INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 10 - Mining and quarrying  

Subdivision A - General mining  

SECTION 122JAA   ROLL-OVER RELIEF WHERE CGT ROLL-OVER RELIEF ALLOWED UNDER SECTION 160ZZM, 160ZZMA, 160ZZN, 160ZZNA OR 160ZZO OR WHERE ELECTION FOR ROLL-OVER RELIEF MADE UNDER SECTION 122R  

122JAA(1)   Roll-over relief where CGT roll-over relief allowed.  

This section applies to the disposal of property before the 1997-98 year of income by a taxpayer (in this section called the transferor ) to another taxpayer (in this section called the transferee ) if:


(a) either:


(i) in a case where the transferor is not a partnership - section 160ZZM , 160ZZMA , 160ZZN or 160ZZO applies to the disposal of the property by the transferor; or

(ii) if the transferor is a partnership - the property is partnership property of the partnership and section 160ZZNA applies to the corresponding disposal, by all of the partners in the partnership, of their interests in the property; and


(b) subject to subsection (22A), deductions have been allowed or are allowable under this Subdivision to the transferor in respect of the property.

Note:

Common rule 1 in Subdivision 41-A of the Income Tax Assessment Act 1997 sets out when roll-over relief is available in relation to the disposal of property in the 1997-98 year of income or a later year of income.

122JAA(2)   Roll-over relief where joint election made under section 122R .  

This section also applies if a joint election for roll-over relief is made under subsection 122R(2) by both the transferor and the transferee referred to in that subsection in relation to the disposal of property before the 1997-98 year of income.

Note:

Common rule 1 in Subdivision 41-A of the Income Tax Assessment Act 1997 sets out when a joint election for roll-over relief may be made in relation to the disposal of property in the 1997-98 year of income or a later year of income.

122JAA(3)   No balancing charges or deductions.  

Section 122K (which deals with balancing charges and deductions) does not apply to the disposal of the property by the transferor.

122JAA(4)   Transferee to inherit certain characteristics from transferor.  

This Subdivision and Subdivision C (to the extent to which it relates to thisSubdivision) apply as if:


(a) if any part of the expenditure of the transferor in respect of the property is allowable capital expenditure of the transferor - the transferee had acquired the property for a consideration equal to the amount worked out using the formula:

Graphic


where:
  • Transferor's expenditure means so much of the total expenditure of a capital nature of the transferor in respect of the property as is allowable capital expenditure of the transferor;
  • Transferor's deductions means the sum of the deductions allowed or allowable to the transferor under this Subdivision in respect of so much of the expenditure of a capital nature of the transferor in respect of the property as is allowable capital expenditure of the transferor;
  • Undeducted excess amounts means the sum of the excess amounts referred to in subsection (5) in respect of the property; and

  • (b) if no part of the expenditure of the transferor in respect of the property is allowable capital expenditure of the transferor - the transferee had acquired the property for nil consideration; and


    (c) if the property is a mining or prospecting right or mining or prospecting information:


    (i) a notice under section 122B in respect of the acquisition of the property had been given to the Commissioner by the transferor and the transferee; and

    (ii) the amount specified in the notice were the amount worked out under paragraph (a) of this subsection; and

    (iii) subsections 122B(2) , 122DG(9) and 122J(5) were not applicable to that notice; and


    (d) if the property is not a mining or prospecting right or mining or prospecting information - subsection 122DG(8) were not applicable to the disposal of the property; and


    (da) if:


    (i) the property is a qualifying interest in relation to a cash bidding exploration permit (within the meaning of section 122BA ); and

    (ii) immediately before the disposal, the transferor had an entitlement to an eligible cash bidding amount (within the meaning of that section) in relation to that permit;

    the following were the case:


    (iii) an agreement under section 122BA in respect of the acquisition of the property had been made by the transferor and the transferee; and

    (iv) the amount specified in the agreement were equal to the whole of the transferor's entitlement to the eligible cash bidding amount; and


    (e) the reference in paragraph 122DG(3)(a) to a year of income in respect of which a deduction has been allowed or is allowable, or, apart from the operation of subsection 122DG(6) , would have been allowed or would be allowable, in respect of an amount of allowable capital expenditure of the transferee in respect of the property included a reference to a year of income in respect of which a deduction has been allowed or is allowable, or, apart from the operation of subsection 122DG(6) , would have been allowed or would be allowable, in respect of allowable capital expenditure of:


    (i) the transferor in respect of the property; or

    (ii) if there have been 2 or more prior successive applications of this section - any of the prior successive transferors in respect of the property.

    122JAA(5)   Transfer of subsection 122DG(7) excess amounts.  

    If, apart from this subsection, the following conditions are satisfied in relation to a deduction allowable to the transferor under subsection 122DG(2) in respect of the property:


    (a) the deduction is allowable because of the application of subsection 122DG(7) ;


    (b) the deduction is in respect of an amount (in this subsection called the excess amount ) of expenditure of a capital nature in respect of the property;


    (c) the deduction is allowable for the year of income in which the disposal took place;

    then:


    (d) the excess amount is taken, under subsection 122DG(7) , to be a deduction that is allowable under subsection 122DG(2) to the transferee for the year of income in which the disposal took place; and


    (e) a deduction is not allowable to the transferor under subsection 122DG(2) in respect of the excess amount.

    122JAA(6)   Transfer of subsection 122J(3) excess amounts.  

    If, apart from this subsection, the following conditions would have been satisfied in relation to an amount (in this subsection called the excess amount ) of contingent allowable capital expenditure of the transferor in respect of the property:


    (a) the expenditure is taken to be contingent allowable capital expenditure because of subsection 122J(3) ;


    (b) the contingency is that the transferor carried on prescribed mining operations in the year of income in which the disposal took place or a subsequent year of income;

    then:


    (c) the excess amount is taken, under subsection 122J(3) , to be allowable capital expenditure incurred by the transferee in:


    (i) if the transferee carried on prescribed mining operations in the year of income in which the disposal took place - that year of income; or

    (ii) the first subsequent year of income in which the transferee carried on prescribed mining operations; and


    (d) subsection 122J(3) does not apply in relation to the excess amount in relation to the transferor.

    122JAA(7)   Transfer of subsection 122J(4) excess amounts.  

    If, apart from this subsection, the following conditions would have been satisfied in relation to a contingent deduction allowable to the transferor under subsection 122J(1) in respect of the property:


    (a) the deduction is allowable because of the application of subsection 122J(4) ;


    (b) the deduction is in respect of an amount (in this subsection called the excess amount ) of expenditure in respect of the property;


    (c) the contingency is that the transferor had carried on prescribed mining operations in the year of income in which the disposal took place or a subsequent year of income;

    then:


    (d) the excess amount is taken, under subsection 122J(4) , to be a deduction that is allowable under subsection 122J(1) to the transferee for:


    (i) if the transferee carried on prescribed mining operations in the year of income in which the disposal took place - that year of income; or

    (ii) the first subsequent year of income in which the transferee carried on prescribed mining operations;


    (e) a deduction is not allowable to the transferor under subsection 122J(1) in respect of the excess amount.

    122JAA(8)   Transfer of subsection 122J(4C) excess amounts.  

    If, apart from this subsection, the following conditions would have been satisfied in relation to a contingent deduction allowable to the transferor under subsection 122J(1) in respect of the property:


    (a) the deduction is allowable because of the application of subsection 122J(4C) ;


    (b) the deduction is in respect of an amount (in this subsection called the excess amount ) of expenditure of a capital nature in respect of the property;


    (c) the contingency is that the transferor had derived assessable income in the year of income in which the disposal took place or a subsequent year of income;

    then:


    (d) the excess amount is taken, under subsection 122J(4C) , to be a deduction that is allowable under subsection 122J(1) to the transferee for:


    (i) if the transferee derives assessable income in the year of income in which the disposal took place - that year of income; or

    (ii) the first subsequent year of income in which the transferee derives assessable income; and


    (e) a deduction is not allowable to the transferor under subsection 122J(1) in respect of the excess amount.

    122JAA(9)   Section 122C, 122DA, 122DC and 122DE and subsection 122DG(1) - inheritance of threshold conditions.  

    If section 122C , 122DA , 122DC or 122DE or subsection 122DG(1) applied to the expenditure of a capital nature of the transferor in respect of the property, that section or subsection has effect, in relation to the transferee and in relation to the property, as if the threshold conditions that were satisfied in relation to the transferor were satisfied in relation to the transferee.

    122JAA(10)   Subsection (9) - threshold conditions.  

    For the purposes of subsection (9), the following are taken to be threshold conditions in relation to expenditure in respect of property:


    (a) a condition that the expenditure was incurred before, at or after a particular time;


    (b) if the expenditure was incurred under a contract - a condition that the contract was, or was not, entered into before, at or after a particular time;


    (c) if the expenditure was incurred in respect of the construction of property - a condition that the construction commenced, or did not commence, before, at or after a particular time.

    122JAA(11)   Subsections 122J(3) and (4) - inheritance of threshold conditions.  

    If subsection 122J(3) or (4) applied to the expenditure of the transferor in respect of the property, that subsection has effect, in relation to the transferee and in relation to the property, as if the threshold conditions that were satisfied in relation to the transferor were satisfied in relation to the transferee.

    122JAA(12)   Subsection (11) - threshold conditions.  

    For the purposes of subsection (11), the following are taken to be threshold conditions in relation to expenditure in respect of the property:


    (a) a condition that the expenditure was incurred before, at or after a particular time;


    (b) a condition that the expenditure was incurred during a particular year of income.

    122JAA(13)   Inheritance of section 122H election.  

    If the transferor made an election under section 122H in respect of expenditure on the property, the transferee is taken to have made an election under section 122H in respect of expenditure on the property.

    122JAA(14)   Rule where no section 122H election made.  

    If the transferor did not make an election under section 122H in respect of expenditure on the property, the transferee is not entitled to make an election under section 122H in respect of expenditure on the property.

    122JAA(15)   Inheritance of subsection 122A(1B) threshold conditions.  

    If:


    (a) the property is plant or articles for the purposes of section 54 ; and


    (b) the expenditure of a capital nature of the transferor in respect of the property is allowable capital expenditure;

    then, section 122A has effect in relation to the transferee and in relation to the property, as if the conditions set out in subsection 122A(1B) that were satisfied in relation to the transferor were satisfied in relation to the transferee.

    122JAA(16)   Leases - subsection 88B(5) election to have no effect.  

    If the property is a lease, being a mining or prospecting right, an election under subsection 88B(5) (whether made before or after the disposal) has no effect in relation to the grant, assignment or surrender of the lease.

    122JAA(17)   Provisions of Subdivision B of Division 16H - inheritance of threshold conditions.  

    If a provision of Subdivision B of Division 16H applied to the expenditure of the transferor in respect of the property, that provision has effect, in relation to the transferee and in relation to the property, as if the threshold conditions that were satisfied in relation to the transferor were satisfied in relation to the transferee.

    122JAA(18)   Subsection (17) - threshold conditions.  

    For the purposes of subsection (17), the following are taken to be threshold conditions in relation to expenditure in respect of the property:


    (a) a condition that the expenditure was incurred before, at or after a particular time;


    (b) a condition that the expenditure was incurred during a particular year of income.

    122JAA(19)   Recoupment of expenditure - consequential amendment of assessments.  

    Section 170 does not prevent the amendment at any time of an assessment of the transferee where section 122T has applied to:


    (a) the transferor in respect of the property; or


    (b) if there have been 2 or more prior successive applications of this section - any of the prior successive transferors in respect of the property.

    122JAA(20)   Disposal by transferee where no roll-over relief - inheritance of deductions.  

    If:


    (a) after the disposal of the property to the transferee:


    (i) the property is lost or destroyed; or

    (ii) the transferee disposes of the property; or

    (iii) the use of the property by the transferee for prescribed purposes or eligible purposes (within the meaning of section 122K ) is otherwise terminated; and


    (b) in the case of a disposal by the transferee - this section does not apply to the disposal;

    then, for the purposes of the application of section 122K in relation to the loss, destruction, disposal or termination, the total of:


    (c) the deductions allowed or allowable to the transferor under this Subdivision in relation to the property; and


    (d) if there have been 2 or more prior successive applications of this section - the deductions allowed or allowable to the prior successive transferors under this Subdivision in relation to the property;

    are taken to have been deductions allowed or allowable to the transferee under this Subdivision in relation to the property.

    122JAA(21)   Disposal by transferee where no roll-over relief - inheritance of total expenditure of a capital nature.  

    In spite of subsection (4), if:


    (a) after the disposal of the property to the transferee:


    (i) the property is lost or destroyed; or

    (ii) the transferee disposes of the property; or

    (iii) the use of the property by the transferee for prescribed purposes or eligible purposes (within the meaning of section 122K ) is otherwise terminated; and


    (b) in the case of a disposal by the transferee - this section does not apply to the disposal;

    then, for the purposes of the application of section 122K in relation to the loss, destruction, disposal or termination, the total expenditure of a capital nature of the transferee in respect of the property is to be worked out as if the rule set out in subsection (22) had been applicable to:


    (c) the disposal of the property by the transferor to the transferee; and


    (d) if there have been 2 or more prior successive applications of this section - each prior successive disposal.

    122JAA(22)   Rule referred to in subsection (21).  

    The rule referred to in subsection (21) is that the transferee had acquired the property for a consideration equal to the total expenditure of a capital nature of the transferor in respect of the property.

    122JAA(22A)   Second or subsequent application of section - paragraph (1)(b) does not apply.  

    If, apart from this subsection, this section has applied to the disposal of the property to the transferee, then, in working out whether this section applies to a subsequent disposal of the property by:


    (a) the transferee; or


    (b) one or more subsequent successive transferees;

    this section has effect as if paragraph (1)(b) (which deals with deductions) had not been enacted.

    122JAA(23)   CGT roll-over relief applies to motor vehicles.  

    For the purposes of this section, in addition to the effect that sections 160ZZM , 160ZZMA , 160ZZN , 160ZZNA and 160ZZO have apart from this subsection, those sections also have the effect that they would have if a reference in those sections to an asset included a reference to a motor vehicle of a kind covered by paragraph 82AF(2)(a) .


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