Income Tax Assessment Act 1997
Note: A Commissioner ' s Remedial Power (CRP 2017/2) is relevant to this part of the tax law. Taxation Administration (Remedial Power - Small Business Restructure Roll-over) Determination 2017 (F2017L01687) modifies the operation of s 40-340 of the Income Tax Assessment Act 1997 and any other provisions of a taxation law whose operation is affected by the modified operation of s 40-340 in relation to an asset transferred under a small business restructure roll-over (item 8 of the table in s 40-340(1) ).
The operation of the relevant provisions is modified as follows:
If s 40-340 of ITAA 1997 provides for rollover relief in relation to a disposal of a depreciating asset because the condition in item 8 of the table in s 40-340(1) of ITAA 1997 is satisfied in relation to the asset, that section has effect as if it also provided that the disposal of the asset has no direct consequences under the income tax law (other than Div 40 of ITAA 1997).
The modification applies in respect of transfers on or after 8 May 2018.
An entity must treat a modification as not applying to it or any other entity if the modification would produce a less favourable result for it. The Commissioner is empowered by s 370-5 of Sch 1 to the Taxation Administration Act 1953 to make modifications, by legislative instrument, to ensure the law is administered to achieve its intended purpose or object.
There is roll-over relief if:
(a) there is a *balancing adjustment event under section 40-295 because, in an income year, you dispose of a *depreciating asset to another entity; and
(b) the asset is a *mining, quarrying or prospecting right; and
(c) the disposal occurs under an *interest realignment arrangement; and
(d) you choose to apply roll-over relief in relation to the asset. Choosing to apply roll-over relief 40-363(2)
The choice must:
(a) be in writing; and
(b) be made at or before the time you lodge your *income tax return for the income year in which the *balancing adjustment event occurs, or within a longer period allowed by the Commissioner. The effect of roll-over relief 40-363(3)
If there is roll-over relief under this section:
(a) section 40-285 does not apply to the *balancing adjustment event in relation to the asset; and
(b) an amount is included in your assessable income if such an amount (the non-realignment amount ) would have been included under subsection 40-285(1) if:
(i) paragraph (a) of this subsection did not apply; and
(ii) the *adjustable value of the *mining, quarrying or prospecting rights that you disposed of under the arrangement were taken to be the market value of the mining, quarrying or prospecting rights that you received under the arrangement; and
(c) in working out the *cost of a mining, quarrying or prospecting right that you receive under the arrangement, if:
(i) some or all of the cost consists of a *non-cash benefit that you provide; and
the market value of the benefit is taken to be the adjustable value of the benefit. 40-363(4)
(ii) that benefit is a mining, quarrying or prospecting right that you disposed of under the arrangement;
The amount included in your assessable income under paragraph (3)(b) is the non-realignment amount, and it is included for the income year in which the balancing adjustment event occurred. Meaning of interest realignment arrangement etc. 40-363(5)
An interest realignment arrangement is an *arrangement:
(a) that is entered into between entities:
(i) that are undertaking jointly, or propose to undertake jointly, a project for carrying out *mining and quarrying operations; and
(ii) that each *holds one or more *mining, quarrying or prospecting rights relating to the project; and
(b) under which those entities exchange (or agree to exchange), with the effect set out in subsection (6), parts of those rights; and
(c) that does not provide for any transfer, of a mining, quarrying or prospecting right, that does not give rise to the effect referred to in subsection (6).
The parts referred to in paragraph (b) are themselves mining, quarrying or prospecting rights (see paragraph (c) of the definition of mining, quarrying or prospecting right in subsection 995-1(1) ), and are therefore not referred to elsewhere in this Act as parts of such rights.40-363(6)
The effect referred to in paragraphs (5)(b) and (c) must be that, for each of those entities, the following are equal:
(a) the entity ' s percentage interest in the project;
(b) the reserves and resources represented by the *mining, quarrying or prospecting rights that the entity *holds relating to the project, expressed as a percentage of the reserves and resources represented by all mining, quarrying or prospecting rights that any of the entities hold relating to the project. 40-363(7)
For the purposes of subsection (6):
(a) the reserves represented by a *mining, quarrying or prospecting right are taken to be the reserves, reasonably estimated using an appropriate accepted industry practice, that are expected to be extracted from the mine, *petroleum field or quarry to which the right relates; and
(b) the resources represented by a mining, quarrying or prospecting right are taken to be the resources, reasonably estimated using an appropriate accepted industry practice, that are expected to be situated in the area to which the right relates (other than those resources that are reserves referred to in paragraph (a)).