INCOME TAX ASSESSMENT ACT 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 40 - Capital allowances  

Subdivision 40-D - Balancing adjustments  

Operative provisions

SECTION 40-340   Roll-over relief  

Automatic roll-over relief

40-340(1)  


There is roll-over relief if:


(a) there is a *balancing adjustment event because an entity (the transferor ) disposes of a *depreciating asset in an income year to another entity (the transferee ); and


(b) the disposal involves a *CGT event; and


(c) the conditions in an item in this table are satisfied.


CGT roll-overs that qualify transferor for relief
Item Type of CGT roll-over Conditions
1 Disposal of asset to wholly-owned company The transferor is able to choose a roll-over under Subdivision 122-A for the *CGT event.
.
2 Disposal of asset by partnership to wholly-owned company The transferor is a partnership, the property is partnership property and the partners are able to choose a roll-over under Subdivision 122-B for the disposal by the partners of the *CGT assets consisting of their interests in the property.
.
2A Transfer of a *CGT asset of a trust to a company under a trust restructure The transferor and transferee are able to choose a roll-over under Subdivision 124-N for the *CGT event.
.
3 Marriage or relationship breakdown There is a roll-over under Subdivision 126-A for the *CGT event.
.
4 Disposal of asset to another member of the same wholly-owned group The transferor is able to choose a roll-over under Subdivision 126-B for the *CGT event.
.
5 *Disposal of asset between certain trusts The trustees of the trusts choose to obtain a roll-over under Subdivision 126-G in relation to the disposal.
.
6 Disposal of asset as part of merger of superannuation funds The transferor chooses a roll-over under Subdivision 310-D in relation to the disposal.
.
7 Disposal of asset as part of transfer to a *MySuper product The transferor chooses a roll-over under Subdivision 311-B in relation to the disposal.
.
8 Transfer of asset under a small business restructure roll-over A roll-over under Subdivision 328-G would be available in relation to the asset if the asset were not a *depreciating asset.

Note 1:

Section 40-345 sets out what the relief is.

Note 2:

This Act also applies as if there were roll-over relief under this subsection in the circumstances set out in section 620-30 (which is about a body incorporated under one law ceasing to exist and disposing of its assets to a company incorporated under another law that has not significantly different ownership).

40-340(2)  
In applying an item in the table in subsection (1), disregard the following so far as they relate to the *depreciating asset you disposed of:


(a) an exemption in Division 118 (which contains the general exemptions from CGT); and


(b) subsection 122-25(3) (which excludes certain assets from some kinds of CGT roll-over); and


(c) subsection 124-870(5) (which excludes certain assets from roll-over relief under Subdivision 124-N ).

Choosing roll-over relief

40-340(3)  


There is also roll-over relief if:


(a) there is a *balancing adjustment event for a *depreciating asset because of subsection 40-295(2) (about a change in the holding of, or in interests in, the asset); and


(b) the entity or entities that had an interest in the asset before the change (also the transferor ) and the entity or entities that have an interest in the asset after the change (also the transferee ) jointly choose the roll-over relief.

Example:

The change could be a variation in the constitution of a partnership or in the interests of the partners.

Note 1:

Section 40-345 sets out what the relief is.

Note 2:

Subdivision 328-D sets out what the relief is for small business entities that calculate deductions for their depreciating assets under that Subdivision.

40-340(4)  
The choice must:


(a) be in writing; and


(b) contain enough information about the transferor ' s holding of the property for the transferee to work out how this Division or Subdivision 328-D applies to the transferee ' s holding of the * depreciating asset; and


(c) be made within 6 months after the end of the transferee ' s income year in which the * balancing adjustment event occurred, or within a longer period allowed by the Commissioner.

40-340(5)  
If you die before the end of the time allowed for jointly choosing roll-over relief, the trustee of your estate may be a party to the choice.

40-340(6)  
The transferor must keep the choice or a copy of it for 5 years after the *balancing adjustment event occurred.

Penalty: 30 penalty units.

40-340(7)  
The transferee must keep the choice or a copy of it until the end of 5 years after the next *balancing adjustment event occurs for the *depreciating asset.

Penalty: 30 penalty units.

Exception: Subdivision 170-D applies

40-340(8)  
There can be no roll-over relief if Subdivision 170-D (about transactions by a company that is a member of a linked group) applies to the disposal of the *depreciating asset or the change in interests in it.


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