# INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES

Division 19 - Goodwill

SECTION 160ZZRAA   CALCULATION OF EXEMPTION THRESHOLD FOR PURPOSES OF SECTION 160ZZR

160ZZRAA(1)   Calculation in accordance with section.

For the purposes of section 160ZZR , the exemption threshold for a year of income is calculated as follows.

160ZZRAA(2)   Exemption threshold before 1993-94.

The exemption threshold for years of income before the 1993-94 year of income is \$2,000,000.

160ZZRAA(3)   Exemption threshold from 1993-94 onwards.

For each later year of income, the exemption threshold is calculated by:

(a) taking the exemption threshold for the year of income before it (ignoring any application of paragraph (d)); and

(b) multiplying the exemption threshold by the indexation factor for the later year of income (see subsection (4)); and

(c) rounding the result to the nearest \$1,000 or multiple of \$1,000 (rounding upwards an amount ending in \$500); and

(d) if the result is less than \$2,000,000 - increasing it to \$2,000,000.

160ZZRAA(4)   Calculating the indexation factor in subsection (3).

The indexation factor for the later year of income is calculated, to 3 decimal places, using the following formula:

 Sum of index numbers for quarters in period 1 Sum of index numbers for quarters in period 2

where:

`` index number '', for a quarter, means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of the quarter (ignoring any later number that may be published by the Australian Statistician in substitution for it);

`` period 1 '' means the period of 12 months ending on 31 March immediately before the later year of income (ignoring any substituted accounting period);

`` period 2 '' means the period of 12 months immediately before period 1.

160ZZRAA(5)   Indexation factor: rounding.

If the indexation factor would end with a number greater than 4 if it were calculated to 4 decimal places (instead of 3 decimal places as mentioned in subsection (4)), then the indexation factor must be increased by 0.001.

160ZZRAA(6)   Indexation factor: change in CPI reference base.

For the purposes of applying the formula component ``index number'' , if at any time, whether before or after the commencement of this section, the Australian Statistician has changed or changes the reference base for the Consumer Price Index, then, after the change only index numbers published in terms of the new base are to be used.

160ZZRAA(7)   Publication of indexation factor and exemption threshold.

Before the beginning of each year of income (ignoring any substituted accounting period) the Commissioner must publish by written notice the indexation factor and the exemption threshold for the year of income.