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  • If you receive an asset

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    If you receive a replacement asset when the event happens, you can choose a roll-over only if:

    • the replacement asset is not held as trading stock when you acquire it, and
    • the market value of the replacement asset is more than the cost base of the original asset just before the event happened.

    Consequences of receiving an asset

    If you choose to obtain a roll-over when you receive a replacement asset, any capital gain you make from the original asset is disregarded. The other consequences are outlined below.

    Original asset acquired before 20 September 1985

    If you acquired the original asset before 20 September 1985, you are taken to have acquired the new asset before that day.

    Original asset acquired on or after 20 September 1985

    If you acquired the original asset on or after 20 September 1985, the first element of the cost base or reduced cost base of the replacement asset is taken to be the cost base or reduced cost base of the original asset at the time of the event.

    Example
    Asset received

    Jon acquired land after 19 September 1985 that the State Government compulsorily acquired on 14 July 2000. The cost base of the land at the time it was compulsorily acquired was $180 000. As compensation, Jon received another piece of land with a market value of $200 000.

    Because the market value of the replacement land was greater than the cost base of the original land just before it was compulsorily acquired, the capital gain Jon made on the disposal of the original land is disregarded. Jon is taken to have paid $180 000 to acquire the replacement land (that is, the cost base of the original land at the time it was compulsorily acquired).

    Last modified: 31 Aug 2010QC 16195