Income Tax Assessment Act 1997
There is roll-over relief if:
(a) there is a *balancing adjustment event because an entity (the transferor ) disposes of a *depreciating asset in an income year to another entity (the transferee ); and
(b) the disposal involves a *CGT event; and
(c) the conditions in an item in this table are satisfied.
|CGT roll-overs that qualify transferor for relief|
|Item||Type of CGT roll-over||Conditions|
|1||Disposal of asset to wholly-owned company||The transferor is able to choose a roll-over under Subdivision 122-A for the *CGT event.|
|2||Disposal of asset by partnership to wholly-owned company||The transferor is a partnership, the property is partnership property and the partners are able to choose a roll-over under Subdivision 122-B for the disposal by the partners of the *CGT assets consisting of their interests in the property.|
|2A||Transfer of a *CGT asset of a trust to a company under a trust restructure||The transferor and transferee are able to choose a roll-over under Subdivision 124-N for the *CGT event.|
|3||Marriage or relationship breakdown||There is a roll-over under Subdivision 126-A for the *CGT event.|
|4||Disposal of asset to another member of the same wholly-owned group||The transferor is able to choose a roll-over under Subdivision 126-B for the *CGT event.|
|5||*Disposal of asset between certain trusts||The trustees of the trusts choose to obtain a roll-over under Subdivision 126-G in relation to the disposal.|
|6||Disposal of asset as part of merger of superannuation funds||The transferor chooses a roll-over under Subdivision 310-D in relation to the disposal.|
|7||(Repealed by No 89 of 2013)|
|8||Transfer of asset under a small business restructure roll-over||A roll-over under Subdivision 328-G would be available in relation to the asset if the asset were not a *depreciating asset.|
Section 40-345 sets out what the relief is.
This Act also applies as if there were roll-over relief under this subsection in the circumstances set out in section 620-30 (which is about a body incorporated under one law ceasing to exist and disposing of its assets to a company incorporated under another law that has not significantly different ownership).
[ CCH Note: S 40-340(1) will be amended by No 19 of 2010 (as amended by No 158 of 2012 and No 23 of 2018), s 3 and Sch 2 item 12, by repealing table item 6, effective 1 July 2022. For savings provisions relating to the repeal see note under Div 310 heading.]
In applying an item in the table in subsection (1), disregard the following so far as they relate to the *depreciating asset you disposed of:
(a) an exemption in Division 118 (which contains the general exemptions from CGT); and
(b) subsection 122-25(3) (which excludes certain assets from some kinds of CGT roll-over); and
(c) subsection 124-870(5) (which excludes certain assets from roll-over relief under Subdivision 124-N ).
There is also roll-over relief if:
(a) there is a *balancing adjustment event for a *depreciating asset because of subsection 40-295(2) (about a change in the holding of, or in interests in, the asset); and
(b) the entity or entities that had an interest in the asset before the change (also the transferor ) and the entity or entities that have an interest in the asset after the change (also the transferee ) jointly choose the roll-over relief.
The change could be a variation in the constitution of a partnership or in the interests of the partners.
Section 40-345 sets out what the relief is.
Subdivision 328-D sets out what the relief is for small business entities that calculate deductions for their depreciating assets under that Subdivision.
The choice must:
(a) be in writing; and
(b) contain enough information about the transferor ' s holding of the property for the transferee to work out how this Division or Subdivision 328-D applies to the transferee ' s holding of the * depreciating asset; and
(c) be made within 6 months after the end of the transferee ' s income year in which the * balancing adjustment event occurred, or within a longer period allowed by the Commissioner.
If you die before the end of the time allowed for jointly choosing roll-over relief, the trustee of your estate may be a party to the choice.
The transferor must keep the choice or a copy of it for 5 years after the *balancing adjustment event occurred.
Penalty: 30 penalty units.40-340(7)
The transferee must keep the choice or a copy of it until the end of 5 years after the next *balancing adjustment event occurs for the *depreciating asset.
Penalty: 30 penalty units.Exception: Subdivision 170-D applies 40-340(8)
There can be no roll-over relief if Subdivision 170-D (about transactions by a company that is a member of a linked group) applies to the disposal of the *depreciating asset or the change in interests in it.
Note: A Commissioner ' s Remedial Power (CRP 2017/2) is relevant to this part of the tax law. Taxation Administration (Remedial Power - Small Business Restructure Roll-over) Determination 2017 (F2017L01687) modifies the operation of s 40-340 of the Income Tax Assessment Act 1997 and any other provisions of a taxation law whose operation is affected by the modified operation of s 40-340 in relation to an asset transferred under a small business restructure roll-over (item 8 of the table in s 40-340(1) ).
The operation of the relevant provisions is modified as follows:
If s 40-340 of ITAA 1997 provides for rollover relief in relation to a disposal of a depreciating asset because the condition in item 8 of the table in s 40-340(1) of ITAA 1997 is satisfied in relation to the asset, that section has effect as if it also provided that the disposal of the asset has no direct consequences under the income tax law (other than Div 40 of ITAA 1997).
The modification applies in respect of transfers on or after 8 May 2018.
An entity must treat a modification as not applying to it or any other entity if the modification would produce a less favourable result for it. The Commissioner is empowered by s 370-5 of Sch 1 to the Taxation Administration Act 1953 to make modifications, by legislative instrument, to ensure the law is administered to achieve its intended purpose or object.