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 160ZZPZI   DUAL-CONTROLLER CONDITIONS  

160ZZPZI(1)   [Conditions set out]  

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

160ZZPZI(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.

160ZZPZI(3)   Second condition.  

The second condition is that, immediately before the disposal, there must be 2 controlling individuals (see section 160ZZPZP ) of the taxpayer.

160ZZPZI(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 election must specify the percentages (the exemption percentages ) of the asset's CGT exempt amount that are to be regarded as attributable to each of the 2 controlling individuals. One of the percentages may be nil, but the 2 percentages must add up to 100%; and

(e) for each of the 2 controlling individuals, the individual's exemption percentage of the asset's CGT exempt amount must not exceed that individual's CGT retirement exemption limit immediately before the election is made; and

Example:

Fiona is a controlling individual of a taxpayer. Her exemption percentage is 10% (which means that the other controlling individual's exemption percentage must be 90%). Fiona's CGT retirement exemption limit is $500,000. To determine whether paragraph (e) is complied with, she would take 10% of the asset's CGT exempt amount and see whether that amount exceeds $500,000.

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

160ZZPZI(5)   Fourth condition.  

The conditions in subsections 160ZZPZH(5) to (8) are also dual-controller conditions, except that the subsections apply separately in respect of each of the 2 controlling individuals as if:

(a) each were the only controlling individual; and

(b) references (other than in paragraph (5)(b) and subsection (8)) to the payment amount were, in relation to each controlling individual, instead a reference to the following amount:

Controlling individual's exemption percentage

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Payment amount