INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 17A - Roll-over relief for certain disposals of assets related to small businesses  

Subdivision B - How roll-over relief is available on the disposal of an asset  

SECTION 160ZZPQ   WHEN ROLL-OVER RELIEF IS AVAILABLE  

160ZZPQ(1)   Assets in respect of which roll-over relief may apply.  

If:


(a) there is a roll-over asset in respect of a taxpayer in respect of a year of income; and


(b) apart from this Division, a capital gain (the notional capital gain ) would be taken to have accrued to the taxpayer as a result of the disposal of the roll-over asset; and


(c) where the roll-over asset is neither a share in a company nor a unit in a unit trust:


(i) the roll-over asset was an active asset at the disposal test time or, if it was not an active asset at that time because the relevant business had ceased to be carried on, the cessation occurred not earlier than 12 months before that time; and

(ii) the roll-over asset was an active asset during more than one-half of the period in which it was owned by the taxpayer; and


(d) (Omitted by No 16 of 1998).


(e) if the roll-over asset was nominated as a replacement asset under a previous application of this Division - the roll-over asset was acquired by the taxpayer more than 5 years before the disposal test time; and


(f) the taxpayer elects in writing, on or before the date of lodgment of the taxpayer's return of income for the disposal year of income, that this Division is to apply to the taxpayer in respect of the disposal of the roll-over asset;

the following provisions of this section have effect.

160ZZPQ(2)   Exclusion of Part in respect of disposal of roll-over asset.  

This Part (other than this Division) does not apply in respect of the disposal of the roll-over asset.

160ZZPQ(3)   Calculation of gross non-goodwill roll-over amount for assets other than shares or units.  

If the roll-over asset is none of the following:


(a) goodwill;


(b) a share in a company;


(c) a unit in a unit trust;

an amount (the gross non-goodwill roll-over amount ) equal to the notional capital gain is taken for the purposes of this Division to apply to the taxpayer in respect of the year of income in which the disposal occurred.

160ZZPQ(3A)   Calculation of gross non-goodwill roll-over amount for shares or units.  

If the roll-over asset is a share in a company or a unit in a unit trust, an amount (the gross non-goodwill roll-over amount ) equal to the lesser of the following amounts is taken for the purposes of this Division to apply to the taxpayer in respect of the year of income in which the disposal occurred:


(a) an amount equal to the notional capital gain;


(b) the amount worked out using the formula:


Unrealised net
capital gain  
×                   Market value of share or unit                
  Total of market values of shares in the
    company or units in the unit trust

160ZZPQ(3B)   Amount taken to be capital gain.  

If the gross non-goodwill roll-over amount is the amount worked out under paragraph (3A)(b), an amount equal to the difference between the notional capital gain and the amount worked out under that paragraph is taken to be a capital gain that accrued to the taxpayer in the year of income in which the disposal occurred.

160ZZPQ(3C)   Unrealised net capital gain from active assets.  

Subject to subsection (3D), for the purposes of paragraph (3A)(b), the unrealised net capital gain is the total of the capital gains (after deducting any capital losses) that would accrue to the company or trust at the time of the disposal, as the case may be, if all assets of the company or trust that:


(a) either:


(i) were active assets at that time; or

(ii) had ceased to be active assets because of the cessation of the relevant business of the company or trust not earlier than 12 months before that time; and


(b) had been active assets during more than one-half of the period in which they were owned by the company or were assets of the trust, as the case may be;

were disposed of at that time and the consideration for the disposal of each asset was an amount equal to the market value of the asset.

160ZZPQ(3D)   Certain assets to be disregarded in calculating unrealised net capital gain.  

In calculating the unrealised net capital gain referred to in subsection (3C), no regard is to be had to any asset that had been nominated by the company or trust as a replacement asset for the purposes of this Division and was acquired by the company or trust less than 5 years before the time of the disposal of the roll-over asset.

160ZZPQ(4)   Calculation of gross goodwill roll-over amount.  

If the roll-over asset is goodwill, an amount (the gross goodwill roll-over amount ) equal to the notional capital gain is taken for the purposes of this Division to apply to the taxpayer in respect of the year of income in which the disposal occurred.


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