Tax and Superannuation Laws Amendment (2015 Measures No. 2) Act 2015 (130 of 2015)

Schedule 1   Tax relief for certain mining arrangements

Part 1   Interest realignment arrangements

Income Tax Assessment Act 1997

2   At the end of Division 124

Add:

Subdivision 124-S - Interest realignment arrangements

Guide to Subdivision 124-S

124-1220 What this Subdivision is about

There is roll-over relief if an interest in a mining, quarrying or prospecting right is disposed of under an interest realignment arrangement.

Table of sections

124-1225 Disposals of interests under interest realignment arrangements

124-1230 Roll-over consequences - partial roll-over

124-1235 Roll-over consequences - all original interests were post-CGT

124-1240 Roll-over consequences - all original interests were pre-CGT

124-1245 Roll-over consequences - original interests were of mixed CGT status, all were pre-UCA

124-1250 Roll-over consequences - some original interests were pre-UCA

Operative provisions

124-1225 Disposals of interests under interest realignment arrangements

(1) There is a roll-over if:

(a) *CGT event A1 happens because you *dispose of one or more assets each of which:

(i) is an interest (an original interest ) in a *mining, quarrying or prospecting right; and

(ii) is an interest that you started to *hold before 1 July 2001; and

(b) the disposal occurs under an *interest realignment arrangement.

(2) The first element of the *cost base and *reduced cost base of an interest (a new interest ) in a *mining, quarrying or prospecting right that you acquire under the *interest realignment arrangement includes any amount you paid to acquire the new interest.

Note 1: The rest of the first element is worked out under Subdivision 124-A.

Note 2: Under subsections 124-10(2) and 124-15(2), a capital gain or capital loss you make from the original interest is disregarded.

(3) The amount can include giving property: see section 103-5. However, it does not include a *mining, quarrying or prospecting right that you dispose of under the *interest realignment arrangement.

124-1230 Roll-over consequences - partial roll-over

(1) You can obtain only a partial roll-over in relation to an original interest if the *capital proceeds for that interest includes something (the ineligible proceeds ) other than a new interest or new interests. There is no roll-over for that part (the ineligible part ) of the interest for which you received the ineligible proceeds.

Note: If there is more than one original interest, some or all of those original interests may each have an ineligible part.

(2) The *cost base of the ineligible part is that part of the cost base of the original interest as is reasonably attributable to the ineligible part.

(3) The *reduced cost base of the ineligible part is that part of the reduced cost base of the original interest as is reasonably attributable to the ineligible part.

(4) For the purposes of sections 124-1235 and 124-1245, for each original interest that has an ineligible part:

(a) reduce the *cost base of that interest (just before the *CGT event that happened in relation to it) by so much of that cost base as is attributable to that ineligible part; and

(b) reduce the *reduced cost base of that interest (just before the CGT event that happened in relation to it) by so much of that reduced cost base as is attributable to that ineligible part.

124-1235 Roll-over consequences - all original interests were post-CGT and pre-UCA

(1) If you acquire the new interest in exchange for:

(a) one original interest that you started to *hold on or after 20 September 1985 and before 1 July 2001; or

(b) 2 or more original interests, each of which you started to hold on or after 20 September 1985 and before 1 July 2001;

you are taken to have started to hold the new interest (or all of the new interests) on or after 20 September 1985 and before 1 July 2001.

(2) The first element of the *cost base of the new interest (or of each of the new interests) is such amount as is reasonable having regard to:

(a) the total of the cost bases of all the original interests; and

(b) the number, *market value and character of the original interests; and

(c) the number, market value and character of the new interests.

(3) The first element of the *reduced cost base of the new interest (or of each of the new interests) is such amount as is reasonable having regard to:

(a) the total of the reduced cost bases of all the original interests; and

(b) the number, *market value and character of the original interests; and

(c) the number, market value and character of the new interests.

124-1240 Roll-over consequences - all original interests were pre-CGT

If you acquire the new interest in exchange for:

(a) one original interest that you started to *hold before 20 September 1985; or

(b) 2 or more original interests, each of which you started to hold before 20 September 1985;

you are taken to have started to hold the new interest (or all of the new interests) before that day.

124-1245 Roll-over consequences - original interests were of mixed CGT status, all were pre-UCA

(1) This section applies if:

(a) you acquire the new interest in exchange for more than one original interest; and

(b) you started to *hold one or more of the original interests before 20 September 1985; and

(c) you started to hold one or more of the original interests on or after that day; and

(d) you did not start to hold any of the original interests on or after 1 July 2001.

(2) Each new interest is taken to be 2 separate *CGT assets that are both new interests:

(a) one (which you are taken to have started to *hold on or after 20 September 1985 and before 1 July 2001) representing the extent to which you started to hold the original interests on or after 20 September 1985 and before 1 July 2001; and

(b) another (which you are taken to have started to hold before 20 September 1985) representing the extent to which you started to hold the original interests before that day.

(3) The first element of the *cost base and *reduced cost base of the *CGT asset mentioned in paragraph (2)(a) in relation to a new interest is worked out under the formula:

Formula for rollover consequences where original interests are mixed CGT status

where:

market value of all new interests is the total of the *market values of all of the new interests.

market value of new interest is the *market value of the new interest to which the *CGT asset mentioned in paragraph (2)(a) relates.

total post-CGT cost base is the total of the *cost bases of all the original interests that you started to *hold on or after 20 September 1985.

124-1250 Roll-over consequences - some original interests were pre-UCA

(1) This section applies if:

(a) you acquire the new interest in exchange for more than one original interest; and

(b) you started to *hold one or more of the original interests ( pre-UCA interests ) before 1 July 2001; and

(c) you started to hold one or more of the original interests ( post-UCA interests ) on or after that day.

(2) If you started to *hold all of the pre-UCA interests on or after 20 September 1985, each new interest is taken to be 2 separate assets that are both new interests:

(a) one (which you are taken to have started to hold on or after that day and before 1 July 2001) representing the extent to which the original interests are pre-UCA interests; and

(b) another (which you are taken to have started to hold on or after 1 July 2001) representing the extent to which the original interests are post-UCA interests.

Apply section 124-1235 to the interest referred to in paragraph (a) as if the pre-UCA interests were the only original interests. Apply Division 40 to the interests referred to in paragraph (b).

(3) If you started to *hold all of the pre-UCA interests before 20 September 1985, each new interest is taken to be 2 separate assets that are both new interests:

(a) one (which you are taken to have started to hold before that day) representing the extent to which the original interests are pre-UCA interests; and

(b) another (which you are taken to have started to hold on or after 1 July 2001) representing the extent to which the original interests are post-UCA interests.

Apply section 124-1240 to the new interest referred to in paragraph (a) as if the pre-UCA interests were the only original interests. Apply Division 40 to the new interest referred to in paragraph (b).

(4) If you started to *hold one or more of the pre-UCA interests before 20 September 1985 and one or more of the pre-UCA interests on or after that day, each new interest is taken to be 3 separate assets that are all new interests:

(a) one (which you are taken to have started to hold on or after 20 September 1985 and before 1 July 2001) representing the extent to which the original interests that you started to hold on or after 20 September 1985 are pre-UCA interests; and

(b) another (which you are taken to have started to hold before 20 September 1985) representing the extent to which the original interests that you started to hold before 20 September 1985 are pre-UCA interests; and

(c) another (which you are taken to have started to hold on or after 1 July 2001) representing the extent to which the original interests are post-UCA interests.

Apply section 124-1245 to the new interests referred to in paragraphs (a) and (b) as if the pre-UCA interests were the only original interests. Apply Division 40 to the new interest referred to in paragraph (c).