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Rollover conditions

Last updated 27 June 2012

There are rollover conditions that must be satisfied by the end of the replacement asset period. This period starts one year before and ends two years after the last CGT event that occurs in the income year for which you choose the rollover.

If the rollover conditions are not met within the replacement asset period, the gain will become assessable.

You satisfy the rollover conditions where you meet all the following conditions:

  • you acquire one or more CGT assets as replacement assets or make a capital improvement to one or more existing assets, or both, within the replacement asset period
  • the replacement asset, or the asset to which the capital improvement was made is an active asset at the end of the replacement asset period (a depreciating asset such as plant can be a replacement asset)
  • if the replacement asset is a share in a company or an interest in a trust, at the end of the replacement asset period:
    • you, or an entity connected with you, are a CGT concession stakeholder in the company or trust, or
    • CGT concession stakeholders in the company or trust have a small business participation percentage in the interposed entity of at least 90%
  • the capital gain that is being rolled over is not more than the sum of the following
    • the amount paid to acquire the replacement asset (that is, the first element of the cost base of the replacement asset)
    • any incidental costs incurred in acquiring that asset, which can include giving property (that is, the second element of the cost base of the replacement asset), and
    • the amount expended on capital improvements to one or more assets that were acquired or already owned (that is, fourth element expenditure).

As the share or interest also needs to be an active asset, the company or trust must satisfy the 80% test - that is, the market value of the active assets and certain financial instruments of the company or trust must be 80% or more of the total of the market value of all the assets of the company or trust.

You can choose to obtain a rollover even if you have not yet acquired a replacement asset or incurred expenditure on a capital improvement to an existing asset.

The Commissioner has the discretion to allow a longer replacement asset period by granting you an extension of time.


Jordan owns 50% of the shares in Company A and Company B. This makes him a CGT concession stakeholder in both companies. The companies are connected with Jordan because he controls both of them.

Company A owns land which it leases to Jordan for use in a business. It sells the land at a profit and buys shares in Company B as replacement assets. All of Company B's assets are active assets.

The replacement asset test is satisfied because the shares are active assets and Jordan is connected with Company A and is a CGT concession stakeholder in Company B.