INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 17 - Miscellaneous roll-over relief  

SECTION 160ZZO   TRANSFER OF ASSET BETWEEN RELATED COMPANIES  

160ZZO(1)   [Application of section]  

Where:

(a) one of the following subparagraphs applies:

(i) a company (in this section called the ``transferor'' ) that is a resident of Australia, other than a prescribed dual resident, disposes of an asset (in this section called a ``roll-over asset'' ) to another company (in this section called the ``transferee'' ) that is a resident of Australia, other than a prescribed dual resident;

(ii) a company (in this section also called the ``transferor'' ) that is not a resident of Australia disposes of a taxable Australian asset (in this section also called a ``roll-over asset'' ) to another company (in this section also called the ``transferee'' ) that is a resident of Australia, other than a prescribed dual resident;

(iii) on or before 25 May 1988, a company (in this section also called the ``transferor'' ) disposed of a taxable Australian asset (in this section also called a ``roll-over asset'' ) to another company (in this section also called the ``transferee'' ) that is not a resident of Australia;

(iv) the following conditions are satisfied:

(A) after 25 May 1988, a company (in this section also called the ``transferor'' ) disposes of a taxable Australian asset (in this section also called a ``roll-over asset'' ) to another company (in this section also called the ``transferee'' ) that is not a resident of Australia;

(B) immediately after the disposal, the asset is a taxable Australian asset of the transferee;

(aa)-(ac) (Omitted by No 48 of 1991)

(b) the transferee is related to the transferor when the disposal takes place;

(ba) the roll-over asset is not trading stock of the transferee immediately after its acquisition by the transferee;

(bb) if:

(i) the roll-over asset is:

(A) a right to which Division 10 or 10A applies; or

(B) an option to which Division 11, 11A or 13 applies; or

(C) a convertible note to which Division 12 or 12A applies; and

(ii) as a result of the exercise of the right or option, or the conversion of the convertible note, the transferee acquires another asset (in this paragraph called the ``derived asset'' );

the derived asset is not trading stock of the transferee immediately after its acquisition by the transferee;

(c) the transferee is not a person whose income of the year of income in which the disposal took place is exempt from tax by virtue of a relevant exempting provision; and

(d) either:

(i) subsection (1AA) (disposals giving rise to capital losses) applies to the disposal; or

(ii) the transferor and the transferee have elected that this section is to apply in relation to the disposal;

this Part (other than this section and Division 19A) does not apply in respect of the disposal and:

(e) if the roll-over asset was acquired by the transferor before 20 September 1985 - the transferee shall be deemed to have acquired the roll-over asset before that date; and

(f) if the roll-over asset was acquired by the transferor on or after 20 September 1985, the transferee shall be deemed to have paid as consideration in respect of the acquisition of the roll-over asset an amount equal to:

(i) for the purpose of ascertaining whether a capital gain accrued to the transferee in the event of a subsequent disposal of the roll-over asset by the transferee - the amount that would have been the indexed cost base to the transferor of the roll-over asset for the purposes of this Part if this Part had applied in respect of the disposal of the roll-over asset by the transferor to the transferee; or

(ii) for the purpose of ascertaining whether the transferee incurred a capital loss in the event of a subsequent disposal of the roll-over asset by the transferee - the amount that would have been the reduced cost base to the transferor of the roll-over asset for the purposes of this Part if this Part had applied in respect of the disposal of the roll-over asset by the transferor to the transferee;

(g)-(h) (Omitted by No 17 of 1993)

160ZZO(1AA)   [Disposal not covered by election]  

This subsection applies to a disposal if:

(a) assuming this Part applied to the disposal, the disposal would give rise to a capital loss; and

(b) the disposal is not covered by an election under subsection (1AB).

160ZZO(1AB)   [Election]  

The transferor and the transferee may make an election under this subsection in relation to a disposal if the transferor and the transferee intend that, before the end of the year of income of the transferor after the year in which the disposal takes place, they will cease to be related and that the transferor, together with related companies of the transferor, will cease to hold 50% or more of the shares in the transferee.

160ZZO(1AC)   [No capital loss where election requirements not met]  

If a transferor and a transferee make an election under subsection (1AB) and the transferor, together with related companies of the transferor, does not cease to hold 50% or more of shares in the transferee before the end of the year of income of the transferor after the year in which the disposal occurs, no capital loss is taken to have arisen in relation to the disposal of the asset by the transferor.

160ZZO(1AD)   [No capital loss where certain events occur]  

No capital loss is taken to have arisen in relation to the disposal of the asset by the transferor if:

(a) the transferor and transferee make an election under subsection (1AB); and

(b) at any time in the 4 year period after the disposal of the asset, the asset is held by the transferor or a company that is related to the transferor or a company where, at that time, the transferor, together with other companies related to the transferor, holds 50% or more of the shares in the company.

Paragraph (b) does not apply in relation to the asset being held by the transferee in the period between the time when the asset is disposed of by the transferor and the time when the transferor, together with related companies of the transferor, ceases to hold 50% or more of the shares in the transferee.

160ZZO(2)   [Disposal by transferee within 12 months of taxpayer's acquisition]  

If, in the case of a roll-over asset to which paragraph (1)(f) applies, the asset was disposed of by the transferee within 12 months after the day on which the asset was acquired by the transferor, the reference in that paragraph to the indexed cost base to the transferor of the asset shall be construed as a reference to the cost base to the transferor of the asset.

160ZZO(2A)-(2C)    

160ZZO(2D)   [Application of Div 7 of Pt X]  

If:

(a) there is a requirement to calculate under Division 7 of Part X the attributable income of a company in relation to any taxpayer; and

(b) this section, as it has effect in accordance with that Division, is relevant to that calculation because both of the following subparagraphs apply:

(i) the company is the transferor;

(ii) apart from the residency assumption mentioned in that Division, the disposal of the roll-over asset concerned is not a disposal of a taxable Australian asset;

then, in addition to the effect that this section has apart from this subsection, this section also has the effect, in relation to any subsequent disposal of the roll-over asset (whether by the transferee or otherwise) that it would have if it had applied in relation to the transferee subject to the modifications made by that Division.

160ZZO(3)   [Form and manner of election]  

An election under this section must be made in writing on or before the date of lodgment of the transferor's return for the year of income in which the disposal took place. The Commissioner may allow the election to be made at a later time.

160ZZO(3A)    

160ZZO(4)   [Asset an interest in CFC or FIF]  

If:

(a) subsection (1AA) applies to a disposal (the first disposal ) of an asset; and

(b) the asset is an interest in a CFC or a FIF; and

(c) the consideration in respect of the first disposal is reduced under section 461 or 613 ;

then:

(d) for the purpose of determining if a capital gain arises in respect of the subsequent disposal of the asset by the transferee, the indexed cost base of the asset to the transferee is to be increased, at the time of the subsequent disposal, by so much of the attribution surplus as was taken into account under paragraph 461(1)(c) or 613(1)(c) in relation to the first disposal; and

(e) for the purpose of determining if a capital loss arises in respect of the subsequent disposal of the asset by the transferee, the reduced cost base of the asset to the transferee is to be increased, at the time of the subsequent disposal, by so much of the attribution surplus as was taken into account under paragraph 461(1)(c) or 613(1)(c) in relation to the first disposal.

160ZZO(5)   [``attribution surplus''; ``CFC''; ``FIF'']  

In subsection (4):

attribution surplus
means an attribution surplus under Part X or Part XI.

CFC
has the same meaning as in Part X.

FIF
has the same meaning as in Part XI.

160ZZO(6)    

160ZZO(7)-(8)    

160ZZO(8A)    

160ZZO(8B)    

160ZZO(9)   [Personal-use asset]  

Where this section applies to the disposal of a roll-over asset that was a personal-use asset of the transferor, the asset shall be taken for the purposes of this Part to be a personal-use asset of the transferee.

160ZZO(9A)   [Amendment of assessments]  

Section 170 does not prevent the amendment of an assessment at any time for the purpose of giving effect to paragraph (1)(bb) or subsection (1AC) or (1AD).

160ZZO(10)