INCOME TAX (TRANSITIONAL PROVISIONS) ACT 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 880 - Sovereign entities and activities  

SECTION 880-25   Asset of sovereign entity - deemed sale and purchase  

880-25(1)  
This section applies if:


(a) a sovereign entity acquired an asset (other than money) on or before 27 March 2018 under a scheme; and


(b) on or before 27 March 2018, the sovereign entity applied for a private ruling in relation to the scheme; and


(c) before 1 July 2026, the Commissioner gave the entity a private ruling confirming that income from the asset was not subject to income tax, or withholding tax, because of the doctrine of sovereign immunity; and


(d) the private ruling applied during at least part of the period:


(i) starting on 27 March 2018; and

(ii) ending before 1 July 2026;
regardless of whether the private ruling started to apply before 27 March 2018, or ceased to apply before 1 July 2026; and


(e) the sovereign entity holds the asset on the day mentioned in subsection (5).

880-25(2)  
For the purposes mentioned in subsection (3), the sovereign entity is taken:


(a) to have disposed of the asset, immediately before the day mentioned in subsection (5), for a consideration equal to its market value; and


(b) to have acquired the asset again, immediately after the disposal mentioned in paragraph (a), for a consideration equal to the higher of the following:


(i) its market value immediately before that disposal;

(ii) its cost base immediately before that disposal.

880-25(3)  
The purposes are as follows:


(a) the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ;


(b) if the asset is a revenue asset - determining whether an amount is included in, or can be deducted from, the assessable income of the entity.

880-25(4)  
Despite subsection (3):


(a) disregard any capital gain or capital loss the sovereign entity makes because of the disposal mentioned in paragraph (2)(a); or


(b) if the asset is a revenue asset - disregard any amount that could (apart from this subsection) be included in, or be deducted from, the assessable income of the entity as a result of that disposal.

880-25(5)  
For the purposes of paragraphs (1)(e) and (2)(a), the day is:


(a) unless paragraph (b) applies - the later of the following days:


(i) 1 July 2026;

(ii) the day before the private ruling ceases to apply; or


(b) a day earlier than the day mentioned in paragraph (a), if:


(i) the scheme mentioned in paragraph (1)(a) is not, when it is first carried out, materially different to the scheme specified in the private ruling; and

(ii) it becomes, on the earlier day, materially different to the scheme specified in the private ruling.



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