INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 17B - Disposal of small business assets: proceeds used for retirement  

Subdivision B - Taxpayers who are individuals  

SECTION 160ZZPZE   WHAT HAPPENS IF THE DISPOSAL IS EXEMPT  

160ZZPZE(1)   [Application if conditions met]  

If the conditions in section 160ZZPZD are met, the following consequences apply.

160ZZPZE(2)   Capital gain reduced by asset's CGT exempt amount.  

The amount of the capital gain that otherwise would have accrued to the taxpayer in respect of the disposal of the asset concerned is reduced (but not below nil) by the asset's CGT exempt amount.

160ZZPZE(3)   Other CGT exemptions/concessions are not available.  

Divisions 15, 17, 17A, 18 and 19 do not apply in respect of the disposal.

160ZZPZE(4)   Proceeds of disposal taken to be an ETP.  

Also, for each amount the taxpayer receives as actual consideration in respect of the disposal at a particular time, an ETP of that amount (but possibly reduced by subsection (5)) is taken, for the purposes of this Act, to have been made in relation to the taxpayer at the later of the following times:

(a) the time the election is made;

(b) the time the actual consideration is received.

Note:

For the rules about ETPs (eligible termination payments), see Subdivision AA of Division 2 of Part III .

160ZZPZE(5)   No ETP to the extent that the total actual consideration received exceeds the asset's CGT exempt amount.  

However, if the sum of:

(a) the amount of the actual consideration; and

(b) the total amount of any actual consideration the taxpayer received earlier in respect of the disposal;

exceeds the asset's CGT exempt amount, the amount of the ETP is reduced by the amount of the excess.

Note:

In some cases, this will reduce the amount of the ETP to nil.

Example:

Assume that the asset's CGT exempt amount is $1,000. Assume that the taxpayer receives an amount of actual consideration of $300, and has previously received $900 as actual consideration in respect of the disposal. The sum of that actual consideration is $1,200, which exceeds the asset's CGT exempt amount by $200. Therefore the amount of this ETP is reduced by $200 to $100.