Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon Ralph Willis, MP)
Chapter 2 - capital gains tax - Various amendments
2.1 Part 2 of Schedule 1 of the Bill will amend the capital gains tax (CGT) provisions of the Income Tax Assessment Act 1936 (the Act) to:
- increase the current thresholds of $100 and $5,000 for listed and non-listed personal-use assets to $500 and $10,000; and
- introduce safeguard provisions to prevent exploitation of the proposed $500 threshold for listed personal-use assets;
- ensure that CGT will apply to all gains realised by non-residents on the disposal of taxable Australian assets;
- extend CGT relief provided by subsection 160ZA(7) to assets created on or before 25 June 1992;
- limit CGT relief in relation to tax exempt non-portfolio dividends;
- provide that CGT relief for capital amounts included in whole or in part in a taxpayers assessable income will apply only to eligible termination payments;
- generally prevent capital losses being realised when assets are transferred between related companies; and
- provide CGT rollover relief for disposals of assets occurring as a consequence of the conversion of a complying approved deposit fund (ADF) to a complying superannuation fund, or where an existing complying ADF or complying superannuation fund amends or replaces its trust deed to comply with the Superannuation Industry (Supervision) Act 1993.
2.2 The amendments will provide the first increase in the thresholds for personal-use assets since the CGT legislation was introduced in 1985. The increase in the CPI since that date has eroded the value of the thresholds.
2.3 The increased thresholds will:
- ease the record keeping requirements for taxpayers in relation to some personal-use assets already acquired; and
- reduce the scope of personal use assets to which the CGT provisions will apply.
2.4 The proposed amendments will also ensure that the new listed personal-use asset threshold of $500 applies appropriately where an asset is jointly owned or forms part of a set of articles.
2.5 The increased thresholds for listed and non-listed personal-use assets will apply to disposals of assets on or after 1 July 1995. [Subitem 34(1)]
2.6 The safeguard measures relating to the joint ownership and sets of listed personal-use assets will apply to assets acquired after Royal Assent of the Bill. [Subitems 34(2) and (3)]
2.7 A personal-use asset is defined in subsection 160B(1) of the Act as an asset (other than land, or a building that is deemed to be a separate asset from the land by virtue of section 160P) which is kept primarily for the personal use and enjoyment of the taxpayer or associates of the taxpayer. The definition also extends to options and debts in respect of such assets.
2.8 The CGT provisions distinguish between:
- a 'listed' personal-use asset, being an asset which costs more than $100 and which is listed in subsection 160B(2). Examples include a stamp, coin, antique, and an interest in such assets; and
- a 'non-listed' personal-use asset which is described in subsection 160B(3), in a 'catch-all' way, as being a personal-use asset other than a listed personal-use asset.
2.9 The CGT provisions currently operate to remove non-listed personal-use assets which fall below the $5,000 threshold from the CGT provisions. Where the cost base and indexed cost base is less than $5,000, section 160ZG deems the cost base and indexed cost base to be $5,000. Where the actual consideration on disposal is less than $5,000, section 160ZE deems the consideration to be $5,000.
2.10 Safeguard provisions also apply in situations where parts of a non listed personal-use asset are sold separately for less than $5,000 in order to take advantage of the $5,000 threshold. Subsections 160ZE(2) and 160ZG(2) operate to pro-rate the $5,000 threshold in these situations and, in effect, treat the part of the asset sold as a separate asset.
2.11 The CGT provisions also address potential exploitation of the $5,000 threshold in situations involving the disposal of non-listed personal use assets which would ordinarily be disposed of as a set of articles. Subsection 160B(4) provides that where the disposal of a set of articles involves 2 or more transactions (for example, a transaction for a specific article), each article disposed of is to be treated as a disposal of part of the asset represented by the set of articles.
2.12 The Bill proposes amendments to the CGT provisions to increase the thresholds for listed and non-listed personal-use assets. The thresholds proposed are:
- $500 to replace the current $100 threshold for listed personal use assets [item 20] ; and
- $10,000 to replace the current $5,000 threshold for non-listed personal-use assets [items 27 and 28] .
2.13 In relation to listed personal-use assets, safeguard provisions are proposed to prevent the exploitation of the new threshold. This threshold could be exploited in two ways. As explained above, safeguard provisions currently only apply to 'protect' the threshold for non-listed personal-use assets.
2.14 Where a listed personal-use asset forms part of a set of articles, the particular article could be sold separately to take advantage of the threshold. As explained in the Background above, subsection 160B(4) currently safeguards the $5,000 threshold for non-listed personal-use assets which are ordinarily disposed of as a set of articles. The subsection provides that the set of articles is deemed to constitute a single asset and each article disposed of is treated as the disposal of a part of that asset.
2.15 The Bill proposes to extend the operation of subsection 160B(4) to include listed personal-use assets. [Item 22]
2.16 Within the listed personal-use assets in subsection 160B(2), subparagraph 160B(2)(a)(vii) provides that an interest in a listed asset is itself a listed personal-use asset. This means that where a listed personal use asset is jointly owned, the full threshold is currently available to each part owner of the asset. As a result, an asset could fall outside the CGT provisions even though its total cost exceeds the current $100 or proposed $500 threshold.
2.17 An amendment is proposed to address similar concerns to those which arise on the disposal of part of a non-listed personal-use asset. In particular, the amendment will address situations where a listed personal use asset is an interest in a personal-use asset.
2.18 In these circumstances, the threshold test will be referenced to the market value of the asset at the time the interest is acquired rather than, as the current law provides, the value of the interest. [Item 21; new subsection 160B(2A)]
2.19 The following example illustrates how the joint ownership provision will operate.
2.20 An antique worth $800, being a listed personal-use asset, is purchased jointly by two taxpayers for $400 each. Each taxpayer has acquired a listed personal use asset for $400 as represented by their interest in the antique. Without a safeguard provision, each interest would not be caught by the CGT provisions as the cost of the interest ($400) does not exceed the proposed $500 threshold.
2.21 Under the amendment proposed by new subsection 160B(2A) , the asset, as represented by a $400 interest, will come within the CGT provisions as the total value of the underlying asset ($800) when the interest was acquired exceeded the proposed $500 threshold.
2.22 The Bill proposes an amendment to ensure that CGT will apply in relation to gains realised by non-residents on the disposal of taxable Australian assets used solely to produce franked dividends or income subject to withholding tax in Australia.
2.23 Generally, the amendments will apply to disposals of taxable Australian assets taking place after 19 September 1985, which is the date on which the introduction of the CGT provisions was announced. However, the amendments will not apply in relation to transactions which had been commenced to be carried out prior to 7.30 pm AEST on 9 May 1995, where the transaction was covered by a private binding ruling issued by the Commissioner of Taxation under Part IVAA of the Taxation Administration Act 1953. [Subitems 35(1) and (2)]
2.24 Non-residents are subject to CGT only on gains and losses realised on disposals of taxable Australian assets. Section 160T of the Act defines disposals of assets which will be deemed to be disposals of taxable Australian assets for these purposes. Disposals of taxable Australian assets include a disposal of a share in a resident public company of which the taxpayer (and/or associates of the taxpayer) holds a ten percent or greater interest, any shares in a resident private company, or an asset that has been used to carry on a trade or business wholly or partially through a permanent establishment in Australia.
2.25 Subsection 160Z(6) and paragraph 160Z(9)(c) provide an exemption from CGT for gains and losses realised on the disposal of assets (including taxable Australian assets) used solely for the purpose of producing 'eligible exempt income'. Subsection 160Z(10) defines 'eligible exempt income' as generally being 'exempt income'. The term 'exempt income' is defined in subsection 6(1) of the Act as including income which is not assessable income.
2.26 Section 128D of the Act provides that certain income (eg income in relation to which withholding tax is payable such as royalties paid to a non resident taxpayer, or on which withholding tax would, but for another provision of the Act be payable, such as franked dividends paid to non residents) shall not be included in the assessable income of a taxpayer. This exemption reflects the fact that tax has already been paid in relation to the income.
2.27 It has been argued that the CGT exemption for assets used to produce 'eligible exempt income' will apply to disposals of taxable Australian assets used solely to produce income which, by section 128D is not included in a taxpayers assessable income. Therefore, assets used through a permanent business establishment in Australia to produce royalty income or shares in Australian companies which are used to produce franked dividends or dividends subject to withholding tax would not be subject to CGT on disposal. This interpretation of the application of the legislation is contrary to the clear intention of Parliament as reflected in paragraphs (b), (c) and (d) of the definition of disposals of taxable Australian assets in section 160T.
2.28 The Bill amends subsection 160Z(10) of the Act to specify that 'exempt income' for the purposes of subsection 160Z(6) and paragraph 160Z(9)(c) will not include income to which section 128D applies [item 23] . Because this amendment reflects the clear intention of Parliament in relation to gains realised on disposals of taxable Australian assets as reflected in section 160T, it will apply to disposals of taxable Australian assets occurring on or after 20 September 1985, which is the date on which the enactment of the CGT provisions was announced [subitem 35(1)] .
2.29 The clarifying amendment will not apply where a transaction covered by a private binding ruling from the Commissioner of Taxation (i.e. a ruling to which Part IVAA of the Taxation Administration Act 1953 applies) was commenced to be carried out prior to 7.30 pm AEST on 9 May 1995 [subitem 35(2)] . This will ensure that, if a taxpayer received a ruling contrary to the intended operation of the Act, the taxpayer will still be able to rely on that ruling provided the relevant transaction was commenced prior to the announcement of this clarifying amendment.
2.30 The Bill will:
- provide uniform CGT relief for non-portfolio dividends received by resident companies from non-resident companies where the dividend is exempt from tax under section 23AJ of the Act, irrespective of whether the shares in the non-resident company were issued before, on or after 25 June 1992;
- ensure that CGT relief for the tax exempt non-portfolio dividends referred to above will not be available in relation to dividends paid out of share capital accounts, share premium accounts or asset revaluation reserves of the non-resident company; and
- provide that the CGT tax relief under subsection 160ZA(8) in relation to capital amounts which are expressly included in part in the assessable income of a taxpayer will apply only to eligible termination payments (ETPs).
2.31 CGT relief for disposals of shares giving rise to non-portfolio dividends which are exempt from income tax under section 23AJ will apply to disposals of shares in the 1990-91 year of income (the year from which section 23AJ applies) and in subsequent years of income. [Item 1, Part 1, Schedule 6]
2.32 The proposals to:
- deny CGT relief under subsection 160ZA(7) (in relation to non-portfolio dividends paid out of share capital accounts, share premium accounts or revaluation reserves); and
- apply the relief under subsection 160ZA(8) only to disposals of assets giving rise to ETP's;
will apply to disposals of assets after 7.30 pm AEST on 9 May 1995 (Budget night). [Item 36]
2.33 Subsection 160ZA(4) of the Act operates to prevent double taxation by providing CGT relief for capital gains realised on the disposal of an asset where, as a consequence of the disposal, an amount is also included in the taxpayer's assessable income.
2.34 Subsection 160ZA(7) extends the CGT relief provided by subsection 160ZA(4) in circumstances where, as a consequence of the disposal of an asset, an amount which would otherwise be included in the assessable income of the taxpayer is specifically exempt from tax or is concessionally taxed under another provision of the Act. The CGT relief provided by subsection 160ZA(7), currently applies only to the disposal of assets (including shares) created after 25 June 1992.
2.35 Section 23AJ of the Act exempts from tax certain non-portfolio dividends received by an Australian company from a foreign company. A non portfolio dividend is a dividend paid in relation to shares which have a voting interest of at least 10 per cent. The exemption for dividends provided by section 23AJ applies to receipts which are 'exempting receipts' for the purposes of section 380 of the Act and which are received by a resident company during its 1990-91 income year or any subsequent year of income.
2.36 Subsection 160ZA(7) applies to exempt from CGT an amount received on the disposal of a share to the extent that the amount received on the disposal is treated as a dividend which is exempt under section 23AJ.
2.37 However, as described above, the relief provided by subsection 160ZA(7) applies only to assets created after 25 June 1992, which is the date of commencement of the subsection. Therefore, subsection 160ZA(7) does not provide for a reduction in any capital gains arising on the disposal of shares in foreign companies where the shares were issued before 26 June 1992.
2.38 Subsection 160ZA(8) applies where part of an otherwise non assessable amount is specifically included in the assessable income of a taxpayer. The subsection provides that, for the purposes of the application of subsection 160ZA(4), the whole of the amount is to be taken to have been included in assessable income. Therefore, the whole amount of the receipt will be excluded from CGT even though only a part of the payment will be taxable as income.
2.39 The Bill amends section 47 of the Taxation Laws Amendment Act 1993 to provide that subsection 160ZA(7) will apply to disposals of assets occurring during or after the 1990-91 year of income of the taxpayer, which is the date from which the income tax exemption for non-portfolio dividends under section 23AJ applies. [Item 1, Part 1, Schedule 6]
2.40 The Bill also proposes new subsection 160ZA(7A) which specifies that disposals of shares in foreign companies giving rise to non-portfolio dividends which are exempt from tax under section 23AJ, will only qualify for CGT relief to the extent that the dividend is not paid out of share capital, share premium accounts or asset revaluation reserves. [Paragraphs (a), (b) and (c) of item 25]
2.41 In addition, CGT relief will not be available under subsection 160ZA(7) in relation to disposals of shares giving rise to non-portfolio dividends which are attributable to amounts transferred from a share capital account, a share premium account or an asset revaluation reserve of the non resident company. This is because the underlying amounts out of which the dividend is paid would not have been subjected to tax in the foreign country. [Paragraph (d) of item 25]
2.42 The term 'share premium account' is defined in subsection 6(1) of the Act. Paragraphs (a) and (b) of the definition of 'share premium account' provide that where an amount which is not a share premium, or an amount that cannot be identified in the books of the company as a share premium, has been credited to the account, the account will cease to be a share premium account. However, by new subsection 160ZA(7A) , paragraphs (a) and (b) of the definition of 'share premium account' are to be disregarded for the purposes of the application of that subsection.
2.43 Item 26 of the Bill amends subsection 160ZA(8) so that, for the purposes of the application of subsection 160ZA(4), only capital amounts that are eligible termination payments will, where included in part in the assessable income of a taxpayer, be taken to be wholly included.
2.44 This is consistent with the original purpose of subsection 160ZA(8). The current provision is stated in general terms and could provide relief in cases where it was not intended that relief be available.
2.45 The amendments will ensure that the existing option in the CGT provisions, which allows a capital loss to be realised in the hands of a transferor, will generally no longer be available where a loss asset is transferred between related companies.
2.46 The amendments proposed will also:
- exempt certain asset transfers from the compulsory rollover provisions being proposed. For example, where the transferor and transferee companies are 'related' at the time the asset is transferred but intend to become 'unrelated' by virtue of the transferee company being sold or floated by the company group; and
- cater for situations where an amount of assessable income in respect of the asset being transferred has been attributed to the transferor under the controlled foreign companies (CFC) or foreign investment funds (FIF) provisions in Parts X and XI of the Act. In these situations, any 'attribution surplus' will be carried forward with the rolled over asset and used to reduce any capital gain or increase any capital loss in respect of the transferee's subsequent disposal.
2.47 The amendments will apply to assets transferred between related companies after 7.30 pm AEST on 9 May 1995. [Item 37]
2.48 When a rollover election is made under section 160ZZO, the CGT provisions do not apply to the disposal of the asset from the transferor to the transferee. In addition, paragraphs 160ZZO(e) and (f) provide that, when a rollover occurs, the asset maintains its CGT attributes in the hands of the transferee. Thus, the rollover provisions operate so that an asset acquired before 20 September 1985 will remain a pre CGT asset while the realisation of accrued gains on assets acquired after that date will be delayed for CGT purposes.
2.49 The current optional nature of the CGT rollover provisions in section 160ZZO of the Act allows related companies (defined in section 160G as companies within a company group sharing 100% common ownership) to offset a capital loss realised by the transfer of an asset to a related company against capital gains realised on third party transactions. As the related companies effectively represent a single entity, the capital loss does not represent a loss to the related companies as a group.
2.50 Due to the potential for capital gains to be sheltered by intra group capital losses, it is proposed to limit the realisation of capital losses to asset transfers where a loss is incurred by the related companies as a group. Consequently, the proposed amendments will generally require a compulsory rollover when asset transfers, which would give rise to a capital loss, are made between related companies.
2.51 Subject to the exception explained below, the proposed amendments will alter the rollover option currently available through paragraph 160ZZO(1)(d) and make it compulsory to rollover assets which are transferred between related companies where the transfer would have resulted in a capital loss. Optional rollover relief will still apply to asset transfers between:
- related companies which realise a capital gain; or
- related companies which realise a capital loss and which fall within the exception explained below. [Item 29]
2.52 In response to submissions received, the amendments will provide that the compulsory rollover measures explained above will not apply where an asset is transferred to a related company which is to be sold or floated. Where a related company becomes unrelated, section 160ZZOA requires the company to make a deemed disposal and reacquisition of any rolled over assets held.
2.53 The exception proposed will enable the consequences of the deemed disposal and reacquisition to be avoided by allowing the transferor to transfer rather than rollover loss assets into the transferee company. Thus, the transferee can be sold or floated free of any potential capital gains tax implications. Also, the transferor will be able to offset capital gains and losses realised on assets transferred to the related transferee company.
2.54 The amendments will provide that a CGT rollover of a loss asset between related companies will not be compulsory where an election is made by both transferor and transferee companies [item 30, new subsection 160ZZO(1AA)] . An election for the compulsory rollover provisions not to apply can be made when it is intended that, before the end of the year of income after the year in which the disposal takes place:
- the companies will cease to be related; and
- the transferor, together with related companies of the transferor, will not hold 50% or more of the shares in the transferee company [item 30, new subsection 160ZZO(1AB)] .
2.55 If an election is made under new subsection 160ZZO(1AB) but the intentions expressed in that election are not met, no capital loss will be taken to have been realised by the transferor at the time when the asset was disposed [new subsection 160ZZO(1AC)] .
2.56 The amendments [new subsection 160ZZO(1AD)] will also provide that no capital loss will be taken to have been realised by the transferor if an election is made under new subsection 160ZZO(1AB) and one of the following events occurs within 4 years of the disposal of the asset by the transferor. The events include:
- the asset being subsequently acquired by the transferor or a company related to the transferor; and
- the asset being acquired by a company and, at the time of acquisition, the transferor, together with other companies related to the transferor, holds 50% or more of the shares in the company.
2.57 In determining whether these events occur, it is necessary for the amending provisions to disregard the period between the asset's disposal (when the transferor was related to the transferee) to when that relationship ceased.
2.58 New subsection 160ZZO(3) [item 30] updates the election mechanism currently contained in paragraph 160ZZO(1)(d). There will no longer be a requirement for the election to be given to the Commissioner. Consistent with recent practice, the elections under both new subparagraph 160ZZO(1)(d)(ii) and subsection 160ZZO(1AB) must be in writing and retained for 5 years in accordance with section 262A.
2.59 Where a transferor company has an interest in a CFC or FIF, an 'attribution surplus' could exist in relation to that asset under section 370 of the Act in the case of an interest in a CFC, or section 604 in the case of an interest in a FIF. The surplus reflects the attributable income in respect of which tax has been assessed and can be applied to exempt that income from tax when it is subsequently received.
2.60 When a transferor disposes of the interest and an attribution surplus in respect of the CFC or FIF exists at the time of disposal, sections 461 and 613 of the Act operate to prevent double taxation by reducing the disposal consideration by the amount of the attribution surplus.
2.61 An anomaly arises if the interest in the CFC/FIF is disposed of to a related company and the disposal gives rise to a capital loss which is compulsorily rolled over under the CGT provisions. The benefit of the attribution surplus would be lost in this situation because there is currently no provision for the surplus to be transferred to the transferee company.
2.62 The Bill proposes that where:
- new subsection 160ZZO(1AA) [item 30] applies to the disposal of an interest in a CFC/FIF to a related transferee so that a compulsory rollover occurs [item 31, new paragraphs 160ZZO(4)(a) and (b)] ; and
- the original transferor's consideration on disposal is reduced under sections 461 or 613 as explained above [item 31, new paragraph 160ZZO(4)(c)] ;
then, new subsection 160ZZO(4) [item 31] will apply. The new subsection will operate to specify the CGT implications for the subsequent disposal of the asset by the transferee. The implications will be that the relevant cost base will be increased, at the time of that disposal, by the amount of the attribution surplus used to reduce the original transferor's consideration in respect of the asset. This adjustment will only be available to the first transferee company.
2.63 The Bill will also amend subsection 160ZZO(9A) to enable section 170, which deals with the amendment of assessments, to apply to give effect to new subsections 160ZZO(1AC) and (1AD) which are explained above under the heading 'Exception to compulsory rollover'. [Item 32]
2.64 Company A disposes of an asset, being an interest in a CFC, to related Company B. On disposal, A's consideration received from B is reduced by $400, being the attribution surplus in respect of the asset. This creates a loss on the disposal such that a compulsory rollover of the asset would be required under the proposed amendments.
2.65 B disposes of the asset to an unrelated party for $1700 when the indexed cost base of the asset was $1200. When calculating the capital gain on disposal, the amendments proposed will allow B to use an indexed cost base of $1600 ($1200 increased by the attribution surplus of $400).
2.66 The amendments will provide CGT rollover relief for disposals of assets occurring as a consequence of the conversion of a complying approved deposit fund (ADF) to a complying superannuation fund, or where an existing complying ADF or complying superannuation fund amends or replaces its trust deed to comply with the Superannuation Industry (Supervision) Act 1993.
2.67 The amendment will provide CGT rollover relief for disposals of assets occurring on or after 12 January 1994, which is the commencement date of certain amendments to subsection 160M(3) of the Act that deal with transfers of property to trusts and settlements of trusts. [Item 38]
2.68 Section 160M of the Act sets out the transactions which will constitute a disposal or acquisition of an asset for CGT purposes. Subsection 160M(1) provides that a change in the ownership of an asset will be taken be a disposal and acquisition of the asset.
2.69 Subsections 160M(1A) and 160M(3) apply specifically in relation to trusts. Subsection 160M(1A) provides that a change in the legal ownership of an asset (for example a change in the identity of a trustee where no beneficiary is absolutely entitled to the asset) shall not constitute a change in the ownership of the asset unless there is also a change in beneficial ownership.
2.70 Subsection 160M(1A) is expressed to be subject to subsection 160M(3) whereby a change will be taken to have occurred in the ownership of an asset by the creation of a trust (by declaration or settlement) over the asset. An exception to this rule applies where a trust is created by the transfer of an asset to the trust from another trust, and the beneficiaries and terms of the trusts are identical (subparagraph 160M(3)(a)(ii)). Subsection 160M(3) may apply where there is a change in the beneficial but not the legal ownership of an asset.
2.71 Following changes to the Superannuation Industry (Supervision) Act 1993 (the SIS Act) both superannuation funds and approved deposit funds (ADF's) may need to replace or amend their trust deeds in order to comply with the SIS Act. In addition, many ADF's will wish to convert to superannuation funds, since ADF's are now less attractive than superannuation funds as investment vehicles. In either case, the amendment or replacement of the superannuation fund or ADF trust deed will result in a change in the terms of the trust.
2.72 The Bill proposes new section 160ZZPJ [item 33] which grants a CGT rollover for disposals of assets which occur as a consequence of the amendment or replacement of the trust deed of a complying ADF or a complying superannuation fund [new paragraphs 160ZZPJ(1)(a), (b) and (d)] . The terms 'complying ADF' and 'complying superannuation fund' have the same meaning as in subsection 267(1) of the Act [new subsection 160ZZPJ(9)] . The amendment of the trust deed must be for the purpose of complying with the SIS Act or to enable an ADF to convert to a complying superannuation fund.
2.73 A requirement for the granting of a CGT rollover for disposals of assets occurring as a consequence of the amendment or replacement of an ADF or superannuation fund trust deed is that the members of the fund and the assets of the fund do not change as a consequence of the disposal [new paragraph 160ZZPJ(1)(c)] . Provided that the limitations in new subsection 160ZZPJ(1) are satisfied, the identity of the trustee (i.e. the legal ownership of the asset) is irrelevant.
2.74 Where the requirements for the granting of a rollover have been satisfied, Part IIIA will not apply in respect of any disposal constituted by the amendment or replacement of the trust deed [new subsection 160ZZPJ(2)] . The rollover is not elective.
2.75 As a consequence of the rollover, assets of the original fund (the first trust) acquired prior to 20 September 1985 will also be taken to have been acquired by the second trust before 20 September 1985. [New subsection 160ZZPJ(3)]
2.76 In relation to post CGT assets, in determining the amount of any capital gain or loss realised by the second trust on a subsequent disposal of the asset, the amount that would have been the indexed cost base or the reduced cost base (as the case may) of the asset if the first trust had disposed of the asset at the time of the rollover, will also be taken to be the relevant indexed cost base or reduced cost base of the asset to the second trust at that time. [New subsections 160ZZPJ(5), (6) and (7)]
2.77 If the second trust disposes of the asset within 12 months of the day on which the asset was last acquired by the first trust prior to the day on which the rollover took place (the last acquisition day), indexation of the cost base of the asset will not be available. [New subsections 160ZZPJ(8) and (3)]