Tax Laws Amendment (2006 Measures No. 7) Act 2007 (55 of 2007)
Schedule 1 Small business relief for CGT events
Income Tax Assessment Act 1997
35 After subsection 152-40(3)
(3A) A *share in a company, or an interest in a trust, mentioned in paragraph (3)(a) is an active asset at a time (the later time ) if:
(a) the share or interest was an active asset at an earlier time; and
(b) it is reasonable to conclude that the share or interest is still an active asset at the later time.
Note: This ensures that the 80% test does not need to be applied on a day to day basis.
(3B) A *share in a company, or an interest in a trust, mentioned in paragraph (3)(a) is an active asset at a time if:
(a) the share or interest fails to meet the requirements under subsection (3) at that time; and
(b) the failure is of a temporary nature only.
Note: If a share in a company or an interest in a trust is chosen as a replacement asset, this ensures that a temporary failure of the 80% test does not automatically lead to CGT event J2 happening.