INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 19A - Transfers of assets between companies under common ownership  

Subdivision D - Depreciable assets  

SECTION 160ZZRDM   LOANS TO TRANSFEROR - DEPRECIABLE ASSETS - DEEMED DISPOSAL  

160ZZRDM(1)   [Loan deemed disposed of for consideration equal to indexed cost base]  

If this section applies (see section 160ZZRDL ), the second taxpayer is taken to have disposed of the loan at the first asset disposal time for a consideration equal to the indexed cost base to the second taxpayer of the loan.

160ZZRDM(2)   [Capital gain on subsequent disposal of loan]  

For the purpose of ascertaining whether a capital gain accrued to the second taxpayer in the event of a subsequent disposal of the loan by the second taxpayer, the second taxpayer is taken to have immediately re-acquired the loan for a consideration equal to the indexed cost base to the second taxpayer of the loan, reduced by the reduction (capital gain) amount.

160ZZRDM(3)   [Reduction (capital gain) amount]  

The reduction (capital gain) amount is worked out, immediately before the first asset disposal time, using the formula:


        Market value of loan        
Total of market values of
all loans to transferor  
× Total excess share reduction
    (capital gain) amount

160ZZRDM(4)   [Total excess share reduction (capital gain) amount]  

The total excess share reduction (capital gain) amount is:


(a) if paragraph 160ZZRDL(4)(a) applies - so much of the total share reduction amounts for the excess shares as was not applied in making reductions to the indexed cost bases of the excess shares in accordance with subsection 160ZZRDJ(3) or section 160ZZRDK ; or


(b) if paragraph 160ZZRDL(4)(b) applies - the amount worked out using the formula:


Written down value
of first asset    
-   Consideration for
disposal of first asset

160ZZRDM(5)   [Capital loss on subsequent disposal of loan]  

For the purpose of ascertaining whether a capital loss accrued to the second taxpayer in the event of a subsequent disposal of the loan by the second taxpayer, the second taxpayer is taken to have immediately re-acquired the loan for a consideration equal to the reduced cost base to the second taxpayer of the loan, reduced by the reduction (capital loss) amount.

160ZZRDM(6)   [Reduction (capital loss) amount]  

The reduction (capital loss) amount is worked out, immediately before the first asset disposal time, using the formula:


        Market value of loan        
Total of market values of
all loans to transferor  
× Total excess share reduction
    (capital gain) amount

160ZZRDM(7)   [Total excess share reduction (capital loss) amount]  

The total excess share reduction (capital loss) amount is:


(a) if paragraph 160ZZRDL(4)(a) applies - so much of the total share reduction amounts for the excess shares as was not applied in making reductions to the reduced cost bases of the excess shares in accordance with subsection 160ZZRDJ(4) or section 160ZZRDK ; or


(b) if paragraph 160ZZRDL(4)(b) applies and the written down value of the first asset exceeds the consideration in respect of the disposal of the first asset - the amount of the excess; or


(c) in any other case - 0.

160ZZRDM(8)   [Loan disposed of within 12 months of acquisition]  

If the second taxpayer or another taxpayer disposed of a loan (otherwise than because of the application of this section) within 12 months after the taxpayer acquired the loan (otherwise than because of the application of this section), subsections (1) and (2) have effect as if the references to the indexed cost base to the taxpayer in respect of the loan were a reference to the cost base to the taxpayer in respect of the loan.


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