INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 165 - Income tax consequences of changing ownership or control of a company  

Subdivision 165-CC - Change of ownership or control of company that has an unrealised net loss  

Operative provisions

SECTION 165-115F   Notional gains and losses  

165-115F(1)  
This section applies for the purpose of calculating whether a company has at a particular time (the relevant time ) a notional capital gain, a notional capital loss, a notional revenue gain or a notional revenue loss in respect of a *CGT asset that it owned at that time.

165-115F(2)  


The calculation is to be made on the assumption that the company disposed of the asset at its *market value at the relevant time.

165-115F(3)  


In relation to an asset other than an item of *trading stock:


(a) if the company would make a *capital gain in respect of the disposal of the asset - the company has at the relevant time in respect of the asset a notional capital gain equal to the amount of the capital gain; or


(b) if an amount (other than a capital gain) would be included in the company ' s assessable income in respect of the disposal of the asset - the company has at the relevant time in respect of the asset a notional revenue gain equal to the amount so included; or


(c) if the company would make a *capital loss in respect of the disposal of the asset - the company has at the relevant time in respect of the asset a notional capital loss equal to the amount of the capital loss; or


(d) if the company would be entitled to a deduction in respect of the disposal of the asset - the company has at the relevant time in respect of the asset a notional revenue loss equal to the amount of the deduction.

165-115F(4)  


In relation to an asset that is an item of *trading stock:


(a) if the item ' s *market value at the relevant time exceeds:


(i) in respect of an item that has been valued under Division 70 - the item ' s latest valuation under that Division; or

(ii) otherwise - the *cost of the item at the relevant time;
the company has at the relevant time in respect of the article a notional revenue gain equal to the excess; or


(b) if the item ' s market value at the relevant time is less than:


(i) in respect of an item that has been valued under Division 70 - the item ' s latest valuation under that Division; or

(ii) otherwise - the *cost of the item at the relevant time;
the company has at the relevant time in respect of the article a notional revenue loss equal to the difference.

165-115F(5)  


A company may choose that this section is to apply to the company at the relevant time in respect of an asset to which subsection (6) applied at that time as if references to the *market value of the asset were references to its *written down value.

165-115F(6)  


This subsection applies to an asset at the relevant time if:


(a) the asset is a *depreciating asset (not a building or structure) for whose decline in value the company has deducted or can deduct an amount; and


(b) the expenditure incurred by the company to *acquire the asset was less than $1,000,000 (the expenditure can include the giving of property: see section 103-5 ); and


(c) it would be reasonable for the company to conclude that the *market value of the asset at that time was not less than 80% of its *written down value at that time.

165-115F(7)  
(Repealed by No 90 of 2002)


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