Income Tax Assessment Act 1997
CGT event J5 happens if you choose a small business roll-over under Subdivision 152-E for a *CGT event that happens in relation to a *CGT asset in an income year and, by the end of the *replacement asset period:
(a) you have not *acquired a replacement asset (the replacement asset ), and have not incurred *fourth element expenditure in relation to a CGT asset (also the replacement asset ); or
(b) the replacement asset does not satisfy the conditions set out in subsection (2).
The conditions are:
(a) the replacement asset must be your *active asset; and
(b) if the replacement asset is a *share in a company or an interest in a trust:
(i) you, or an entity *connected with you, must be a *CGT concession stakeholder in the company or trust; or
(ii) CGT concession stakeholders in the company or trust must have a *small business participation percentage in you of at least 90%.
Joseph owns 50% of the shares in Company A and Company B. He is therefore a CGT concession stakeholder in the companies: see section 152-60 . The companies are connected with Joseph (see section 328-125 ) because he controls both of them.
Company A owns land which it leases to Joseph for use in a business. It sells the land at a profit and buys shares in Company B.
Subsection (2) is satisfied for the shares because Joseph is connected with Company A and is a CGT concession stakeholder in Company B.
The time of the event is at the end of the *replacement asset period.
You make a capital gain equal to the amount of the *capital gain that you disregarded under Subdivision 152-E . 104-197(5)
The *replacement asset period may be modified or extended as mentioned in section 104-190 .