Tax Law Improvement Act (No. 1) 1998 (46 of 1998)
Schedule 1 Amendment of the Income Tax Assessment Act 1997
1 Part 3-1 Division 109
Division 109 - Acquisition of CGT assets
Table of Subdivisions
Guide to Division 109
109-A Operative rules
109-B Signposts to other acquisition rules
Guide to Division 109
109-1 What this Division is about
This Division sets out the ways in which you can acquire a CGT asset and the time of acquisition.
The time of acquisition is important for indexation, and for the exemption of assets acquired before 20 September 1985.
Generally, you acquire a CGT asset when you become its owner. You can also acquire a CGT asset:
• as a result of a CGT event happening: see section 109-5; or
• in other circumstances: see section 109-10.
This Division also directs you to special acquisition rules in other Divisions.
Subdivision 109-A - Operative rules
Table of sections
109-5 General acquisition rules
109-10 When you acquire a CGT asset without a CGT event
109-15 Exception
109-5 General acquisition rules
(1) In general, you acquire a *CGT asset when you become its owner.
(2) This table sets out specific rules for when you acquire a *CGT asset as a result of a *CGT event happening.
Note: The full list of CGT events is in section 104-5.
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Acquisition rules (CGT events) |
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Event Number |
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A1
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An entity *disposes of a CGT asset to you (except where you compulsorily acquire it) |
when the disposal contract is entered into or, if none, when the entity stops being the asset's owner |
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A1
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You compulsorily acquire a *CGT asset from another entity |
the earliest of: (a) when you paid compensation to the entity; or (b) when you became the asset's owner; or (c) when you entered the asset under the power of compulsory acquisition; or (d) when you took possession of it under that power |
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B1 |
You enter into an agreement to obtain the use and enjoyment of a *CGT asset |
when you first obtain the use and enjoyment of the asset (unless title does not pass to you when the agreement ends) |
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D1 |
An entity creates contractual or other rights in you |
when the contract is entered into or the right created |
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D2 |
An entity grants an option to you |
when the option is granted |
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D3 |
An entity grants you a right to receive *ordinary income from mining |
when the contract is entered into or, if none, when the right is granted |
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E1 |
An entity creates a trust over a *CGT asset and you are the trustee |
when the trust is created |
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E2 |
An entity transfers a *CGT asset to a trust and you are the trustee |
when the asset is transferred |
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E3 |
A trust over a *CGT asset is converted to a unit trust and you are the trustee |
when the trust is converted |
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E5 |
You as beneficiary under a trust become absolutely entitled to a *CGT asset of the trust as against the trustee (disregarding any legal disability) |
when you become absolutely entitled |
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E6 |
Trustee *disposes of a *CGT asset of the trust to you to satisfy a right you had to receive *ordinary income from the trust |
when the *disposal occurs |
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E7 |
Trustee *disposes of a *CGT asset of the trust to you to satisfy your interest, or part of it, in trust capital |
when the *disposal occurs |
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E8 |
Beneficiary under a trust *disposes of its interest, or part of it, in trust capital to you |
when disposal contract is entered into or, if none, when beneficiary stops being interest's owner |
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E9 |
An entity creates a trust over future property and you are the trustee |
when the entity makes the agreement to create the trust |
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F1 |
A lessor grants a lease to you, or renews or extends a lease |
for grant of lease - when the contract is entered into or, if none, at the start of lease;
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F2 |
A lessor grants a lease to you, or renews or extends a lease, and term is at least 50 years |
for grant of lease - when lessor grants the lease;
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K1 |
An entity *partially realises an item of *intellectual property to you |
when the contract is entered into or, if none, when the *partial realisation happens |
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K3 |
An individual dies and a *CGT asset of the individual *passes to you (as a tax advantaged entity) |
when the individual dies |
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K6 |
A *CGT event happens to *shares or an interest in a trust you own |
when the other CGT event happens |
Note 1: For CGT events E1, E2 and E3, if the circumstances specified in the second column of the table happened to an asset before 12 January 1994, there may be no acquisition: see section 109-5 of the Income Tax (Transitional Provisions) Act 1997.
Note 2: The acquisition rule for CGT event E9 in the table does not apply to you as trustee if the agreement to create the trust was made before 12 noon on 12 January 1994: see section 109-5 of the Income Tax (Transitional Provisions) Act 1997.
109-10 When you acquire a CGT asset without a CGT event
This table sets out specific rules for some cases where you acquire a *CGT asset otherwise than as a result of a *CGT event happening.
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Acquisition rules (no CGT event) |
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Item |
In these circumstances |
You acquire the asset at this time: |
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1 |
You (or your agent) construct or create a *CGT asset, and you own it when the construction is finished or the asset is created |
when the construction, or work that resulted in the creation, started |
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2 |
A company issues or allots *shares to you |
when contract is entered into or, if none, when *shares issued or allotted |
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3 |
A trustee of a unit trust issues units in the trust to you |
when contract is entered into or, if none, when units issued |
109-15 Exception
You do not acquire a *CGT asset if the asset was *disposed of to you to provide or redeem a security.
Subdivision 109-B - Signposts to other acquisition rules
Table of sections
109-50 Effect of this Subdivision
109-55 Other acquisition rules
109-60 Acquisition rules outside this Part and Part 3-3
109-50 Effect of this Subdivision
This Subdivision is a *Guide.
109-55 Other acquisition rules
This table sets out other acquisition rules in this Part and Part 3-3.
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Other acquisition rules |
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You acquire the asset at this time: |
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1 |
A CGT asset devolves to you as legal personal representative of a deceased individual |
when the individual died |
section 128-15 |
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2 |
A CGT asset passes to you as beneficiary in the estate of a deceased individual |
when the individual died |
sections 128-15 and 128-25 |
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3 |
A surviving joint tenant acquires deceased joint tenant's interest in a CGT asset |
when the deceased died |
section 128-50 |
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4 |
You get only a partial exemption under Subdivision 118-B for a CGT event happening to a CGT asset that is a dwelling, but you would have got a full exemption if the CGT event had happened just before the first time the dwelling was used for that purpose |
at that time |
section 118-92 |
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5 |
The trustee of a deceased estate acquires a dwelling under the deceased's will for you to occupy, and you obtain an interest in it |
when the trustee acquired it |
section 118-210 |
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6 |
You obtain a replacement-asset roll-over for replacing an asset you acquired before 20 September 1985 |
before 20 September 1985 |
Divisions 122 and 124 |
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7 |
You obtain a replacement-asset roll-over for a Crown lease, or a *prospecting or mining entitlement that is renewed or replaced and part of the new entitlement relates a part of the old one that you acquired before 20 September 1985 |
before 20 September 1985 (for that part of the new entitlement that relates to the pre-CGT part of the old one) |
sections 124-595 and 124-725 |
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8 |
You obtain a same-asset roll-over for a CGT asset the transferor acquired before 20 September 1985 |
before 20 September 1985 |
Divisions 122 and 126 |
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8A |
There is a same-asset roll-over for a CGT event that happens to a CGT asset (acquired on or after 20 September 1985) because the trust deed of a fund is changed and you are the fund that owns the asset after the CGT event |
at the time of the CGT event |
Subdivision 126-C |
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9 |
A company or trustee of a unit trust issues you with bonus equities because it owes you an amount, and the amount is not included in your assessable income |
if the original equities are post-CGT assets, or are pre-CGT assets and fully paid - when you acquired the original equities; or
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section 130-20 |
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10 |
You own shares in a company or units in a unit trust and you exercise rights to acquire new equities in the company or trust |
for the rights
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section 130-40 |
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11 |
You acquire shares in a company or units in a unit trust by converting a convertible note |
when the liability to pay for the convertible note arose |
section 130-60 |
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12 |
You acquire a qualifying share or right under an employee share scheme and a CGT event does not happen to it at the cessation time or within 30 days after that time |
at the cessation time |
section 130-80 |
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13 |
You (as a lessee of land) acquire the reversionary interest of the lessor and there is no roll-over for the acquisition |
if term of lease was for 99 years or more - when the lease was granted or assigned to you; or
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section 132-15 |
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14 |
You acquired a CGT asset before 20 September 1985, and there has since been a change in the majority underlying interests in the asset |
at the time of the change |
Division 149 |
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15 |
You become an Australian resident and you owned a CGT asset that you acquired on or after 20 September 1985 and that did not have the necessary connection with Australia |
when you become an Australian resident |
section 136-40 |
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16 |
A trust of which you are trustee becomes a resident trust for CGT purposes and you owned a CGT asset that you acquired on or after 20 September 1985 and that did not have the necessary connection with Australia |
when the trust becomes a resident trust for CGT purposes |
section 136-45 |
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17 |
There is a roll-over under Subdivision 126-B for a *CGT event and you are the company owning the roll-over asset just after the roll-over and you stop being a *100% subsidiary of another company in the *wholly-owned group |
when you stop |
section 104-175 |
109-60 Acquisition rules outside this Part and Part 3-3
This table sets out other acquisition rules outside this Part and Part 3-3.
Provisions of the Income Tax Assessment Act 1936 are in bold .
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Other acquisition rules |
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The asset is acquired at this time: |
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1 |
You stop holding an item as trading stock |
when you stop |
paragraph 70-110(b) |
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2 |
CGT event happens to Cocos (Keeling) Islands asset |
30 June 1991 |
section 24P |
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3 |
Trust ceases to be a resident trust for CGT purposes and there is an attributable taxpayer |
when it ceases |
section 102AAZBA |
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4 |
CGT event happens to CGT asset in connection with the demutualisation of an insurance company |
on the demutualisation resolution day |
section 121AS |
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5 |
CGT event happens to assets of NSW State Bank |
at the first taxing time |
section 121EN |
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6 |
You own shares in a company that stops being a PDF |
just after it stops |
section 124ZR |
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7 |
You acquire a number of shares that results in you obtaining a 10% (threshold) interest in a SME |
when you obtained the threshold interest |
section 128TI |
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8 |
CGT event happens to 30 June 1988 asset of complying superannuation fund, complying ADF or complying PST |
30 June 1988 |
section 306 |
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9 |
A CGT asset of a CFC (that it owned on its commencing day) |
on the CFC's commencing day |
section 411 |
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10 |
A CGT asset is owned by a tax exempt entity and it becomes taxable |
at the transition time |
section 57-25 of Schedule 2D |