INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 1 - Preliminary  

Subdivision A - Object, simplified outline, example and index  

SECTION 160AY   SIMPLIFIED OUTLINE OF SCHEME OF PART  

160AY(1)   Simplified outline.  

The following is a simplified outline of the scheme of this Part.

160AY(2)   Step 1 - disposal of an asset.  

This Part applies if a taxpayer disposes of an asset. For a basic definition of ``asset'', see section 160A . The taxpayer must have acquired the asset on or after 20 September 1985 and the disposal of the asset must occur on or after that date (see section 160L ). 160M is the basic provision defining ``disposal'' and ``acquisition''. The timing of disposal and acquisition is dealt with by section 160U . There are various exemptions, including the principal residence exemption (see the Exemptions Sub Index in section 160AZA ). There are also various provisions giving roll-over relief on the disposal of assets (see the Roll-overs Sub Index in section 160AZA ).

160AY(3)   Step 2 - disposal of asset may result in a capital gain or a capital loss.  

The disposal of the asset may result in a capital gain or capital loss (see section 160Z ).

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For a basic definition of ``consideration in respect of a disposal of an asset'', see section 160ZD . For basic definitions of ``cost base'', ``indexed cost base'' and ``reduced cost base'', see section 160ZH . The basic idea is that the cost base of an asset consists of the cost of acquiring the asset and certain other costs, the indexed cost base is the cost base indexed for inflation (see section 160ZJ ) and the reduced cost base is the cost base adjusted to take account of certain capital deductions and balancing charges (see section 160ZK ).

The indexed cost base and the cost base are also adjusted to take account of certain deductions and balancing adjustments (see sections 160ZJA and 160ZJB ).

160AY(4)   Step 3 - calculation of net capital gain.  

Capital gains and capital losses are netted under section 160ZC to work out the net capital gain.

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160AY(5)   Step 4 - net capital gain to be included in assessable income under section 160ZO.  

The amount of the net capital gain is included in the taxpayer's assessable income under section 160ZO .


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