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 C - Taxpayers that are private companies or trusts  

SECTION 160ZZPZH   SINGLE-CONTROLLER CONDITIONS  

160ZZPZH(1)   [Conditions set out]  

This section sets out the conditions that are the single-controller conditions .

160ZZPZH(2)   First condition.  

The first condition is that:


(a) the requirements of paragraphs 160ZZPQ(1)(a) to (c) must be satisfied in relation to the disposal of an asset by the taxpayer; and


(aa) the asset is a roll-over asset within the meaning of subsection 160ZZPL(7) ; and


(b) the taxpayer must receive all of the actual consideration (see section 160ZZPZO ), if any, in respect of the disposal within the period beginning one year before, and ending 2 years after, the disposal.

The whole of the actual consideration mentioned in paragraph (b) need not be received all at once; parts of the actual consideration may be received at different times during the period.

160ZZPZH(3)   Second condition.  

The second condition is that, immediately before the disposal, there must be one, and only one, controlling individual (see section 160ZZPZP ) of the taxpayer.

160ZZPZH(4)   Third condition.  

The third condition is that:


(a) the taxpayer must elect in writing, on or before the date of lodgment of the taxpayer's return of income for the year of income mentioned in paragraph 160ZZPQ(1)(a) , that this Division is to apply to the taxpayer in respect of the disposal; and


(b) the election must specify an amount as the asset's CGT exempt amount ; and


(c) that amount must not be greater than the amount of the capital gain concerned (possibly as reduced by Subdivision D, which deals with previous years' net capital losses); and


(d) the asset's CGT exempt amount must not exceed the controlling individual's CGT retirement exemption limit (see section 160ZZPZN ) immediately before the election is made; and


(e) the taxpayer must not have already made an election under section 160ZZPQ in respect of the disposal.

160ZZPZH(5)   Fourth condition.  

The fourth single-controller condition is that, within:


(a) 7 days after making the election; or


(b) 7 days after the taxpayer receives the whole or a part (the payment amount ) of the actual consideration as mentioned in paragraph (2)(b);

whichever comes later, the taxpayer must make an ETP in relation to the controlling individual whose amount is at least equal to the payment amount.

Note:

The payment amount may be reduced under subsection (8).

160ZZPZH(6)   If there are 2 or more ETPs required.  

If, at a particular time, subsection (5) requires a taxpayer to make 2 or more ETPs to the controlling individual (whether or not by the same time), the taxpayer may meet that requirement either:


(a) by making separate ETPs whose amounts are in total at least equal to the sum of the payment amounts; or


(b) by making a single ETP whose amount is at least equal to the sum of the payment amounts.

160ZZPZH(7)   Fifth condition.  

The fifth condition is that, if the controlling individual was under 55 immediately before the disposal, an amount, in relation to the ETP, at least equal to the payment amount must be rolled over (within the meaning of Subdivision AA of Division 2 of Part III , reading references in that Subdivision to ``the taxpayer'' as references to the controlling individual instead, and assuming that paragraph 27A(12)(c) had not been enacted) by the controlling individual.

Note:

The payment amount may be reduced under subsection (8).

160ZZPZH(8)   ETP not required to the extent that the total actual consideration received exceeds the asset's CGT exempt amount.  

However, if the sum of:


(a) the payment amount; and


(b) the total amount of any actual consideration the taxpayer received, as mentioned in paragraph (2)(b), earlier in respect of the disposal;

exceeds the asset's CGT exempt amount, the payment amount is reduced, for the purposes of subsections (5), (6) and (7), by the amount of the excess.

Note:

In some cases, this will reduce that amount to nil.

Example:

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


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