Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-95 - VALUE SHIFTING  

Division 727 - Indirect value shifting affecting interests in companies and trusts, and arising from non-arm ' s length dealings  

Subdivision 727-G - The realisation time method  

Operative provisions

SECTION 727-645   Effect of CGT roll-over  

727-645(1)  
If:


(a) this Subdivision applies to a * realisation event that is a * CGT event that happens to an * affected interest in the * losing entity; and


(b) section 727-615 reduces a loss that would, apart from this Division, be * realised for income tax purposes by the CGT event; and


(c) there is a roll-over for the CGT event;

the interest ' s * reduced cost base at the time of the CGT event is taken to have been reduced by the amount by which section 727-615 reduces that loss, but is so taken only for the purposes of working out:


(d) the interest ' s reduced cost base, from time to time after the roll-over, for the entity that * acquired the interest because of the CGT event; and


(e) in the case of a * replacement-asset roll-over - the reduced cost base of the replacement CGT asset, from time to time after the roll-over, for the entity that * disposed of the interest.

Note:

Because of the roll-over, the loss reduction under section 727-615 will have no tax effect. This subsection ensures that the loss reduction is passed on, through the reduction in reduced cost base, to prevent or reduce a loss arising on a later CGT event.

727-645(2)  
If:


(a) this Subdivision applies to a * realisation event that is a * CGT event that happens to an * affected interest in the * gaining entity; and


(b) section 727-620 reduces a gain that would, apart from this Division, be * realised for income tax purposes by the CGT event; and


(c) there is a roll-over for the CGT event;

the interest ' s * cost base at the time of the CGT event is taken to have been uplifted by the amount by which section 727-620 reduces that gain, but is so taken only for the purposes of working out:


(d) the interest ' s cost base, from time to time after the roll-over, for the entity that * acquired the interest because of the CGT event; and


(e) in the case of a * replacement-asset roll-over - the cost base of the replacement CGT asset, from time to time after the roll-over, for the entity that * disposed of the interest.

Note:

Because of the roll-over, the gain reduction under section 727-620 will have no tax effect. This subsection ensures that the gain reduction is passed on, through the uplift in cost base, to prevent or reduce a gain arising on a later CGT event.


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