INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 10AA - Prospecting and mining for petroleum  

SECTION 124AMAA   ROLL-OVER RELIEF WHERE CGT ROLL-OVER RELIEF ALLOWED UNDER SECTION 160ZZM, 160ZZMA, 160ZZN, 160ZZNA OR 160ZZO OR WHERE ELECTION FOR ROLL-OVER RELIEF MADE UNDER SECTION 124AO  

124AMAA(1)   Roll-over relief where CGT roll-over relief allowed.  

This section applies to the disposal of property before the 1997-98 year of income by a taxpayer (in this section called the transferor ) to another taxpayer (in this section called the transferee ) if:

(a) either:

(i) in a case where the transferor is not a partnership - section 160ZZM , 160ZZMA , 160ZZN or 160ZZO applies to the disposal of the property by the transferor; or

(ii) if the transferor is a partnership - the property is partnership property of the partnership and section 160ZZNA applies to the corresponding disposal, by all of the partners in the partnership, of their interests in the property; and

(b) subject to subsection (18A), deductions have been allowed or are allowable under this Division to the transferor in respect of the property.

Note:

Common rule 1 in Subdivision 41-A of the Income Tax Assessment Act 1997 sets out when roll-over relief is available in relation to the disposal of property in the 1997-98 year of income or a later year of income by a taxpayer to another taxpayer.

124AMAA(2)   Roll-over relief where joint election made under section 124AO .  

This section also applies if a joint election for roll-over relief is made under section 124AO by both the transferor and the transferee referred to in that section in relation to the disposal of property before the 1997-98 year of income.

Note:

Common rule 1 in Subdivision 41-A of the Income Tax Assessment Act 1997 sets out when a joint election for roll-over relief may be made in relation to the disposal of property in the 1997-98 year of income or a later year of income.

124AMAA(3)   No balancing charges or deductions.  

Section 124AM (which deals with balancing charges and deductions) does not apply to the disposal of the property by the transferor.

124AMAA(4)   Transferee to inherit certain characteristics from transferor.  

This Division applies as if:

(a) if any part of the expenditure of the transferor in respect of the property is allowable capital expenditure of the transferor and no part of the expenditure of the transferor in respect of the property is unrecouped previous capital expenditure of the transferor - the transferee had acquired the property for a consideration equal to the amount worked out using the formula:

where:

``Transferor's expenditure'' means so much of the total expenditure of a capital nature of the transferor in respect of the property as is allowable capital expenditure of the transferor;

``Transferor's deductions'' means the sum of the deductions allowed or allowable to the transferor under this Division in respect of so much of the expenditure of a capital nature of the transferor in respect of the property as is allowable capital expenditure of the transferor;

``Undeducted excess amounts'' means the sum of the excess amounts referred to in subsection (5) in respect of the property; and

(aa) if any part of the expenditure of the transferor in respect of the property is unrecouped previous capital expenditure of the transferor:

(i) the transferee had acquired the property for a consideration equal to the sum of:

(A) so much of the total expenditure of a capital nature of the transferor in respect of the property as is unrecouped previous capital expenditure of the transferor as at the end of the year of income immediately preceding the year of income in which the disposal took place; and

(B) if any part of the expenditure of the transferor in respect of the property is allowable capital expenditure of the transferor - the amount worked out using the formula in paragraph (a); and

(ii) section 124AE has effect in relation to the transferee and in relation to the property as if so much of the expenditure which the transferee is taken to have incurred because of sub-subparagraph (i)(A) of this paragraph were covered by paragraph 124AE(a) or (b); and

(iii) a deduction were not allowable to the transferor under section 124AF for the year of income in which the disposal took place in respect of so much of the unrecouped previous capital expenditure of the transferor as at the end of that year of income as is attributable to the total expenditure of a capital nature of the transferor in respect of the property; and

(b) if no part of the expenditure of the transferor in respect of the property is:

(i) allowable capital expenditure of the transferor; or

(ii) unrecouped previous capital expenditure of the transferor;

the transferee had acquired the property for nil consideration; and

(c) if any part of the expenditure of the transferor in respect of the property is allowable capital expenditure of the transferor and the property is a petroleum prospecting or mining right or petroleum prospecting or mining information:

(i) a notice under section 124AB in respect of the acquisition of the property had been given to the Commissioner by the transferor and the transferee; and

(ii) the amount specified in the notice were the amount worked out using the formula in paragraph (a) of this subsection; and

(iii) subsections 124AB(3) , 124ADG(9) and 124AH(5) were not applicable to that notice; and

(d) if any part of the expenditure of the transferor in respect of the property is allowable capital expenditure of the transferor and the property is not a petroleum prospecting or mining right or petroleum prospecting or mining information - subsection 124ADG(8) were not applicable to the disposal of the property; and

(e) if:

(i) the property is a qualifying interest in relation to a cash bidding exploration permit (within the meaning of section 124ABA ); and

(ii) immediately before the disposal, the transferor had an entitlement to an eligible cash bidding amount (within the meaning of that section) in relation to that permit;

then:

(iii) a notice under section 124ABA in respect of the acquisition of the property had been given to the Commissioner by the transferor and the transferee; and

(iv) the amount specified in the notice were equal to the whole of the transferor's entitlement to the eligible cash bidding amount; and

(f) the reference in paragraph 124ADG(3)(a) to a year of income in respect of which a deduction has been allowed or is allowable, or, apart from the operation of subsection 124ADG(6) , would have been allowed or would be allowable, in respect of an amount of allowable capital expenditure of the transferee in respect of the property included a reference to a year of income in respect of which a deduction has been allowed or is allowable, or, apart from the operation of subsection 124ADG(6) , would have been allowed or would be allowable, in respect of allowable capital expenditure of:

(i) the transferor in respect of the property; or

(ii) if there have been 2 or more prior successive applications of this section - any of the prior successive transferors in respect of the property.

124AMAA(5)   Transfer of subsection 124ADG(7) excess amounts.  

If, apart from this subsection, the following conditions are satisfied in relation to a deduction allowable to the transferor under subsection 124ADG(2) in respect of the property:

(a) the deduction is allowable because of the application of subsection 124ADG(7) ;

(b) the deduction is in respect of an amount (in this subsection called the excess amount ) of expenditure of a capital nature in respect of the property;

(c) the deduction is allowable for the year of income in which the disposal took place;

then:

(d) the excess amount is taken, under subsection 124ADG(7) , to be a deduction that is allowable under subsection 124ADG(2) to the transferee for the year of income in which the disposal took place; and

(e) a deduction is not allowable to the transferor under subsection 124ADG(2) in respect of the excess amount.

124AMAA(6)   Transfer of subsection 124AH(4) excess amounts.  

If, apart from this subsection, the following conditions would have been satisfied in relation to a contingent deduction allowable to the transferor under subsection 124AH(1) in respect of the property:

(a) the deduction is allowable because of the application of subsection 124AH(4) ;

(b) the deduction is in respect of an amount (in this subsection called the excess amount ) of expenditure of a capital nature in respect of the property;

(c) the contingency is that the transferor had derived assessable income from petroleum in the year of income in which the disposal took place or a subsequent year of income;

then:

(d) the excess amount is taken, under subsection 124AH(4) , to be a deduction that is allowable under subsection 124AH(1) to the transferee for:

(i) if the transferee derives assessable income from petroleum in the year of income in which the disposal took place - that year of income; or

(ii) the first subsequent year of income in which the transferee derives assessable income from petroleum; and

(e) a deduction is not allowable to the transferor under subsection 124AH(1) in respect of the excess amount.

124AMAA(7)   Transfer of subsection 124AH(4B) excess amounts.  

If, apart from this subsection, the following conditions would have been satisfied in relation to a contingent deduction allowable to the transferor under subsection 124AH(1) in respect of the property:

(a) the deduction is allowable because of the application of subsection 124AH(4B) ;

(b) the deduction is in respect of an amount (in this subsection called the excess amount ) of expenditure of a capital nature in respect of the property;

(c) the contingency is that the transferor had derived assessable income in the year of income in which the disposal took place or a subsequent year of income;

then:

(d) the excess amount is taken, under subsection 124AH(4B) , to be a deduction that is allowable under subsection 124AH(1) to the transferee for:

(i) if the transferee derives assessable income in the year of income in which the disposal took place - that year of income; or

(ii) the first subsequent year of income in which the transferee derives assessable income; and

(e) a deduction is not allowable to the transferor under subsection 124AH(1) in respect of the excess amount.

124AMAA(8)   Section 124AB , 124AC , 124ADA , 124ADC and 124ADE and subsection 124ADG(1) - inheritance of threshold conditions.  

If section 124AB , 124AC , 124ADA , 124ADC or 124ADE or subsection 124ADG(1) applied to the expenditure of a capital nature of the transferor in respect of the property, that section or subsection has effect, in relation to the transferee and in relation to the property, as if the threshold conditions that were satisfied in relation to the transferor were satisfied in relation to the transferee.

124AMAA(9)   Subsection (8) - threshold conditions.  

For the purposes of subsection (8), the following are taken to be threshold conditions in relation to expenditure in respect of property:

(a) a condition that the expenditure was incurred before, at or after a particular time;

(b) if the expenditure was incurred under a contract - a condition that the contract was, or was not, entered into before, at or after a particular time;

(c) if the expenditure was incurred in respect of the construction of property - a condition that the construction commenced, or did not commence, before, at or after a particular time.

124AMAA(10)   Subsection 124AH(4) - inheritance of threshold conditions.  

If subsection 124AH(4) applied to the expenditure of the transferor in respect of the property, that subsection has effect, in relation to the transferee and in relation to the property, as if the threshold conditions that were satisfied in relation to the transferor were satisfied in relation to the transferee.

124AMAA(11)   Subsection (10) - threshold conditions.  

For the purposes of subsection (10), the following are taken to be threshold conditions in relation to expenditure in respect of the property:

(a) a condition that the expenditure was incurred before, at or after a particular time;

(b) a condition that the expenditure was incurred during a particular year of income.

124AMAA(12)   Inheritance of section 124AG election.  

If the transferor made an election under section 124AG in respect of expenditure on the property, the transferee is taken to have made an election under section 124AG in respect of expenditure on the property.

124AMAA(13)   Rule where no section 124AG election made.  

If the transferor did not make an election under section 124AG in respect of expenditure on the property, the transferee is not entitled to make an election under section 124AG in respect of expenditure on the property.

124AMAA(14)   Inheritance of subsection 124AA(2A) threshold conditions.  

If:

(a) the property is plant or articles for the purposes of section 54 ; and

(b) the expenditure of a capital nature of the transferor in respect of the property is allowable capital expenditure;

then, section 124AA has effect in relation to the transferee and in relation to the property, as if the conditions set out in subsection 124AA(2A) that were satisfied in relation to the transferor were satisfied in relation to the transferee.

124AMAA(15)   Recoupment of expenditure - consequential amendment of assessments.  

Section 170 does not prevent the amendment at any time of an assessment of the transferee where section 124AQ has applied to:

(a) the transferor in respect of the property; or

(b) if there have been 2 or more prior successive applications of this section - any of the prior successive transferors in respect of the property.

124AMAA(16)   Disposal by transferee where no roll-over relief - inheritance of deductions.  

If:

(a) after the disposal of the property to the transferee:

(i) the property is lost or destroyed; or

(ii) the transferee disposes of the property; or

(iii) the use of property by the transferee for purposes of carrying on prescribed petroleum operations or of exploring or prospecting for petroleum (within the meaning of section 124AM ) is otherwise terminated; and

(b) in the case of a disposal by the transferee - this section does not apply to the disposal;

then, for the purposes of the application of section 124AM in relation to the loss, destruction, disposal or termination, the total of:

(c) the deductions allowed or allowable to the transferor under this Division in relation to the property; and

(d) if there have been 2 or more prior successive applications of this section - the deductions allowed or allowable to the prior successive transferors under this Division in relation to the property;

are taken to have been deductions allowed or allowable to the transferee under this Division in relation to the property.

124AMAA(17)   Disposal by transferee where no roll-over relief - inheritance of total expenditure of a capital nature.  

In spite of subsection (4), if:

(a) after the disposal of the property to the transferee:

(i) the property is lost or destroyed; or

(ii) the transferee disposes of the property; or

(iii) the use of the property by the taxpayer for purposes of carrying on prescribed petroleum operations or of exploring or prospecting for petroleum (within the meaning of section 124AM ) is otherwise terminated; and

(b) in the case of a disposal by the transferee - this section does not apply to the disposal;

then, for the purposes of the application of section 124AM in relation to the loss, destruction, disposal or termination, the total expenditure of a capital nature of the transferee in respect of the property is to be worked out as if the rule set out in subsection (18) had been applicable to:

(c) the disposal of the property by the transferor to the transferee; and

(d) if there have been 2 or more prior successive applications of this section - each prior successive disposal.

124AMAA(18)   Rule referred to in subsection (17).  

The rule referred to in subsection (17) is that the transferee had acquired the property for a consideration equal to the total expenditure of a capital nature of the transferor in respect of the property.

124AMAA(18A)   Second or subsequent application of section - paragraph (1)(b) does not apply.  

If, apart from this subsection, this section has applied to the disposal of the property to the transferee, then, in working out whether this section applies to a subsequent disposal of the property by:

(a) the transferee; or

(b) one or more subsequent successive transferees;

this section has effect as if paragraph (1)(b) (which deals with deductions) had not been enacted.

124AMAA(19)   CGT roll-over relief applies to motor vehicles.  

For the purposes of this section, in addition to the effect that sections 160ZZM , 160ZZMA , 160ZZN , 160ZZNA and 160ZZO have apart from this subsection, those sections also have the effect that they would have if a reference in those sections to an asset included a reference to a motor vehicle of a kind covered by paragraph 82AF(2)(a) .