acquired before 20 September 1985.
Example: To continue the example, suppose you acquired 67 of the 100 original
shares before 20 September 1985. The number of new shares that you
are taken to have acquired before that day cannot exceed:
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-15
67
10 × = 6.7
100
So, you are taken to have acquired 6 of the 10 shares before that day.
Note: Subdivision 124-O provides a different rule for FSR transitions.
(6) These rules are relevant to each remaining new asset. The first
element of each one’s *cost base is:
The total of the cost bases of all the original assets
that you *acquired on or after 20 September 1985
(worked out when your ownership of them ended)
Number of remaining new assets
The first element of each one’s *reduced cost base is worked out
similarly.
Note: There are special indexation rules for roll-overs: see Division 114.
Example: To continue the example, suppose the total of the cost bases of the 33
shares you acquired on or after 20 September 1985 is $400.
The first element of the cost base of each of the remaining 4 shares is:
$400
= $100
4
The first element of the reduced cost base of those 4 shares is worked
out similarly.
(7) However, subsections (4) and (5) are taken never to have applied to
a *share to which subsection 104-195(6) applies (CGT event J4).
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-70
Section 124-70
(iv) the entity to which you dispose of the land was the
lessee under the lease;
(cb) you dispose of it to an entity (other than a foreign
government agency) in circumstances meeting all of these
conditions:
(i) the asset is land over which a mining lease would have
been compulsorily granted if you had not disposed of it;
(ii) that lease would have significantly affected your use of
the land;
(iii) the entity to which you dispose of the land would have
been the lessee under the lease.
(d) if it is a lease granted to you by an *Australian government
agency under an *Australian law—the lease expires and is
not renewed.
Note 1: There are no roll-over consequences if you make a capital loss from
the event.
Note 2: Section 103-25 tells you when you have to make the choice.
Section 124-75
(4) The original asset must have the *necessary connection with
Australia just before the event happens. The other asset must have
the *necessary connection with Australia just after you *acquire it.
Section 124-80
(5) The other asset cannot become an item of your *trading stock just
after you *acquire it, nor can it be a *depreciating asset whose
decline in value is worked out under Division 40 or deductions for
which are calculated under Division 328.
(2) The other asset cannot become an item of your *trading stock just
after you *acquire it, nor can it be a *depreciating asset whose
decline in value is worked out under Division 40 or deductions for
which are calculated under Division 328.
(3) The *market value of the other asset (when you *acquire it) must be
more than the *cost base of the original asset just before the event
happens.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-85
$100,000
$75,000 × = $30,000
$100,000 + $150, 000
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-90
Case 2
Suppose Simon spent $15,000 on repairs instead. The money he
received under the policy exceeds that amount by $85,000. This is
more than the gain he made.
The gain is relevant to working out Simon’s net capital gain or loss for
the income year and the $15,000 he spent on repairs forms part of the
factory’s cost base.
Case 3
Suppose Simon spent $120,000 on repairs instead. The gain is
disregarded and the $120,000 is reduced to $50,000.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-95
Example: Steven bought land in 1999 for $100,000. In 2001 the government
compulsorily acquires the land and gives him new land in return.
A capital gain he makes from the original land is disregarded. Suppose
the original land’s cost base when it is acquired is $120,000. The first
element of the new land’s cost base becomes $120,000.
(4) If you acquired the original asset before 20 September 1985, you
are taken to have *acquired the other asset before that day.
(4) If you *acquired the original asset before 20 September 1985, you
are taken to have acquired the new asset before that day.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-95
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-95
(6) If you *acquired the original asset before 20 September 1985 and
you incurred expenditure in acquiring another *CGT asset, you are
taken to have acquired the other asset before that day if:
(a) the expenditure you incurred in acquiring the other
asset is not more than 120% of the *market value of
that part of the original asset that is attributable to the
other asset when the event happened; or
(b) a natural disaster happened so that the original asset, or
part of it, is lost or destroyed and it is reasonable to
treat the other asset as substantially the same as that
part of the original asset that is attributable to the new
asset.
Note 1: The consequences in paragraph (6)(a) are different to those in
paragraph 124-85(3)(a). They require a proportional
attribution of the market value of the original asset.
Note 2: The consequences in paragraph (6)(b) are different to those in
paragraph 124-85(3)(b). They require a proportional
attribution of the original asset.
Example: Kris owns land, which he acquired in 1998. It is compulsorily
acquired, and Kris receives $80,000 in cash and replacement
land with a market value of $80,000.
The cost base of the original land is $150,000.
Kris buys additional land for $80,000.
Subsection (2) is satisfied because the market value of the
replacement land ($80,000) is more than the part of the cost
base of the original land that is attributable to the replacement
land:
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-140
(2) The first element of the *cost base and *reduced cost base of the
new licence includes any amount you paid to get it (which can
include giving property: see section 103-5).
Note: The rest of the first element is worked out under Subdivision 124-A.
Section 124-240
Note 1: The roll-over consequences are set out in section 124-10. The original
asset is the property that gave you the right to occupy a unit in the
building. The new asset is the stratum unit.
Note 2: Section 103-25 tells you when you have to make the choice.
(2) The first element of the *cost base and *reduced cost base of the
*stratum unit includes any amount you paid to get it (which can
include giving property: see section 103-5).
Note: The rest of the first element is worked out under Subdivision 124-A.
Section 124-245
Note 1: The roll-over consequences are set out in Subdivision 124-A. The
original assets are the original shares. The new assets are the new
shares.
Note 2: Section 103-25 tells you when you have to make the choice.
Table of sections
124-295 Exchange of rights or option to acquire shares in a company
124-300 Exchange of rights or option to acquire units in a unit trust
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-300
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-300
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-350
This Subdivision sets out when you can obtain a roll-over if:
• you own shares in a company; and
• there is a reorganisation of its affairs so that you become the
owner of new shares in another company.
Table of sections
124-355 Summary of rules
Disposal case
124-360 Disposal of shares in one company for shares in another one
124-365 Other requirements to be satisfied
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-355
(2) The first case is if you dispose of shares in one company to another
company and the other company issues you with new shares. You
can find the specific rules relevant to this case in sections 124-360
and 124-365.
(3) The second case is if your shares in one company are redeemed or
cancelled and another company issues you with new shares in
return. You can find the specific rules relevant to this case in
sections 124-370 and 124-375.
(4) There are some rules that apply in both cases: see section 124-380.
(5) There are also consequences for the other company if you can
choose to obtain the roll-over: see section 124-385.
Disposal case
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-365
(2) You are taken to have chosen to obtain the roll-over if:
(a) immediately before the time referred to in section 124-365 as
the completion time, the original company is the *head
company of a *consolidated group; and
(b) immediately after the completion time, the interposed
company is the head company of the group.
Note: The consolidated group continues in existence because of
section 703-70.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-370
each share they have in A. All shares in B have the same rights. Bill
owned 15 shares in A and received 150 shares in B in exchange.
(4) Either:
(a) you are an Australian resident at the time you *disposed of
your *shares in the original company; or
(b) if you are a foreign resident at that time—your *shares in the
original company have the *necessary connection with
Australia.
(1A) You are taken to have chosen to obtain the roll-over if:
(a) immediately before the time referred to in section 124-375 as
the completion time, the original company is the *head
company of a *consolidated group; and
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-375
(2) The original company can issue other *shares in itself to the
interposed company as part of the scheme.
Note: Some of the interposed company’s shares in the original company
may be taken to be acquired before 20 September 1985: see
section 124-385.
Section 124-380
(4) Either:
(a) you are an Australian resident at the time your *shares in the
original company are redeemed or cancelled; or
(b) if you are a foreign resident at that time—your *shares in the
original company have the *necessary connection with
Australia.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-385
(6) If subsection (5) of this section does not apply, the interposed
company must choose that section 124-385 apply.
(7) In either case, the interposed company must make the choice
within 28 days after the completion time, or within such further
time as the Commissioner allows. The choice cannot be revoked.
Note: This is an exception to the general rule about choices in
section 103-25.
(2) The number (worked out as at the completion time) is the greatest
possible that (when expressed as a percentage of all the *shares)
does not exceed:
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-390
• the total of the cost bases (as at the completion time) of the
original company’s assets that it acquired on or after that day;
less:
• its liabilities (if any) in respect of those assets.
(4) The first element of the *reduced cost base of the interposed
company’s *shares is worked out similarly.
(5) A liability of the original company that is not a liability in respect
of a specific asset or assets of the company is taken to be a liability
in respect of all the assets of the company.
Note: An example is a bank overdraft.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-390
Trading stock
(2) The amount included in your assessable income because of the
*disposal, redemption or cancellation of each of your *shares in the
original company that is your *trading stock at that time is equal to:
(a) if the share has been your trading stock ever since the start of
the income year in which that time occurs—the total of:
(i) its *value as trading stock at the start of the income year;
and
(ii) the amount (if any) by which its cost has increased since
the start of the income year; or
(b) otherwise—its cost at that time.
(3) For each of the *shares in the interposed company that you
acquired in return for those of your shares in the original company
that were your *trading stock at that time, you are taken to have
paid:
Total of the amounts included in your assessable income
under subsection (2) for those shares in the original company
Number of those shares in the interposed company
Note: The amount worked out under the formula becomes the cost of each of
those shares in the interposed company.
Revenue assets
(4) For each of your *shares in the original company that is a *revenue
asset at that time, your assessable income includes the total of the
amounts that (apart from this subsection) would be subtracted from
the gross disposal proceeds in calculating any profit or loss on your
disposing of, or ceasing to own, that share at that time.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-435
(5) For each of the *shares in the interposed company that you
acquired in return for those of your shares in the original company
that were *revenue assets at that time, you are taken to have paid:
Total of the amounts included in your assessable income
under subsection (4) for those shares in the original company
Number of those shares in the interposed company
This Subdivision sets out when you can obtain a roll-over if:
• you own units in a unit trust; and
• there is a reorganisation of its affairs so that you become the
owner of new shares in a company.
Table of sections
124-440 Summary of rules
Disposal case
124-445 Disposal of units in a unit trust for shares in a company
124-450 Other requirements to be satisfied
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-440
(2) The first case is if you dispose of units in a unit trust to a company
and the company issues you with shares. You can find the specific
rules about this case in sections 124-445 and 124-450.
(3) The second case is if your units in a unit trust are redeemed or
cancelled and a company issues you with shares. You can find the
specific rules about this case in sections 124-455 and 124-460.
(4) There are some rules that apply in both cases: see section 124-465.
(5) There are also consequences for the company if you can choose to
obtain a roll-over: see section 124-470.
Disposal case
Section 124-455
(2) Just after the completion time, each exchanging member must
own:
(a) a whole number of *shares in the company; and
(b) a percentage of the *shares in the company that were issued
to all the exchanging members that is equal to the percentage
of the units in the unit trust (that were *disposed of to the
company) that the member owned.
(3) The ratio of:
•the *market value of each exchanging member’s *shares in
the company to the market value of the shares in the
company issued to all the exchanging members (worked out
just after the completion time);
must equal the ratio of:
• the market value of that member’s units in the unit trust that
were disposed of to the company to the market value of all
the units that were disposed of to the company (worked out
just before the first disposal).
Example: There are 1,000 units in the A unit trust, all having the same rights. B
Pty Ltd acquires all the units in A by issuing each unitholder in A 10
shares in itself for each 100 units they have in A. All shares in B have
the same rights. Brian owned 300 units in A and received 30 shares in
B in exchange.
(4) Either:
(a) you are an Australian resident at the time you *disposed of
your units in the unit trust; or
(b) if you are a foreign resident at that time—your units have the
*necessary connection with Australia.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-460
(b) these are the first units that the company acquires in the trust;
and
(c) you and at least one other entity (the exchanging members)
own all the remaining units in the trust; and
(d) the trustee redeems or cancels those remaining units; and
(e) each exchanging member receives *shares (and nothing else)
in the company in return for their units being redeemed or
cancelled;
and the requirements in sections 124-460 and 124-465 are satisfied.
Note: The roll-over consequences are set out in Subdivision 124-A. The
original assets are your units in the unit trust. The new assets are your
new shares in the company.
(2) The trustee of the unit trust can issue other units to the company as
part of the scheme.
Note: Some of the company’s units in the unit trust may be taken to be
acquired before 20 September 1985: see section 124-470.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-465
• the market value of that member’s units in the unit trust that
were redeemed or cancelled to the market value of all the
units that were redeemed or cancelled (worked out just
before the first redemption or cancellation).
Example: There are 1,000 units in the A unit trust, all having the same rights. 2
new units in A are issued to B Pty Ltd, and all other units in A are
cancelled. Each unitholder in A is issued 10 shares in B for each 100
units they have in A. All shares in B have the same rights. Alison
owned 200 units in A and received 20 shares in B in exchange.
(4) Either:
(a) you are an Australian resident at the time your units in the
unit trust are redeemed or cancelled; or
(b) if you are a foreign resident at that time—your units have the
*necessary connection with Australia.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-470
(2) The number (worked out as at the completion time) is the greatest
possible that (when expressed as a percentage of all the units) does
not exceed:
•the *market value of the unit trust’s assets that it *acquired
before 20 September 1985 less its liabilities (if any) in
respect of those assets;
expressed as a percentage of:
• the market value of all the unit trust’s assets less all of its
liabilities.
(3) The first element of the *cost base of the company’s units in the
unit trust that are not taken to have been *acquired before
20 September 1985 is:
• the total of the cost bases (as at the completion time) of the
unit trust’s assets that it acquired on or after that day;
less:
• its liabilities (if any) in respect of those assets.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-520
(4) The first element of the *reduced cost base of the company’s units
is worked out similarly.
(5) A liability of the unit trust that is not a liability in respect of a
specific asset or assets of the trust is taken to be a liability in
respect of all the assets of the trust.
Note: An example is a bank overdraft.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-570
(2) This section does not apply if the body is a mutual entity that is
being demutualised and to whose demutualisation Division 326 in
Schedule 2H of the Income Tax Assessment Act 1936 applies.
Table of sections
Operative provisions
124-575 Extension or renewal of Crown lease
124-580 Meaning of Crown lease
124-585 Original right differs in area from new right
124-590 Part of original right excised
124-595 Treating parts of new right as separate assets
124-600 What is the roll-over?
124-605 Change of lessor
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-575
Operative provisions
(2) The new right must have been granted in one of these ways:
(a) by renewing or extending the term of the original right where
the renewal or extension is mainly due to your having held
the original right; or
(b) by changing the purpose for which the land to which the
original right related can be used; or
(c) by converting the original right to a *Crown lease in
perpetuity; or
(d) by converting the original right to an estate in fee simple; or
(e) by consolidating, or consolidating and dividing, the original
right; or
(f) by subdividing the original right; or
(g) by excising or relinquishing a part of the land to which the
original right related; or
(h) by expanding the area of that land.
Section 124-585
(2) There is no roll-over for the excised part. The *cost base of the
excised part is so much of the *cost base of the relevant *Crown
lease as is attributable to the excised part.
Its *reduced cost base is worked out similarly.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-595
Note: You may make a capital gain or loss on the excised part because of
CGT event C2.
where:
CB of post-CGT original right is the sum of the *cost bases of the
*Crown leases (that were part of the original right) and that you
*acquired on or after 20 September 1985 (just before the original
right expired or was surrendered) reduced, if there is an excised
part, by so much of those cost bases as is attributable to the excised
part.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-605
market value of all new assets is the *market value of all *CGT
assets (that you are not taken to have *acquired before
20 September 1985) that are part of the new right just after you
acquired them.
market value of separate asset is the *market value of the
particular asset just after you *acquired it.
(4) The first element of the *reduced cost base of each of those assets
is worked out similarly.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-655
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-700
Table of sections
Operative provisions
124-705 Extension or renewal of prospecting or mining entitlement
124-710 Meaning of prospecting entitlement and mining entitlement
124-715 Original entitlement differs in area from new entitlement
124-720 Part of original entitlement excised
124-725 Treating parts of new entitlement as separate assets
124-730 What is the roll-over?
Operative provisions
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-710
(2) The new entitlement must have been granted in one of these ways:
(a) by renewing or extending the term of the original entitlement
where the renewal or extension is mainly due to your having
held the original entitlement; or
(b) by consolidating, or consolidating and dividing, the original
entitlement; or
(c) by subdividing the original entitlement; or
(d) by converting a *prospecting entitlement to a *mining
entitlement, or a mining entitlement to a prospecting
entitlement; or
(e) by excising or relinquishing a part of the land to which the
original entitlement related; or
(f) by expanding the area of that land.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-720
(2) There is no roll-over for the excised part. The *cost base of the
excised part is so much of the *cost base of the original entitlement
as is attributable to the excised part.
Its *reduced cost base is worked out similarly.
Note: You may make a capital gain or loss on the excised part because of
CGT event C2.
Section 124-730
where:
CB of post-CGT original entitlement is the sum of the *cost bases
of the prospecting entitlements or mining entitlements (that were
part of the original entitlement) and that you *acquired on or after
20 September 1985 (just before the original entitlement expired or
was surrendered) reduced, if there is an excised part, by so much of
those cost bases as is attributable to the excised part.
market value of all new assets is the *market value of all *CGT
assets (that you are not taken to have *acquired before
20 September 1985) that are part of the new entitlement just after
you acquired them.
market value of separate asset is the *market value of the
particular asset just after you *acquired it.
(4) The first element of the *reduced cost base of each of those assets
is worked out similarly.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-775
You can only choose the roll-over if you would have made a
capital gain from the exchange.
Table of sections
Operative provisions
124-780 Replacement of shares
124-781 Replacement of trust interests
124-782 Transfer or allocation of cost base of shares acquired by acquiring entity
etc.
124-783 Meaning of significant stakeholder, common stakeholder, significant stake
and common stake
124-784 Cost base of equity or debt given by acquiring entity to ultimate holding
company
124-785 What is the roll-over?
124-790 Partial roll-over
124-795 Exceptions
124-800 Interest received for pre-CGT interest
124-810 Certain companies and trusts not regarded as having 300 members or
beneficiaries
Operative provisions
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-780
Section 124-780
(d) the original interest holder chooses to obtain the roll-over or,
if section 124-782 applies to it for the arrangement, it and the
replacement entity jointly choose to obtain the roll-over; and
(e) if that section applies, the original interest holder informs the
replacement entity in writing of the *cost base of its original
interest worked out just before a CGT event happened in
relation to it.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-781
Note: If the original interest holder also exchanges a CGT asset that it
acquired before 20 September 1985, the cost base of any interest
received in exchange for it is worked out under section 124-800.
CUFS
(6) This section applies to the holder of a Chess Unit of Foreign
Security as if the holder held the underlying interests that the unit
represents.
Note: A Chess Unit of Foreign Security is an interest, traded on the
Australian Stock Exchange, in a foreign share, unit or interest.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-781
Section 124-781
(b) apart from the roll-over, it would make a *capital gain from a
*CGT event happening in relation to its original interest; and
CUFS
(5) This section applies to the holder of a Chess Unit of Foreign
Security as if the holder held the underlying interests that the unit
represents.
Note: A Chess Unit of Foreign Security is an interest, traded on the
Australian Stock Exchange, in a foreign share, unit or interest.
Section 124-782
Section 124-783
(4) The amount allocated to a new interest under subsection (3) must
not be more than its *market value just after the arrangement was
completed.
Significant stakeholder
(1) An original interest holder is a significant stakeholder for an
*arrangement if it had:
(a) had a *significant stake in the original entity just before the
*arrangement started; and
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-783
Common stakeholder
(3) An original interest holder is a common stakeholder for an
*arrangement if it had:
Significant stake
(6) An entity has a significant stake in a company at a time if the
entity, or the entity and the entity’s *associates between them:
(a) have at that time *shares carrying 30% or more of the voting
rights in the company; or
(b) have at that time the right to receive for their own benefit
30% or more of any *dividends that the company may pay; or
(c) have at that time the right to receive for their own benefit
30% or more of any distribution of capital of the company.
Note: The tests are applied to interests held directly by an entity and its
associates.
Example: There are 4 shareholders in YZT Company: Sonja has 60%, Mario has
20%, Peter has 10% and Dave has 10%.
Sonja, Mario and Peter are associates. They each have a significant
stake in YZT because, on an associate inclusive basis, they each have
a 90% stake in YZT. Dave does not have a significant stake because
his total stake, on an associate inclusive basis, is 10%.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-783
Common stake
(9) If the original entity and the acquiring entity are companies, an
entity, or 2 or more entities, have a common stake in the original
entity just before the *arrangement started and in the acquiring
entity just after the arrangement was completed if the entity or
entities, and their *associates, between them:
(a) had 80% or more of:
(i) the voting rights in the original entity just before the
arrangement started; and
(ii) the voting rights in the replacement entity just after the
arrangement was completed; or
(b) had the right to receive for their own benefit 80% or more of:
(i) any *dividends that the original entity may pay just
before the arrangement started; and
(ii) any dividends that the replacement entity may pay just
after the arrangement was completed; or
(c) had the right to receive for their own benefit 80% or more of:
(i) any distribution of capital of the original entity just
before the arrangement started; and
(ii) any distribution of capital of the replacement entity just
after the arrangement was completed.
(10) If the original entity and the acquiring entity are trusts, an entity, or
2 or more entities, have a common stake in the original entity just
before the *arrangement started and in the acquiring entity just
after the arrangement was completed if the entity or entities, and
their *associates, between them:
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-784
(a) had, just before the arrangement started, the right to receive
for their own benefit 80% or more of any distribution to
beneficiaries of the original entity of income or capital of the
original entity; and
(b) had, just after the arrangement was completed, the right to
receive for their own benefit 80% or more of any distribution
to beneficiaries of the replacement entity of income or capital
of that entity.
Purpose
(1) This section allocates an appropriate *cost base to equity issued, or
new debt owed, by an acquiring entity under the *arrangement to
the *ultimate holding company where the cost base of an original
interest was transferred or allocated under section 124-782 because
the original interest holder is a *significant stakeholder or a
*common stakeholder for the arrangement.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-785
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-795
124-795 Exceptions
(1) You cannot obtain the roll-over if, just before you stop owning
your original interest, you are a foreign resident unless, just after
you *acquire your replacement interest, the replacement entity is an
Australian resident or a *resident trust for CGT purposes.
Note: If you are a foreign resident and the replacement entity is an
Australian resident, the replacement interest has the necessary
connection with Australia: see Division 136.
(3) You cannot obtain the roll-over for the *CGT event happening in
relation to the exchange of your original interest if you can choose
a roll-over under Division 122 or Subdivision 124-G for that event.
Note: Division 122 deals with the disposal of assets to a wholly-owned
company, and Subdivision 124-G deals with company reorganisation.
Section 124-800
(5) You can obtain the roll-over for the original interest if:
(a) if the acquiring entity was not a member of a *wholly-owned
group just after the *arrangement was completed—the
acquiring entity had at least 300 *members just before the
arrangement started; or
(b) if it was a member of such a group just after the arrangement
was completed:
(i) the *ultimate holding company of the group had at least
300 members just before the arrangement started; and
(ii) the ultimate holding company was a foreign resident
just after the arrangement was completed.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-810
Concentrated ownership
(3) This subsection applies to a company if an individual owns, or up
to 20 individuals own between them, directly or indirectly (through
one or more interposed entities) and for their own benefit, *shares
in the company:
(a) carrying fixed entitlements to:
(i) at least 75% of the company’s income; or
(ii) at least 75% of the company’s capital; or
(b) carrying at least 75% of the voting rights in the company.
(4) This subsection applies to a trust if an individual owns, or up to 20
individuals own between them, directly or indirectly (through one
or more interposed entities) and for their own benefit, units or other
fixed interests in the trust:
(a) carrying *fixed entitlements to:
(i) at least 75% of the trust’s income; or
(ii) at least 75% of the trust’s capital; or
(b) if beneficiaries of the trust have a right to vote in respect of
activities of the trust—carrying at least 75% of those voting
rights.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-850
Single individual
(6) For the purposes of subsections (3) and (4), all of the following are
taken to be a single individual:
(a) an individual, whether or not the individual holds *shares,
units or other interests in the entity concerned;
(b) the individual’s *associates;
(c) for any shares, units or interests in respect of which other
individuals are nominees of the individual or of the
individual’s associates—those other individuals.
Section 124-855
Note: The effect of the roll-over may be reversed if the trust does not cease
to exist within 6 months: see section 104-195.
Table of sections
Operative provisions
124-855 What this Subdivision deals with
124-860 Requirements for roll-over
124-865 Entities both choose the roll-over
124-870 Roll-over for owner of units or interests in a trust
124-875 Effect on the transferor and transferee
Operative provisions
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-860
(5) Subsection (4) does not apply to a transferee that is the trustee of
the transferor.
(6) Just after the end of the *trust restructuring period:
(a) each entity that owned interests in a transferor just before the
start of the trust restructuring period must own replacement
interests in the transferee in the same proportion as it owned
those interests in that transferor; and
(b) the *market value of the replacement interests each of those
entities owns in the transferee must be at least substantially
the same as the market value of the interests it owned in the
transferor or transferors just before the start of the trust
restructuring period.
Note: Any assets in the company just before the start of the trust
restructuring period may affect the ability of owners of units or
interests to comply with paragraph (6)(b).
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-865
(7) For the purposes of subsection (6), ignore any *shares in the
transferee that:
(a) just before the start of the *trust restructuring period, were
owned by entities who together owned no more than 5
shares; and
(b) just after the end of that period, represented such a low
percentage of the total *market value of all the shares that it
is reasonable to treat other entities as if they owned all the
shares in the transferee.
Example: To continue the example in subsection 124-855(2), assume that
Jonathon Pty Ltd was a shelf company organised for Matthew and
Jaclyn by their solicitor, Indira.
Indira owned the 2 shares in Jonathon Pty Ltd before the trust
restructuring period. The company issues Matthew and Jaclyn 5,000
shares each.
In these circumstances, it is reasonable to treat Matthew and Jaclyn as
if they owned all the shares in Jonathon Pty Ltd.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-875
Note 1: The roll-over consequences are set out in Subdivision 124-A. The
original assets are your units and interests in the transferor. The new
assets are your shares in the transferee.
Note 2: The effect of the roll-over may be reversed if the transferor does not
cease to exist within 6 months: see section 104-195.
(2) You must make the choice for each of your original interests.
(3) An entity that is a foreign resident cannot choose a roll-over under
this section unless the replacement interests the entity *acquires in
the transferee have the *necessary connection with Australia just
after their acquisition.
(4) If you choose a roll-over, you cannot make a *capital loss from a
*CGT event that happens to your original interests during the *trust
restructuring period.
Note: The rule in subsection (4) prevents a capital loss arising on your units
or interests after the trust assets have been disposed of to the company
but before your shares are issued to you.
Note: The effect of the roll-over may be reversed if the transferor does not
cease to exist within 6 months: see section 104-195.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-875
Section 124-880
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-885
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-895
Section 124-900
(7) The first element of each replacement asset’s *reduced cost base is
worked out similarly.
(8) If, in a situation covered by section 124-880, an old licence
mentioned in that section ceases to have effect only partly, then:
(a) a reference in Subdivision 124-A to the original asset’s *cost
base; and
(b) the reference in subsection (6) of this section to the total of
the *cost bases of the original assets;
is taken to be a reference to such part of the cost base of the old
licence as is reasonably attributable to the part of the old licence
that ceases to have effect.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-900
(2) This subsection applies if the new owner and the original owner
are members of the same *consolidatable group at the time that the
new owner *acquires the *Australian financial services licence.
(3) This subsection applies if:
(a) at the time that the new owner *acquires the *Australian
financial services licence, all of the following apply:
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-905
Section 124-910
(2) This subsection applies if the new owner and the original owner
are members of the same *consolidatable group at the time that the
new owner *acquires the new licence.
(3) This subsection applies if:
(a) at the time that the new owner *acquires the new licence, all
of the following apply:
(i) the new owner is a company or a trust;
(ii) if the new owner is a trust—*CGT event E4 is capable
of applying to all of the units and interests in the trust;
(iii) all of the *membership interests in the new owner are
owned by the original owner; and
(b) the original owner is an individual who, at the same time as,
or just after, the new owner acquires the new licence:
(i) becomes an authorised representative (within the
meaning of section 761A of the Corporations Act 2001)
of the new owner; or
(ii) becomes an employee of the new owner; or
(iii) becomes a director (within the meaning of the
Corporations Act 2001) of the new owner.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-915
(d) the new owner acquires one or more intangible CGT assets
by entering into one or more contracts in substitution
(whether wholly or partly) for the contract or contracts that
were terminated; and
(e) subsection (2) or (3) applies.
Note: The period in paragraph (1)(a) may be extended in special
circumstances: see section 124-930.
(2) This subsection applies if the new owner and the original owner
are members of the same *consolidatable group at the time that the
new owner *acquires the *CGT asset or assets mentioned in
paragraph (1)(d).
(3) This subsection applies if:
(a) at the time that the new owner *acquires the *CGT asset or
assets mentioned in paragraph (1)(d), all of the following
apply:
(i) the new owner is a company or a trust;
(ii) if the new owner is a trust—*CGT event E4 is capable
of applying to all of the units and interests in the trust;
(iii) all of the *membership interests in the new owner are
owned by the original owner; and
(b) the original owner is an individual who, at the same time as,
or just after, the new owner acquires the Australian financial
services licence:
(i) becomes an authorised representative (within the
meaning of section 761A of the Corporations Act 2001)
of the new owner; or
(ii) becomes an employee of the new owner; or
(iii) becomes a director (within the meaning of the
Corporations Act 2001) of the new owner.
Section 124-915
(b) another person (the new owner) acquires one or more *CGT
assets (the replacement asset or assets);
the consequences of that section applying are the consequences
specified in this section.
(2) A *capital gain or a *capital loss that the original owner makes
from a *CGT event happening to the original asset is disregarded.
(3) If the original owner *acquired the original asset on or after
20 September 1985, the first element of each replacement asset’s
*cost base is the sum of:
(a) the amount worked out under the formula in subsection (4);
and
(b) any amount the new owner paid to get the replacement asset
(which can include giving property: see section 103-5).
(4) The formula is:
The original asset's *cost base
( worked out when the original owner's ownership of it ended )
The number of replacement asstes
Note: If the original asset is an old licence that ceases to have effect only
partly, subsection (7) modifies this formula.
(5) The first element of each replacement asset’s *reduced cost base is
worked out similarly.
(6) If the original owner *acquired the original asset before
20 September 1985, the new owner is taken to have acquired each
replacement asset before that day.
(7) If, in a situation covered by section 124-900, an old licence
mentioned in that section ceases to have effect only partly, then the
reference in subsection (4) of this section to the original asset’s
*cost base is taken to be a reference to such part of the cost base of
the old licence as is reasonably attributable to the part of the old
licence that ceases to have effect.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-920
(a) the amount worked out under the formula in subsection (4);
and
(b) any amount the new owner paid to get the replacement asset
(which can include giving property: see section 103-5).
(4) The formula is:
The total of the *cost bases of all the original assets
( worked out when the original owner's ownership of them ended )
The number of replacement assets
Note: If an original asset is an old licence that ceases to have effect only
partly, subsection (11) modifies this formula.
(5) The first element of each replacement asset’s *reduced cost base is
worked out similarly.
(6) If the original owner *acquired all the original assets before
20 September 1985, the new owner is taken to have acquired each
replacement asset before that day.
(7) If the original owner *acquired some of the original assets before
20 September 1985, each replacement asset, or part of a
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-920
(10) The first element of each replacement asset’s *reduced cost base is
worked out similarly.
(11) If, in a situation covered by section 124-900, an old licence
mentioned in that section ceases to have effect only partly, then a
reference in subsection (4) or (9) of this section to the original
asset’s *cost base is taken to be a reference to such part of the cost
base of the old licence as is reasonably attributable to the part of
the old licence that ceases to have effect.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 124-925
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 125-1
Table of Subdivisions
Guide to Division 125
125-A Object of this Division
125-B Consequences for owners of interests
125-C Consequences for members of demerger group
125-D Corporate unit trusts and public trading trusts
Note: Dividend relief is also available: see section 44 of the Income Tax
Assessment Act 1936.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 125-5
There are cost base adjustments if you receive new interests under
a demerger and no CGT event happens to your original interests.
Table of sections
Operative provisions
125-55 When a roll-over is available for a demerger
125-60 Meaning of ownership interest and related terms
125-65 Meanings of demerger group, head entity and demerger subsidiary
125-70 Meanings of demerger, demerged entity and demerging entity
125-75 Exception: employee share schemes
125-80 What is the roll-over?
125-85 Cost base adjustments where CGT event happens but no roll-over chosen
125-90 Cost base adjustments where no CGT event
125-95 No other cost base adjustment after demerger
125-100 No further demerger relief in some cases
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 125-55
Operative provisions
(2) You cannot choose to obtain a roll-over under this Subdivision for
an original interest if:
(a) you are a foreign resident; and
(b) the new interest you *acquire under the *demerger in
exchange for that original interest does not have the
*necessary connection with Australia just after you acquire it.
Note: Section 136-25 tells you when an asset has the necessary connection
with Australia.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 125-60
Section 125-65
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 125-70
(b) the listed public company or listed widely held trust chooses
that the first company or trust not be a member of the
demerger group.
(6) A company is a demerger subsidiary of another company or a trust
that is a member of a *demerger group if the other company or the
trust, either alone or together with other members of the group,
owns, or has the right to *acquire, *ownership interests in the
company that carry between them:
(a) the right to receive more than 20% of any distribution of
income or capital by the company; or
(b) the right to exercise, or control the exercise of, more than
20% of the voting power of the company.
(7) A trust is a demerger subsidiary of another trust or a company that
is a member of a *demerger group if the other trust or the company,
either alone or together with other members of the group, owns, or
has the right to *acquire, *ownership interests in the trust that carry
between them the right to receive more than 20% of any
distribution of income or capital by the trustee.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 125-70
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 125-70
(2) Each owner (an original owner) of original interests in the *head
entity of the *demerger group must:
(a) *acquire, under the *demerger, the same proportion, or as
nearly as practicable the same proportion, of new interests in
the *demerged entity as the original owner owned in the head
entity just before the demerger; and
(b) just after the demerger, have the same proportionate total
*market value of *ownership interests in the head entity and
demerged entity as the original owner owned in the head
entity just before the demerger.
Note 1: There is an exception: see section 125-75.
Note 2: Dual listed company voting shares are not treated as ownership
interests: see section 125-60.
Note 3: Fractional interests will generally not affect your ability to choose a
roll-over.
Example: To continue the example from subsection (1), Company A concludes,
given the circumstances of the demerger, that the market values of
Peter’s and the other shareholders’ shares in A and B are expected to
be in proportion with their original interests in Company A, and
advises the shareholders of this position.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 125-70
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 125-75
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 125-75
Adjusting instruments
(4) In working out whether the requirements in subsection 125-70(2)
are met, disregard each of the *ownership interests described in
subsection (5) (adjusting instruments) if, just before the
*demerger, those interests represented not more than 10%, or such
greater percentage (not exceeding 17%) as is prescribed, of the
ownership interests in the entity.
(5) An *ownership interest in a *listed public company or a *listed
widely held trust that is the *head entity of a *demerger group is
disregarded under subsection (4) if:
(a) the adjusting instrument was issued on terms that ensure that
its value is not adversely affected by an *arrangement
undertaken by the company or trust in relation to other
ownership interests in the company or trust; and
(b) if the adjusting instrument can be converted into an ordinary
*share in the company or an ordinary unit in the trust, any
conversion will occur on a basis:
(i) that is set out in the terms of the issue of the instrument;
and
(ii) that is adjusted to take into account a capital reduction
or a capital reconstruction; and
(c) before conversion, the owner of the adjusting instrument
does not have a right to participate in distributions of profit
or capital except as set out in the terms of the issue of the
instrument; and
(d) the adjusting instrument deals with the effect of a *demerger
that happens to the demerger group on the value of the
instrument.
Example: Some examples of adjusting instruments are:
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 125-80
Additional exceptions
(6) The regulations may provide that, in working out whether the
requirements in subsection 125-70(2) are met, other *ownership
interests of a kind specified in the regulations are to be disregarded
if, just before the *demerger, those interests represented not more
than a prescribed percentage of the ownership interests in the
entity.
(7) However, the total percentage of *ownership interests to be
disregarded under this section must not exceed 20% of the
ownership interests in the entity.
(a) each new interest that you are not taken to have *acquired
before 20 September 1985; and
(b) if not all of your original interests ended under the
*demerger—each of your remaining original interests that
you acquired on or after 20 September 1985;
is such proportion of the sum of the cost bases of all your original
interests that you acquired on or after 20 September 1985 (worked
out just before the demerger) as is reasonable having regard to the
matters specified in subsection (3).
Note 1: These rules replace the cost base and reduced cost base adjustments in
CGT event E4 and CGT event G1.
Note 2: The head entity or the demerging entity may advise you of the
proportions.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 125-80
1840 – 92 = 1748
Pre-CGT interests
(4) The following subsections apply if you choose the roll-over and
you *acquired some or all of your original interests before
20 September 1985.
(5) If you *acquired all of your original interests before 20 September
1985, you are taken to have acquired all of your new interests
before that day.
(6) If you *acquired some of your original interests before
20 September 1985, you are taken to have acquired a reasonable
whole number of your new interests before that day having regard
to:
(a) the *market values of your original interests and your
remaining original interests just after the *demerger, or an
anticipated reasonable approximation of those market values;
and
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 125-85
(b) the market values of your new interests just after the
demerger, or an anticipated reasonable approximation of
those market values.
(7) If a proportion, but not all, of your original interests ends under the
*demerger and you *acquired some of your original interests before
20 September 1985, that same proportion of those interests you
acquired before that day ends.
Note: CGT event K6 may be relevant if you later dispose of your interests
that are treated as being pre-CGT.
Example: Bert owned 100 shares in a company of which 50 were acquired
pre-CGT. Under a demerger 20 of Bert’s 100 shares were cancelled in
exchange for new interests. As 20% of his shares were cancelled, 10
of his pre-CGT shares are taken to have been cancelled.
(8) If you choose a roll-over for some but not all of your original
interests, you apply the rules in this section as if your original
interests for which you chose the roll-over were your only original
interests.
(d) you do not choose a roll-over under this Subdivision for the
original interest.
(2) The adjustments you must make are the same as the adjustments
you would have to make under section 125-80 for the *cost bases
and *reduced cost bases of the remaining original interests and new
interests just after the *CGT event if you could have chosen a
roll-over under this Subdivision for the *demerger and you had
done so.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 125-90
(2) The adjustments you must make are the same as the adjustments
you would have to make under section 125-80 if you could have
chosen a roll-over under this Subdivision for the *demerger and
you had done so.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 125-150
Table of sections
Operative provisions
125-155 Certain capital gains or losses disregarded for demerging entity
125-160 No CGT event J1
125-165 Adjusted capital loss for value shift under a demerger
125-170 Reduced cost base reduction if demerger asset subject to roll-over
Operative provisions
Section 125-165
Example: The market value of equity or loan interests in the demerging entity
may be reduced by the disposal, for inadequate value, of ownership
interests of another member of the demerger group to owners of
original interests in the head entity of the group.
(3) If the *reduced cost base of a *CGT asset is reduced under this
section because of a *demerger, no other adjustment can be made
under this Act to that reduced cost base because of something that
happens under the demerger.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 125-225
Table of sections
Operative provisions
125-230 Application of Division to corporate unit trusts and public trading trusts
Operative provisions
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 126-1
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 126-5
Section 126-15
Note: There are special indexation rules for roll-overs: see Division 114.
(6) For a disposal case where the transferor *acquired the asset before
20 September 1985, the transferee is taken to have acquired it
before that day.
Note: A capital gain or loss you make from a CGT asset you acquired before
20 September 1985 is generally disregarded: see Division 104. This
exemption is removed in some situations: see Division 149.
Creation case
Event No. Applicable amount
D1 the *incidental costs the transferor incurred that relate to the
trigger event
D2 the expenditure the transferor incurred to grant the option
D3 the expenditure the transferor incurred to grant the right
F1 the expenditure the transferor incurred on the grant, renewal or
extension of the lease
Section 126-15
(3) The *cost base and *reduced cost base of the other asset are
reduced by an amount that reasonably reflects the fall in its *market
value because of the trigger event. The reduction occurs at the time
of the trigger event.
(4) If the entity owning the other asset is also the transferee, the *cost
base and *reduced cost base of the other asset are then increased by
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 126-20
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 126-40
Table of sections
Operative provisions
126-45 Roll-over for members of wholly-owned group
126-50 Requirements for roll-over
126-55 When there is a roll-over
126-60 Consequences of roll-over
126-75 Originating company is a CFC
126-85 Effect of roll-over on certain liquidations
Operative provisions
Section 126-50
(2) The *CGT asset involved (the roll-over asset) must not be *trading
stock of the recipient company just after the time of the trigger
event.
(3) If:
(a) the roll-over asset is a right or *convertible interest referred
to in Division 130, or an option referred to in Division 134,
or an *exchangeable interest; and
(b) the recipient company *acquires another *CGT asset by
exercising the right or option or by converting the convertible
interest or in exchange for the disposal or redemption of the
exchangeable interest;
the other asset cannot become *trading stock of the recipient
company just after the recipient company acquired it.
(4) The *ordinary income and *statutory income of the recipient
company must not be exempt from income tax because it is an
*exempt entity for the income year of the trigger event.
(5) The requirements in one of the items in this table must be satisfied.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 126-50
Additional requirements
Item At the time of the At the time of the The roll-over asset
trigger event the trigger event the must have the
originating company recipient company necessary connection
must be: must be: with Australia:
1 Either: A foreign resident Either:
(a) a foreign resident; (a) just before and just
or after the trigger
(b) an Australian event, for a disposal
resident but not a case; or
*prescribed dual (b) just after that event,
resident for a creation case
2 A foreign resident An Australian resident Either:
but not a *prescribed (a) just before the
dual resident trigger event, for a
disposal case; or
(b) just after that event,
for a creation case
Section 126-55
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 126-60
(4) If the trigger event involved a *personal use asset of the originating
company, the recipient company is taken to have *acquired one.
Section 126-75
Creation case
Event No. Applicable amount
D1 the *incidental costs the originating company incurred that relate
to the trigger event
D2 the expenditure the originating company incurred to grant the
option
D3 the expenditure the originating company incurred to grant the
right
F1 the expenditure the originating company incurred on the grant,
renewal or extension of the lease
Section 126-85
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 126-85
Method statement
Step 1. Work out (disregarding this section) the sum of the
*capital gains and the sum of the *capital losses the
holding company would make on the cancellation of its
shares in the subsidiary.
Step 3. If, after subtracting the sum of the *capital losses from
the sum of the *capital gains, there is an overall capital
gain from step 1 and an overall capital gain from step 2,
then continue. Otherwise there is no adjustment.
Step 4. Express the number of post-CGT shares as a fraction of
the total number of shares the holding company owned in
the subsidiary.
Step 5. Multiply the overall *capital gain from Step 2 by the
fraction from Step 4.
Step 6. Reduce the overall *capital gain from Step 1 by the
amount from Step 5. The result is the *capital gain the
holding company makes from the cancellation of its
shares in the subsidiary.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 126-125
This Subdivision sets out when there is a roll-over for a CGT event
that happens because of an amendment to or replacement of the
trust deed of a complying approved deposit fund, a complying
superannuation fund or a fund that accepts worker entitlement
contributions.
Table of sections
126-130 Changes to trust deeds
126-135 Consequences of roll-over
Section 126-135
(a) the first element of the asset’s *cost base (in the hands of the
fund that owned the asset after the time of the event) is its
cost base just before that time; and
(b) the first element of the asset’s *reduced cost base asset is
worked out similarly; and
(c) the fund that owned the asset after the time of the event is
taken to have acquired the asset at that time.
Table of sections
126-140 CGT event involving small superannuation funds
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 126-140
Roll-over consequences
(3) A *capital gain or *capital loss the transferor makes from the
transfer of the asset is disregarded.
(4) If the transferor *acquired the asset on or after 20 September 1985:
(a) the first element of the asset’s *cost base (in the hands of the
transferee) is the asset’s cost base (in the hands of the
transferor) at the time the transferee acquired it; and
(b) the first element of the asset’s *reduced cost base (in the
hands of the transferee) is worked out similarly.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 126-185
(5) If the transferor *acquired the asset before 20 September 1985, the
transferee is taken to have acquired it before that day.
Note: A capital gain or loss you make from a CGT asset you acquired before
20 September 1985 is generally disregarded: see Division 104. This
exemption is removed in some situations: see Division 149.
This Subdivision sets out when there is a roll-over for a CGT event
that happens because a beneficiary becomes absolutely entitled to a
share as against the trustee where the trustee obtained a roll-over
under Subdivision 124-M following a demutualisation.
Table of sections
Operative provisions
126-190 When there is a roll-over
126-195 Consequences of roll-over
Operative provisions
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 126-195
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 126-200
Table of sections
Operative provisions
126-205 Object of this Subdivision
126-210 When there is a roll-over and what its effects are
Operative provisions
Section 126-210
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 126-210
(5) A successor RSE trustee that starts to hold one of the identical
assets because of the cessation is taken to have *acquired the asset
before 20 September 1985 if the first RSE trustee acquired the
corresponding asset before that day.
Note 1: A capital gain or loss you make from a CGT asset you acquired before
20 September 1985 is generally disregarded: see Division 104. This
exemption is removed in some situations: see Division 149.
Note 2: Subsection (5) cannot apply if the first RSE trustee was the trustee of
a complying superannuation fund, complying approved deposit fund
or pooled superannuation trust. This is because section 306 of the
Income Tax Assessment Act 1936 treats such a trustee as having
acquired on 30 June 1988 any assets it owned on that day.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 128-1
This Division sets out what happens when you die and a CGT asset
you owned just before dying devolves to your legal personal
representative or passes to a beneficiary in your estate.
It also contains rules about what happens when a joint tenant dies.
General rules
128-10 Capital gain or loss when you die is disregarded
128-15 Effect on the legal personal representative or beneficiary
128-20 When does an asset pass to a beneficiary?
128-25 The beneficiary is a trustee of a superannuation fund etc.
General rules
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 128-15
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 128-15
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 128-20
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 128-25
(2) The beneficiary is taken to have *acquired the asset on the day you
died. The first element of the *cost base and *reduced cost base of
the asset is its *market value on that day.
Note 1: If the beneficiary is an exempt entity, Division 57 of Schedule 2D to
the Income Tax Assessment Act 1936 has rules about exempt entities
that become taxable. It sets out what the entity is taken to have
purchased its assets for when it becomes taxable.
Note 2: If the beneficiary is a foreign resident, Subdivision 136-B sets out
what happens if the beneficiary becomes an Australian resident. The
beneficiary is taken to have acquired each asset owned just before
becoming an Australian resident for the market value of the asset at
that time.
(3) The beneficiary can include in the *cost base or *reduced cost base
of the asset any expenditure that your *legal personal representative
would have been able to include at the time the asset *passes to the
beneficiary. The beneficiary can include the expenditure on the day
the representative incurred it.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 128-50
(3) If the individual who died *acquired his or her interest in the asset
on or after 20 September 1985, the first element of the *cost base
of the interest each survivor is taken to have acquired is:
Cost base of the interest of the individual who died
(worked out on the day the individual died)
Number of survivors
The first element of the *reduced cost base of the interest each
survivor is taken to have *acquired is worked out similarly.
Example: In 1999 2 individuals buy land for $50,000 as joint tenants. Each one
is taken to have a 50% interest in it. On 1 May 2001 one of them dies.
The survivor is taken to have acquired the interest of the individual
who died on 1 May 2001. If the cost base of that interest on that day is
$27,000, the survivor is taken to have acquired that interest for that
amount.
(4) If the individual who died *acquired his or her interest in the asset
before 20 September 1985, the first element of the *cost base and
*reduced cost base of the interest each survivor is taken to have
acquired is:
*Market value of the interest of the individual who died
(worked out on the day the individual died)
Number of survivors
Note: There is a special indexation rule for surviving joint tenants: see
section 114-10.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-1
Division 130—Investments
Table of Subdivisions
Guide to Division 130
130-A Bonus shares and units
130-B Rights
130-C Convertible interests
130-D Employee share schemes
130-E Exchangeable interests
This Division sets out the rules for these kinds of investments:
• rights; and
• exchangeable interests.
Most are about modifying the cost base and reduced cost base of a
CGT asset.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-15
Operative provisions
130-20 Issue of bonus shares or units
No Yes
No Yes
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-20
No Yes
Operative provisions
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-20
(a) for *shares—any part of the shares that are a *dividend (or
taken to be a dividend under subsection 45(2) or 45C(1) of
the Income Tax Assessment Act 1936); and
(b) for units—any part of the other units that are or will be
included in your assessable income.
You are taken to have *acquired the bonus equities when they were
issued.
Note 1: There are special indexation rules for cost base modifications: see
Division 114.
Note 2: The amounts of calls you pay on partly-paid equities will also form
part of the first element of their cost base and reduced cost base.
Note 3: There is a special rule for shares issued on or before 30 June 1987: see
subsection 130-20(2) of the Income Tax (Transitional Provisions) Act
1997.
Note 4: Certain capital distributions are taken to be dividends under
subsections 45(2) and 45C(1) if a company has entered into a capital
streaming or dividend substitution arrangement.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-20
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-40
Subdivision 130-B—Rights
Table of sections
130-40 Exercise of rights
130-45 Timing rules
130-50 Application to options
Section 130-40
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-40
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-40
(7) A *capital gain or *capital loss you make from the exercise of the
rights is disregarded.
Note 1: The exercise of the rights would be an example of CGT event C2
(about a CGT asset ending).
Note 2: There are transitional rules for some rights: see section 130-40 of the
Income Tax (Transitional Provisions) Act 1997.
Note 3: The effect of this Subdivision is modified in 2 cases by
sections 102AAZBA (about non-resident trusts) and 414 (about
CFC’s) of the Income Tax Assessment Act 1936.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-45
Acquisition of rights
(1) If you *acquired the rights from the company or trustee, you are
taken to have acquired the rights when you acquired the original
shares or interests or the original units or interests.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-60
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-60
(1B) The payment to convert the convertible interest can include giving
property (see section 103-5).
(2) You are taken to have *acquired the shares or units when the
conversion of the convertible interest happened.
(3) A *capital gain or *capital loss you make from converting the
convertible interest is disregarded.
Note 1: The conversion of the convertible interest would be an example of
CGT event C2 (about a CGT asset ending).
Note 2: There are transitional rules for some convertible notes: see
section 130-60 of the Income Tax (Transitional Provisions) Act 1997.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-80
(2) The first element of the *cost base and *reduced cost base of the
*share or right is its *market value (worked out under
sections 139FA to 139FF of the Income Tax Assessment Act 1936)
when you *acquired it.
(3) However, if:
(a) the *share or right was *acquired from an *employee share
trust; and
(b) if the share is a *qualifying share or the right is a *qualifying
right—the acquirer made an election under section 139E of
the Income Tax Assessment Act 1936;
the first element of the *cost base and *reduced cost base of the
share or right is its *market value (worked out under
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-83
(1A) If:
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-83
(3) If that event does not happen in relation to the *share or right (or
any *share you *acquired by exercising the right) in an arm’s length
transaction at the *cessation time, or within 30 days after that time,
the first element of the *cost base and *reduced cost base of the
share or right is its market value (worked out under sections 139FA
to 139FF of the Income Tax Assessment Act 1936) at that time.
(4) Subsection (3) does not apply to a *share or right if:
(a) you become an Australian resident; and
(aa) you are not a *temporary resident immediately after you
become an Australian resident; and
(b) you owned, or held a beneficial interest in, the share or right
just before you became an Australian resident; and
(c) the share or right does not have the *necessary connection
with Australia; and
(d) the cessation time for the share or right had occurred before
you became an Australian resident.
Note 1: Sections 136-40 and 768-955 deal with shares or rights that do not
have the necessary connection with Australia.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-85
Section 130-90
Section 130-95
(c) under section 139DQ of the Income Tax Assessment Act 1936
the matching share or right is treated, for the purposes of
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-100
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-105
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 130-105
(3) The payment for the exchange can include giving property (see
section 103-5).
Application
(5) This section applies to the disposal or redemption of an
*exchangeable interest on or after 1 July 2001.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 132-1
Division 132—Leases
Table of sections
132-1 Lessee incurs expenditure to get lease term varied or waived
132-5 Lessor pays lessee for improvements
132-10 Grant of a long-term lease
132-15 Lessee of land acquires reversionary interest of lessor
Section 132-15
(b) the *cost of any *depreciating asset for which the lessor has
deducted or can deduct an amount for the asset’s decline in
value under this Act.
Note: Subdivision 108-D sets out when a building, structure or improvement
is treated as a separate CGT asset.
(3) The fourth element of the property’s *cost base and *reduced cost
base includes any payment by the lessor to the lessee to vary or
waive a term of the lease or for the forfeiture or surrender of the
lease, reduced by the amount of any *input tax credit to which the
lessor is entitled for the variation or waiver.
(4) The expenditure or payment can include giving property: see
section 103-5.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 132-15
(2) All the payments can include giving property: see section 103-5.
Note: CGT events F1 to F5 deal specifically with leases. See also (in
particular) CGT event C2 (about cancellation, surrender and similar
endings).
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 134-1
Division 134—Options
Exercise of options
Item In this situation: Effect on cost base and reduced cost base:
1 Option binds For the grantee
grantor to: The first element of the grantee’s *cost base
(a) *dispose of a and *reduced cost base for the CGT asset is
*CGT asset; or what the grantee paid for the option (or to
(b) create renew or extend it) plus any amount the
(including grant grantee paid to exercise it
or issue) a CGT For the grantor
asset (call
See section 116-65
option)
2 Option binds For the grantor
grantor to *acquire The first element of the grantor’s *cost base
a *CGT asset (put and *reduced cost base for the asset acquired
option) is any amount paid to exercise the option
reduced by any payment received by the
grantor for the option (or to renew or extend
it)
For the grantee
The second element of the grantee’s cost base
and reduced cost base for the asset acquired
by the grantor includes any payment the
grantee made to acquire the option (or to
renew or extend it)
Note 1: If you granted, renewed or extended an option, CGT event C3 or D2
may happen.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 134-1
Note 2: Item 1 in the table is modified for certain options granted before
20 September 1985: see section 134-1 of the Income Tax (Transitional
Provisions) Act 1997.
Note 3: Item 1 in the table is modified for shares or rights acquired at a
discount (within the meaning of Subdivision C of Division 13A of
Part III of the Income Tax Assessment Act 1936) under an employee
share scheme—in certain circumstances you can be taken to have paid
the market value for an option: see Subdivision 130-D and
section 112-15.
(2) All the payments can include giving property: see section 103-5.
Example 1: Steven obtains an option to buy a yacht (for $75,000) from Tom.
Steven pays $5,000 for the option.
Steven exercises the option. The first element of his cost base and
reduced cost base for the yacht includes the expenditure he incurred
for the option.
So, the first element of his cost base and reduced cost base for the
yacht is:
(4) A *capital gain or *capital loss the grantee makes from exercising
the option is disregarded. However, this rule does not apply if the
grantee *acquired the option under a trust restructure (see
Subdivision 124-N) and, on exercising the option, held the
resulting asset as an item of *trading stock.
Note 1: The exercise of the option would be an example of CGT event C2
(about a CGT asset ending).
Note 2: There is an exemption for the grantor if the option is exercised: see
subsection 104-40(5).
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 134-1
(b) an option to the extent that the option binds the grantor to
*acquire *foreign currency.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 136-1
136-5 What if you are a foreign resident just before a CGT event
This Subdivision sets out what happens if just before a *CGT event
happens:
(a) you are an individual or a company that is a foreign resident;
or
(b) you are the trustee of a trust that is not a *resident trust for
CGT purposes.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 136-10
Section 136-10
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 136-10
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 136-15
136-15 Making a capital gain or loss from CGT events D1, E9 and
K9
(1) You make a *capital gain or *capital loss from *CGT event D1
(about creating contractual or other rights) only if one of the items
in this table is satisfied.
CGT event D1
Item In this situation: This requirement is satisfied:
1 The *capital
proceeds from the The proceeds are *derived from an
event are your *ordinary *Australian source
income
2 The *capital proceeds from the If the proceeds were your *ordinary
event are not your *ordinary income, they would have been *derived
income from an *Australian source
(2) You make a *capital gain or *capital loss from *CGT event E9
(about creating a trust over future property) only if one of the items
in this table is satisfied.
CGT event E9
Item In this situation: This requirement is satisfied:
1 The consideration is your The consideration is *derived from an
*ordinary income *Australian source
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 136-20
(3) You make a *capital gain from *CGT event K9 (about carried
interests) only if one of the items in this table is satisfied.
CGT event K9
Item In this situation: This requirement is satisfied:
1 The *capitalproceeds from the The proceeds are *derived from an
event would have been your *Australiansource
*ordinary income if
section 118-21 did not apply
2 The *capital proceeds from the If the proceeds were your *ordinary
event would not have been income, they would have been *derived
your *ordinary income even if from an *Australian source
section 118-21 did not apply
136-20 Those events you cannot make a capital gain or loss from
This table sets out those *CGT events from which you cannot make
a *capital gain or *capital loss.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 136-25
4 An interest in a trust that is a *resident trust for CGT purposes for the
income year in which the *CGT event happens
5 A *share, or an interest in a *share, in a company:
(a) that is an Australian resident, and a *public company, for the
income year in which the CGT event happens; and
(b) in which you and your *associates beneficially owned at least 10%,
by value of the shares of the company (except shares that carried a
right only to participate in a distribution of profits or capital to a
limited extent) at any time during the 5 years before the *CGT
event happens
6 A unit in a unit trust:
(a) that is a *resident trust for CGT purposes for the income year in
which the CGT event happens; and
(b) in which you and your *associates beneficially owned at least 10%
of the issued units in the unit trust at any time during the 5 years
before the *CGT event happens
7 An option or right to *acquire a *CGT asset of the kind referred to
above
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 136-30
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 136-40
(2) The first element of the *cost base and *reduced cost base of the
asset (at the time you become an Australian resident) is its *market
value at that time.
(3) Also, Part 3-1 and this Part apply to the asset as if you had
*acquired it at the time you became an Australian resident.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 136-45
Exception
(4) This section does not apply to a trust if, just before it became a
*resident trust for CGT purposes, it was a *CFT because of
paragraph 342(a) of the Income Tax Assessment Act 1936.
Note: This section is disregarded in calculating the attributable income of a
trust: see section 102AAZB of the Income Tax Assessment Act 1936.
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 136-50
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 149-10
Section 149-15
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 149-25
_____________________________________
*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 149-35
(4) This section applies as if the new owner had (in addition to any
other *underlying interests), at any time when the former owner
had a percentage (the former owner’s percentage) of the
underlying interests in the asset, a percentage of the underlying
interests in the asset equal to the acquired percentage, or the former
owner’s percentage at that time, whichever is the less.
149-35 Cost base elements of asset that stops being a pre-CGT asset
(1) This section affects the *cost base and *reduced cost base of the
asset if it stops being a *pre-CGT asset.
(2) The first element of each is the asset’s *market value at the time
referred to in subsection 149-30(1).
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 149-50
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 149-55
(1A) The evidence must be given in a form that makes the information
about those interests readily apparent.
(1B) The only consequences of failing to give the evidence are those set
out in section 149-70. It is not an offence to fail to give the
evidence.
Test days
(2) Each of these days is a test day:
(aa) 30 June 1999;
(a) a day that is 5 years (or a multiple of 5 years) after 30 June
1999 (but see subsection (3));
(b) if the entity is covered by paragraph 149-50(1)(a) or (e)—a
day on which there is *abnormal trading in *shares in the
company;
(c) if the entity is a *publicly traded unit trust—a day on which
there is *abnormal trading in units in the trust;
(d) if the entity is a company all the *shares in which are
beneficially owned, whether directly, or indirectly through
one or more interposed entities, by one or more of the
following:
(i) a company *shares in which (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;
(ii) a *publicly traded unit trust;
a day on which there is *abnormal trading in *shares in the
other company or in units in that unit trust.
Note: Subsections (6) and (7) change the normal rules about abnormal
trading.
(3) If a day (the fifth anniversary) that would otherwise be a *test day
because of paragraph (2)(a) is:
(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;
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 149-60
Section 149-60
(5) The evidence must be treated on the assumption that the new
owner had (in addition to any other *underlying interests), at any
time when the former owner had a percentage (the former owner’s
percentage) of the *underlying interests in the asset, a percentage
of the underlying interests in the asset equal to the acquired
percentage, or the former owner’s percentage at that time,
whichever is the less.
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 149-70
149-75 Cost base elements of asset that stops being a pre-CGT asset
(1) This section affects the *cost base and *reduced cost base of the
asset if it stops being a *pre-CGT asset.
(2) The first element of each is the asset’s *market value at the time
referred to in subsection 149-70(2).
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 149-162
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 149-170
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-1
Table of Subdivisions
152-A Basic conditions for relief under this Division
152-B Small business 15-year exemption
152-C Small business 50% reduction
152-D Small business retirement exemption
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-5
This Subdivision sets out some basic conditions for relief. If the
basic conditions are satisfied, then a small business entity may be
able to reduce its capital gains using the small business concessions
in this Division.
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-10
Table of sections
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-12
(c) you satisfy the maximum net asset value test (see
section 152-15);
(d) the CGT asset satisfies the active asset test (see
section 152-35).
Note: This condition does not apply in the case of CGT event D1: see
section 152-12.
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-15
(iii) the net value of the CGT assets of any *small business
CGT affiliates of yours or entities connected with your
small business CGT affiliates (not counting any assets
already counted under subparagraph (ii)); and
Note: Some assets aren’t included in the definition of net value of the
CGT assets: see subsections 152-20(2) and (3).
(b) if you are a partner in a partnership and the CGT event
happens in relation to a *CGT asset of the partnership—the
net value of the CGT assets of the partnership does not
exceed $5,000,000.
Section 152-25
Section 152-30
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-30
(3) If the control percentage in subsection (2) or (5) is at least 40%, but
less than 50%, then the Commissioner may determine that the first
entity does not control the other entity if the Commissioner is
satisfied, or thinks it reasonable to assume, that the other entity is
controlled by an entity other than, or by entities that do not include,
the first entity or any of its *small business CGT affiliates.
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-30
or apply any income or capital of the trust, nominate not more than
4 beneficiaries as being controllers of the trust.
Note: The trust might not have had the funds to make a distribution for that
income year, which would prevent it from being controlled in that
year. The trustee may wish to make the nomination to ensure that a
relevant CGT asset is treated as an active asset (see section 152-40).
Section 152-35
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-40
(3) A *CGT asset is also an active asset at a given time if, at that time,
you own it and:
(a) it is either a *share in a company that is an Australian
resident at that time or an interest in a trust that is a *resident
trust for CGT purposes for the income year in which that
time occurs; and
(b) the total of:
(i) the *market values of the active assets of the company
or trust; and
(ii) any *capital proceeds that the company or trust received,
during the 2 years before that time, from *CGT events
happening to its active assets and that the company or
trust holds in the form of cash or debt pending the
acquisition of new active assets;
is 80% or more of the market value of all of the assets of the
company or trust.
Note: Paragraph 152-35(b) requires a CGT asset to have been an active asset
over a period of time. For a share in an Australian resident company to
meet this requirement, the company would have to satisfy the 80% test
in this subsection throughout that same period.
Exceptions
(4) However, the following *CGT assets cannot be active assets:
(a) interests in an entity that is *connected with you, other than
*shares and interests covered by subsection (3);
Section 152-45
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-45
(c) the new asset had not been your active asset at all times when
the original asset was not your active asset.
Note 1: Subdivision 124-O provides a roll-over for certain CGT assets that
come to an end as a result of an FSR transition.
Note 2: If this subsection applies to a CGT asset, then section 152-115 (which
is about continuing time periods) will apply for the 15-year
exemption.
Marriage breakdowns
(2) If you were the transferee of a *CGT asset for which there has been
a roll-over under Subdivision 126-A, then you may choose that the
active asset test in section 152-35 applies as if:
(a) you had acquired the asset when the transferor acquired the
asset; and
(b) the asset had been an *active asset of yours at all times when
the asset was an active asset of the transferor; and
(c) the asset had not been an active asset of yours at all times
when the asset was not an active asset of the transferor.
Note 1: Section 103-25 tells you when the choice must be made.
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-50
Companies
(1) An individual is a controlling individual of a company at a time if,
at that time, the individual holds the legal and equitable interests in
*shares, other than *redeemable shares, that carry (between them)
the right to exercise at least 50% of the voting power in the
company and receive at least 50% of any *dividend the company
may pay and of any distribution of capital the company may make.
Trusts
(2) An individual is a controlling individual of a trust (where entities
have entitlements to all the income and capital of the trust) at a
time if, at that time, the individual is beneficially entitled to at least
50% of the income and capital of the trust.
(3) An individual is a controlling individual of a trust (where entities
do not have entitlements to all the income and capital of the trust)
at a time if, during the income year in which the time occurs:
(a) the trust made a distribution of income or capital, or both;
and
(b) the individual was beneficially entitled to at least 50% of the
total of the distributions of income made by the trust during
the income year; and
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-60
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-105
• the entity continuously owned the asset for the 15-year period
leading up to the CGT event;
Table of sections
152-105 15-year exemption for individuals
152-110 15-year exemption for companies and trusts
152-115 Continuing time periods for involuntary disposals
152-120 Discretionary trusts need not have a controlling individual in a loss year
152-125 Payments to company’s or trust’s CGT concession stakeholders are exempt
Section 152-110
Section 152-115
Exception
(3) However, subsection (2) does not apply to income *derived by a
company or trust as a result of a *balancing adjustment event
occurring to a *depreciating asset:
(a) whose decline in value is worked out under Division 40; or
(b) deductions for which are calculated under Division 328.
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-120
Marriage breakdowns
(2) If you made the choice mentioned in subsection 152-45(2) for a
*CGT asset, then paragraphs 152-105(b) and (c) and 152-110(1)(b)
and (c) (the 15-year and controlling individual rules) apply as if
you had acquired the asset when the transferor acquired it.
Note: There is a roll-over under Subdivision 126-A if CGT assets are
transferred because of a marriage breakdown.
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-125
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-200
This Subdivision tells you how to apply the small business CGT
concessions mentioned in step 4 of the method statement in
subsection 102-5(1).
Alternatively, you may choose not to apply the 50% reduction and
instead apply the small business retirement exemption or small
business rollover.
Table of sections
152-205 You get the small business 50% reduction
152-210 You may also get the small business retirement exemption and small
business roll-over relief
152-215 15-year rule has priority
152-220 You may choose not to apply this Subdivision
Section 152-210
Example: For an individual (other than one who opts to claim indexation instead
of the discount), the discount percentage that applies under step 3 of
the method statement is 50%. Therefore, the combined effect of the
discount percentage and this section would be to reduce the original
capital gain by a total of 75%.
For an individual who opts to claim indexation, or a company, there is
no discount percentage, so the individual or company would simply
get the 50% reduction under this section.
152-210 You may also get the small business retirement exemption
and small business roll-over relief
(1) The *capital gain, as reduced under section 152-205, may also
qualify for:
(a) the small business retirement exemption (see
Subdivision 152-D); or
(b) a small business roll-over (see Subdivision 152-E);
or both.
(2) If it qualifies for both of those concessions, you may choose which
order to apply them in.
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-300
Table of sections
152-305 Choosing the exemption
152-310 Consequences of choice
152-315 Choosing the amount to disregard
152-320 Meaning of CGT retirement exemption limit
152-325 Company or trust conditions
152-330 15-year rule has priority
Individual
(1) If you are an individual, you can choose to disregard all or part of a
*capital gain if:
Section 152-310
Company or trust
(2) A company or a trust (except a public entity—see subsection (3))
can also choose to disregard such an amount if:
(a) the basic conditions in Subdivision 152-A are satisfied for
the *capital gain; and
(b) the entity satisfies the controlling individual test (see
section 152-50); and
(c) the company or trust conditions in section 152-325 are
satisfied.
Note: Section 103-25 tells you when the choice must be made.
Section 152-315
(3) In working out those *capital proceeds, disregard the *market value
substitution rule (see section 116-30).
(4) The amount of that *eligible termination payment is, for the
purposes of Subdivision AA of Division 2 of Part III of the Income
Tax Assessment Act 1936, a CGT exempt component.
(2) However, the choice must be made in a way that ensures that:
(a) for an individual—your *CGT retirement exemption limit is
not exceeded; or
(b) for a company or trust—the CGT retirement exemption limit
of each individual for whom the choice is made is not
exceeded.
(3) The amount chosen for the asset is its CGT exempt amount.
(4) The *CGT exempt amount must be specified in writing.
(5) If a company or trust is making the choice and it has 2 *CGT
concession stakeholders, it must specify in writing the percentage
of each *CGT asset’s *CGT exempt amount that is attributable to
each of those stakeholders. One of the percentages may be nil, but
they must add up to 100%.
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-320
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-330
(4) In working out those *capital proceeds, disregard the *market value
substitution rule (see section 116-30).
(5) The amount of the *eligible termination payment, or the sum of the
amounts of the eligible termination payments, required to be made
under subsection (1) must be equal to the lesser of:
(a) the amount of *capital proceeds received; and
(b) the relevant *CGT exempt amount.
(6) If this section requires the company or trust to make 2 or more
*eligible termination payments to a single stakeholder (whether or
not by the same time), the company or trust may meet that
requirement by making one payment or by making separate
payments.
(7) If a stakeholder is under 55 just before receiving an *eligible
termination payment under subsection (1), an amount equal to that
payment must be rolled over (within the meaning of Subdivision
AA of Division 2 of Part III of the Income Tax Assessment Act
1936) except by being paid as mentioned in paragraph 27A(12)(c)
of that Act.
Note: Paragraph 27A(12)(c) of the Income Tax Assessment Act 1936 deals
with payments to life companies to purchase certain annuities.
Section 152-405
Table of sections
152-405 Basic principles for the small business roll-over
152-410 When you can obtain the roll-over
152-415 What the roll-over consists of
152-420 Replacement asset conditions
152-425 Rules where an individual who has obtained a roll-over dies
152-430 15-year rule has priority
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-415
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.
Section 152-425
Section 152-430
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*To find definitions of asterisked terms, see the Dictionary, starting at section 995-1.