Forced disposals
The capital gains tax provisions allow you to defer working out a gain or loss where the disposal was:
- as a result of a breakdown of marriage
- caused by the loss or destruction of the asset
- from certain resumptions of property
- from the disposal of certain mining leases.
These rollover provisions will apply in working out the attributable income because of the assumption that the CFC is a resident.
Most of these provisions require that the person disposing of the asset must make an election. You can make the election on behalf of a wholly owned CFC. For more details, read Procedures for election that the rollover provisions apply.
Group transfers
The CGT rollover provisions allow companies that have 100% common ownership to defer, in certain circumstances, capital gains or losses on assets transferred between companies in the group. In the case of asset transfers between CFCs with 100% common ownership the circumstances under which the rollover provisions apply are modified.
Transfer by a CFC in a broad-exemption listed country
The group rollover rules are available where the transferor CFC is a resident of a broad-exemption listed country and the transferee is either:
- a CFC resident of the same broad-exemption listed country or
- an Australian resident company, or
- a CFC resident of a particular non-broad-exemption listed country and immediately before the disposal, the asset was used in connection with a permanent establishment of the transferor in a non-broad-exemption listed country at or through which the transferor carried on a business.
Asset |
Transferee |
|---|---|
Any asset |
CFC in the same country |
Any asset |
Australian company |
Assets used by a branch in a non-broad-exemption listed country |
CFC in a non-broad-exemption listed country |
Transfer by a CFC in a non-broad-exemption listed country
The group rollover provisions will also apply where the transferor CFC is a resident of a non-broad-exemption listed country and the transferee is either:
- a CFC resident of a non-broad-exemption listed country or
- an Australian resident company.
Asset |
Transferee |
|---|---|
Any asset |
CFC in any non-broad-exemption listed country |
Any asset |
Australian company |
The assumption that a CFC is a resident of Australia is ignored in determining its residence for the group transfer provisions.
Procedures for electing that the rollover provisions apply
How to elect for rollover relief
If an election for rollover relief is required, a CFC - or in the case of group rollovers, both the transferor and transferee - must elect in writing that the particular rollover provision applies.
The CFC must normally make the election. An attributable taxpayer may, however, make an election on behalf of a wholly owned CFC.
Timing of elections
An election must be lodged with the Tax Office on or before the lodgment of a return by an attributable taxpayer that is affected by the election. If more than one attributable taxpayer is affected, the election will be valid if made on or before the lodgment of the affected tax returns.
Self-assessment - extension of time to make an election
The self-assessment guidelines do not apply to an election by a CFC for rollover relief and Taxation Ruling IT 2624 does not authorise an extension of time in which to make the election. If an extension of time is required, the CFC or its agent should approach the Tax Office. For convenience, the request should go to the tax office where the tax return of the largest attributable taxpayer is lodged. If this is not readily apparent, the request can be lodged at any tax office.
Which officer makes the election?
The person who acts for the CFC should make the election. In Australia, that person would normally be the public officer of the company. However, foreign laws may require a different officer to act for the company. Whoever is authorised - whether under the foreign law or, if no law governs this, under the constituent document of the CFC - may make the election.