INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 1 - Preliminary  

Subdivision A - Object, simplified outline, example and index  

SECTION 160AX   160AX   OBJECT  
The object of this Part is to provide for net capital gains to be included in assessable income (see section 160ZO ).

SECTION 160AY   SIMPLIFIED OUTLINE OF SCHEME OF PART  

160AY(1)   Simplified outline.  

The following is a simplified outline of the scheme of this Part.

160AY(2)   Step 1 - disposal of an asset.  

This Part applies if a taxpayer disposes of an asset. For a basic definition of ``asset'', see section 160A . The taxpayer must have acquired the asset on or after 20 September 1985 and the disposal of the asset must occur on or after that date (see section 160L ). 160M is the basic provision defining ``disposal'' and ``acquisition''. The timing of disposal and acquisition is dealt with by section 160U . There are various exemptions, including the principal residence exemption (see the Exemptions Sub Index in section 160AZA ). There are also various provisions giving roll-over relief on the disposal of assets (see the Roll-overs Sub Index in section 160AZA ).

160AY(3)   Step 2 - disposal of asset may result in a capital gain or a capital loss.  

The disposal of the asset may result in a capital gain or capital loss (see section 160Z ).

Graphic

For a basic definition of ``consideration in respect of a disposal of an asset'', see section 160ZD . For basic definitions of ``cost base'', ``indexed cost base'' and ``reduced cost base'', see section 160ZH . The basic idea is that the cost base of an asset consists of the cost of acquiring the asset and certain other costs, the indexed cost base is the cost base indexed for inflation (see section 160ZJ ) and the reduced cost base is the cost base adjusted to take account of certain capital deductions and balancing charges (see section 160ZK ).

The indexed cost base and the cost base are also adjusted to take account of certain deductions and balancing adjustments (see sections 160ZJA and 160ZJB ).

160AY(4)   Step 3 - calculation of net capital gain.  

Capital gains and capital losses are netted under section 160ZC to work out the net capital gain.

Graphic

160AY(5)   Step 4 - net capital gain to be included in assessable income under section 160ZO.  

The amount of the net capital gain is included in the taxpayer's assessable income under section 160ZO .

SECTION 160AZ   EXAMPLE OF HOW THIS PART WORKS  

160AZ(1)   Typical example.  

This section sets out an example of how this Part will work in a typical case involving the acquisition and disposal of an asset by a taxpayer. The taxpayer acquired the asset on 29 September 1985 for a cost of $100,000 and disposed of the asset on 29 September 1991 for $300,000. The cost base is $100,000. The indexed cost base is calculated as follows:


$149,600
indexed  
cost base
= $100,000
(cost
base)
× 215.7 (index number for
                    September 1991 quarter)
144.2 (index number for
                    September 1985 quarter)

(The fraction on the right is rounded up to 1.496.)

160AZ(2)   Capital gain on disposal.  

There is a capital gain on disposal of the asset.

Graphic

160AZ(3)   Calculation of net capital gain.  

Assuming that the taxpayer has no capital losses, the net capital gain is $150,400.

160AZ(4)   Inclusion of net capital gain in assessable income under section 160ZO.  

The taxpayer's assessable income includes $150,400.

SECTION 160AZA   160AZA   INDEX OF KEY CONCEPTS  
The following is an index of the key concepts relevant to the operation of this Part.


Main Index
Acquisition 160M
Asset 160A
Bankruptcy 160W
Capital gain 160Z
Capital loss 160Z
Capital receipts 160M(6) and (7)
Consideration in respect of disposal of asset 160ZD, 160ZF
Controlled foreign companies, attribution of income Divisions 6, 7, 8 and 10 of Part X
Cost base 160ZH, 160ZJA
Disposal 160M
Employee's shares 160ZYHD to 160ZYJE
Exemptions See Exemptions Sub Index below
Indexed cost base 160ZH, 160ZJ, 160ZJB
Industrial property 160ZZD
Joint owners 160ZN
Leases 160ZR to 160ZW
Life assurance companies Division 8 of Part III
Net capital gain 160ZC, 160ZO
Net capital loss 160ZC, 160ZO
Net capital loss - transfer within company group 160ZP
Non-residents 160L(2), 160M(8) to (14A), 160T
Part of asset, disposal of 160R, 160ZI
Personal-use assets 160B, 160ZE, 160ZG, 160ZQ
Pooled superannuation trusts, units in 160ZYEB
Prospecting and mining rights 160ZZE to 160ZZG
Reduced cost base 160ZH, 160ZK
Roll-overs See Roll-overs Sub Index below
Securities lending arrangements 26BC
Security - transfer by way of 160S
- person enforcing 160V(2)
Shares - bonus shares 160ZYF to 160ZYHC
- buy-back of shares Division 16K of Part III
- cancellation of subsidiary's shares in holding company Division 16J of Part III
- return of capital 160ZL
- valueless, of company in liquidation 160WA
Superannuation funds, complying ADFs and PSTs Division 10 of Part IX
Time of acquisition and disposal 160U
Transitional 160ZZS, 160ZZT
Trusts - accruals system of taxation on certain non-resident trust estates Subdivision D of Division 6AAA of Part III 160V(1)
- bare trustee 160ZYC to 160ZYEA
- bonus units in unit trusts 160ZX to 160ZYB
- other than unit trusts 160ZM
- return of capital on investment
Value shifting, adjustment of cost base Division 19A of Part IIIA
Sub Index - Exemptions
Approved deposit funds, rights under 160ZZJ
Exemptions - general 160L, 160Z, 160ZB
Goodwill 160ZZR, 160ZZRAA
Insurance policies 160ZZH
Life assurance policies 160ZZI
Principal residence 160ZZQ
Small business retirement assets Division 17B of Part IIIA
Superannuation funds, rights under 160ZZJ


Sub Index - Roll-overs
Company group, transfer of asset within 160ZZO
Convertible notes - companies 160ZYY to 160ZZB, 160ZZBE
- unit trusts 160ZZBA to 160ZZBD, 160ZZBF
Crown leases 150ZWA
Death 160J, 160X, 160Y
Incorporated association, conversion to company incorporated under company law 160ZZPH
Involuntary disposal 160ZZK, 160ZZL
Marriage, breakdown, transfer of assets upon 160ZZM, 160ZZMA
Options generally 160ZZC
Partnership assets, transfer of to wholly owned company 160ZZNA
Prospecting and mining rights 160ZZF
Shares - exchange of shares in the same company 160ZZP
- exchange of shares in original company for shares in interposed company 160ZZPC
- in specie distribution of shares by trustee of public trading trust 160ZZPF
- options and rights to acquire unissued shares affected by share splits or share consolidations 160ZZPAB
- options to shareholders to acquire unissued shares 160ZZYR to 160ZYX
- redemption or cancellation of shares in original company in exchange for shares in interposed company 160ZZPD
- rights to acquire shares 160ZYK to 160ZYQ
Statutory licence, renewal or extension of 160ZZPE
Strata title conversion 160ZZPG
Trusts -change in trust deed 160ZZPJ
Units - exchange of units in the same unit trust 160ZZPAA
- exchange of units in a unit trust for shares in a company 160ZZPA
- options and rights to acquire unissued units affected by unit splits or unit consolidations 160ZZPAC
- options to unitholders to acquire unissued units
- redemption or cancellation of units in a unit trust in exchange for shares in a company 160ZYXA to 160ZYXF
- rights to acquire units in a unit trust 160ZZPB
160ZYQA to 160ZYQF
Wholly owned company, transfer of asset to 160ZZN

Subdivision B - Interpretation  

SECTION 160A   160A   ASSETS TO WHICH PART APPLIES  
In this Part, unless the contrary intention appears, ``asset'' means any form of property and includes:


(a) any of the following:


(i) an option;

(ii) a debt;

(iii) a chose in action;

(iv) any other right;
whether legal or equitable and whether or not a form of property;


(aa) goodwill or any other form of incorporeal property;


(b) currency of a foreign country;


(c) (Omitted by No 191 of 1992)


(d) a taxpayer's interest in a partnership asset of a partnership in which the taxpayer is a partner; and


(e) so much of a taxpayer's interest in a partnership as is not covered by paragraph (d);

but does not include a motor vehicle of a kind covered by paragraph 82AF(2)(a) or an interest in such a motor vehicle.

SECTION 160B   PERSONAL-USE ASSETS  

160B(1)   [``personal-use asset'']  

For the purposes of this Part, ``personal-use asset'' , in relation to a taxpayer, means:


(a) an asset (other than land, or a building that is deemed to be a separate asset from land by virtue of section 160P ) owned by the taxpayer and used or kept primarily for the personal use or enjoyment of the taxpayer, of an associate or associates of the taxpayer or of the taxpayer and any one or more of the associates of the taxpayer;


(b) a debt owed to the taxpayer:


(i) in respect of an asset that was formerly a personal-use asset of the taxpayer; or

(ii) that came to be owed otherwise than in the course of the gaining or producing of income by the taxpayer or the carrying on of a business by the taxpayer; and


(c) an option or right of the taxpayer to acquire an asset that would, if acquired by the taxpayer, be an asset to which paragraph (a) would apply.

160B(1A)   [Operation of subsec (2) and (2A)]  

Subsections (2) and (2A) define listed personal-use asset for the purposes of this Part.

160B(2)   [``listed personal-use asset'']  

For the purposes of this Part, ``listed personal-use asset'' , in relation to a taxpayer, means a personal-use asset of the taxpayer the consideration in respect of the acquisition of which by the taxpayer exceeded $500 and which is:


(a) any of the following:


(i) a print, etching, drawing, painting, sculpture or other similar work of art;

(ii) jewellery;

(iii) a rare folio, rare manuscript or rare book;

(iv) a postage stamp or first day cover;

(v) a coin or medallion;

(vi) an antique;

(vii) an interest in an asset referred to in any of the preceding subparagraphs;


(b) a debt owed in respect of an asset referred to in paragraph (a); or


(c) an option or right to acquire an asset referred to in paragraph (a).

160B(2A)   [Interest in an asset]  

An interest in an asset is also a listed personal-use asset if the interest is covered by subparagraph (2)(a)(vii) and the market value of the asset at the time when the interest is acquired is more than $500.

160B(3)   [``non-listed personal-use asset'']  

For the purposes of this Part, ``non-listed personal-use asset'' means a personal-use asset other than a listed personal-use asset.

160B(4)   [Set of articles]  

Where:


(a) a taxpayer owned two or more articles being personal-use assets of a kind that would not ordinarily be disposed of otherwise than by one transaction as a set of articles; and


(b) the taxpayer has disposed of the articles by two or more transactions, whether the articles were disposed of to the same person or to different persons,

this Part applies, and shall be deemed to have applied, as if the articles constituted a single personal-use asset and as if each disposal were a disposal of part of that asset.

160B(5)   [Disposal by several transactions]  

Subsection (4) does not apply if the disposal of the articles by several transactions instead of a single transaction was effected solely for a reason or reasons unrelated to the operation of this Part.

160B(6)   [Amendment of assessments]  

Nothing in section 170 prevents the amendment of an assessment for the purpose of giving effect to subsection (4).

SECTION 160C   TAXPAYER  

160C(1)   [Disposal]  

A reference in this Part to a taxpayer, in relation to an asset that has been disposed of or in relation to a capital gain or listed personal-use asset gain that accrued or a capital loss or a listed personal-use asset loss that was incurred in respect of such an asset, is a reference:


(a) except where paragraph (b) applies - to the person who owned the asset immediately before the disposal took place; or


(b) where the disposal resulted from an act that is, by virtue of subsection 160V(1) or section 160W, deemed to be the act of a person other than the person who owned the asset immediately before the disposal took place - to that other person.

160C(2)   [Acquisition]  

A reference in this Part to a taxpayer, in relation to an asset that has been acquired, is a reference to the person who owned the asset immediately after the acquisition took place.

160C(3)   [Partnership]  

In calculating the net income of a partnership, or a partnership loss, in accordance with section 90 , the partnership is not taken to be a taxpayer for the purposes of this Part.

SECTION 160D   MONEY OR OTHER PROPERTY APPLIED FOR BENEFIT OF TAXPAYER  

160D(1)   [Deemed receipt or entitlement to money or property]  

For the purposes of this Part:


(a) a taxpayer shall be deemed to have received money or other property if the money or other property has been applied for the benefit, or in accordance with the directions, of the taxpayer; and


(b) a taxpayer shall be deemed to be entitled to receive money or other property if the taxpayer is entitled to have the money or other property applied for the benefit, or in accordance with the directions, of the taxpayer.

160D(2)   [Application of money or property]  

For the purposes of this Part, a reference in subsection (1) to the application of money or other property for the benefit of a taxpayer includes, without limiting the generality of the expression, a reference to the application of money or other property in the discharge, in whole or in part, of a debt due by the taxpayer.

160D(3)   [Effect limited]  

Nothing in this section limits the operation of subsections 6-5(4) and 6-10(3) of the Income Tax Assessment Act 1997 .

SECTION 160E   160E   ASSOCIATED PERSONS  
A reference in this Part to an associate of a taxpayer is a reference to:


(a) in the case of a taxpayer who is a natural person, other than a taxpayer in the capacity of a trustee:


(i) a relative of the taxpayer;

(ii) a partner of the taxpayer;

(iii) if a person who is an associate of the taxpayer by virtue of subparagraph (ii) is a natural person - the spouse or a child of that person;

(iv) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies or trusts; or

(v) a company where:

(A) the company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer, of another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph, of a company that is an associate of the taxpayer by virtue of another application of this subparagraph or of any two or more such persons; or

(B) the taxpayer is, the persons who are associates of the taxpayer by virtue of sub-subparagraph (A) of this subparagraph and the preceding subparagraphs of this paragraph are, or the taxpayer and the persons who are associates of the taxpayer by virtue of that sub-subparagraph and those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company;


(b) in the case of a taxpayer being a company, other than a taxpayer in the capacity of a trustee:


(i) a partner of the taxpayer;

(ii) if a person who is an associate of the taxpayer by virtue of subparagraph (i) is a natural person - the spouse or a child of that person;

(iii) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies or trusts;

(iv) another person where:

(A) the taxpayer company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of that person, or of that person and another person or other persons, whether those directions, instructions or wishes are communicated directly to the taxpayer company or its directors, or through any interposed companies, partnerships or trusts; or

(B) that person is, or that person and the persons who, if that person were the taxpayer, would be associates of that person by virtue of paragraph (a), by virtue of sub-subparagraph (A) of this subparagraph, by virtue of another subparagraph of this paragraph or by virtue of paragraph (c) are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the taxpayer company;

(v) another company where:

(A) the other company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer company, of a person who is an associate of the taxpayer company by virtue of another subparagraph of this paragraph, of a company that is an associate of the taxpayer company by virtue of another application of this subparagraph or of any two or more such persons; or

(B) the taxpayer company is, the persons who are associates of the taxpayer company by virtue of sub-subparagraph (A) of this subparagraph and the other subparagraphs of this paragraph are, or the taxpayer company and the persons who are associates of the taxpayer company by virtue of that sub-subparagraph and those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the other company; or

(vi) any other person who, if a third person who is an associate of the taxpayer company by virtue of subparagraph (iv) were the taxpayer, would be an associate of that third person by virtue of paragraph (a), by virtue of another subparagraph of this paragraph or by virtue of paragraph (c); or


(c) in the case of a taxpayer in the capacity of a trustee of a trust estate:


(i) any person who benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust estate, either directly or through any interposed companies or trusts;

(ii) where a person who is an associate of the taxpayer by virtue of subparagraph (i) is a natural person - any person who, if that natural person were the taxpayer, would be an associate of that natural person by virtue of paragraph (a) or this paragraph; or

(iii) where a person who is an associate of the taxpayer by virtue of subparagraph (i) or (ii) is a company - any person who, if that company were the taxpayer, would be an associate of that company by virtue of paragraph (b) or this paragraph.


(d) (Omitted by No 48 of 1991)

SECTION 160F   ASSOCIATED TRUST ESTATES  

160F(1)   [Circumstances in which trust estates associated]  

For the purposes of this Part, a trust estate is associated with another trust estate if a person who benefits or is capable of benefiting from the first-mentioned trust estate benefits or is capable of benefiting from the other trust estate.

160F(2)   [Trust estates associated with common trust estate]  

For the purposes of this Part, trust estates that are associated with the same trust estate (including trust estates that are so associated by another application or other applications of this subsection) are associated with each other.

SECTION 160G   RELATED COMPANIES  

160G(1)   [Circumstances in which companies related]  

For the purposes of this Part, a company shall be taken to be related to another company if:


(a) one of the companies is a subsidiary of the other company; or


(b) each of the companies is a subsidiary of the same company.

160G(2)   [Subsidiary]  

For the purposes of this section, a company (in this subsection referred to as the ``subsidiary company'' ) shall be taken to be the subsidiary of another company (in this subsection referred to as the ``holding company'' ) if:


(a) all the shares in the subsidiary company are beneficially owned by:


(i) the holding company;

(ii) a company that is, or two or more companies each of which is, a subsidiary of the holding company; or

(iii) the holding company and a company that is, or two or more companies each of which is, a subsidiary of the holding company; and


(b) no person is in a position to affect rights of the holding company or of a subsidiary of the holding company in relation to the subsidiary company.

160G(3)   [Sub-subsidiaries]  

For the purposes of this section, where a company is a subsidiary of another company (including a company that is such a subsidiary by virtue of another application or other applications of this subsection), every company that is a subsidiary of the first-mentioned company shall be taken to be a subsidiary of that other company.

160G(4)   [Position to affect rights]  

For the purposes of subsection (2), a person shall be taken to be in a position to affect any rights of a company in relation to another company if that person has a right, power or option (whether by virtue of any provision in the constituent document of either of those companies, by virtue of any agreement or otherwise) to acquire those rights or do an act or thing that would prevent the first-mentioned company from exercising those rights for its own benefit or receiving any benefits accruing by reason of those rights.

160G(5)   [``agreement'']  

In subsection (4), ``agreement'' means an agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.

SECTION 160H   RESIDENT TRUST ESTATES AND UNIT TRUSTS  

160H(1)   [Resident trust estate]  

For the purposes of this Part, a trust estate shall be taken to be a resident trust estate in relation to the year of income if:


(a) a trustee of the trust estate was a resident at any time during the year of income; or


(b) the central management and control of the trust estate was in Australia at any time during the year of income.

160H(2)  

160H(3)   [Resident unit trust]  

For the purposes of this Part, a unit trust shall be taken to be a resident unit trust in relation to the year of income if, at any time during the year of income:


(a) either of the following conditions was satisfied:


(i) any property of the unit trust was situated in Australia;

(ii) the trustee of the unit trust carried on business in Australia; and


(b) either of the following conditions was satisfied:


(i) the central management and control of the unit trust was in Australia;

(ii) a person who was a resident or persons who were residents held more than 50% of:

(A) the beneficial interests in the income of the unit trust; or

(B) the beneficial interests in the property of the unit trust.

SECTION 160J   160J   ASSET PASSING TO PERSONAL REPRESENTATIVE OR BENEFICIARY  
In this Part -


(a) a reference to an asset that formed part of the estate of a deceased person passing to the legal personal representative of the deceased person is a reference to an asset that formed part of the estate of a deceased person coming into the ownership of a person as the executor of the will, or as the administrator of the estate, of the deceased person; and


(b) a reference to an asset that formed part of the estate of a deceased person passing to a beneficiary in that estate is a reference to an asset that formed part of the estate of the deceased person coming into the ownership of a person as a beneficiary:


(i) under the will of the deceased person, or under that will as varied by an order of a court; or

(ii) by operation of law as a result of the intestacy of the deceased person, or by operation of law as a result of that intestacy as the operation of the law is varied by an order of a court; or

(iii) under a deed of arrangement where:

(A) the deed was entered into in settlement of a claim to participate in the distribution of the estate of the deceased person; and

(B) the consideration (if any) given by the beneficiary for the asset consisted of the variation or waiver of a claim to one or more other assets that formed part of that estate;
whether the asset was transmitted directly to that person or was transferred to that person by the executor of the will, or by the administrator of the estate, of the deceased person.

SECTION 160JA   160JA   INTERPRETATIVE PROVISIONS FOR DIVISIONS 3A, 3B, 3C, 3CA, 3CB, 3CC, 3CD AND 3D  
In Divisions 3A, 3B, 3C, 3CA, 3CB, 3CC, 3CD and 3D, unless the contrary intention appears:

100% subsidiary
has the meaning given by section 975-505 of the Income Tax Assessment Act 1997 .

abnormal trading
has the meaning given by Subdivision 960-H of the Income Tax Assessment Act 1997 .

approved deposit
fund has the meaning given by section 10 of the Superannuation Industry (Supervision) Act 1993 .

arrangement
has the same meaning as in the Income Tax Assessment Act 1997 .

capital shareholding of less than 1%
has the meaning given by section 160ZNSQ .

complying approved deposit fund
means a complying approved deposit fund within the meaning of section 47 of the Superannuation Industry (Supervision) Act 1993 .

complying superannuation fund
means a complying superannuation fund within the meaning of section 45 of the Superannuation Industry (Supervision) Act 1993 .

constitution
of a company has the same meaning as in the Income Tax Assessment Act 1997 .

dividend
has the meaning given by subsections 6(1), (4) and (5) and section 94L .

dividend shareholding of less than 1%
has the meaning given by section 160ZNSQ .

entity
has the meaning given by section 960-100 of the Income Tax Assessment Act 1997 .

head company
has the meaning given by section 160ZNSM .

indirectly
has the same meaning as in the Income Tax Assessment Act 1997 .

interposed company
has the meaning given by section 160ZNSN .

listed public company
has the same meaning as in the Income Tax Assessment Act 1997 .

member
of a company includes a shareholder or stockholder.

more than a 50% stake
has the meaning given by section 160ZNC .

more than 50% of the company's capital distributions
has the meaning given by section 160ZNJ .

more than 50% of the company's dividends
has the meaning given by section 160ZNI .

more than 50% of the listed public company's capital distributions
has the meaning given by section 160ZNSJ .

more than 50% of the listed public company's dividends
has the meaning given by section 160ZNSI .

more than 50% of the voting power
has the meaning given by section 160ZNH .

more than 50% of the voting power in the listed public company
has the meaning given by section 160ZNSH .

notional net capital gain
has the meaning given by subsection 160ZNF(1) .

notional net capital loss
has the meaning given by subsection 160ZNF(2).

notional shareholder
has the meaning given by section 160ZNSO .

ownership test period
has the meaning given by section 160ZNC .

ownership test time
has the meaning given by section 160ZNSG .

part of a substantial shareholding
has the meaning given by section 166-245 of the Income Tax Assessment Act 1997 .

public company
means a company that is a public company as defined by section 103A for the year of income.

redeemable shares
has the same meaning as in the Income Tax Assessment Act 1997 .

same business test
has the meaning given by Division 3C.

same business test period
has the meaning given by sections 160ZNB, 160ZND and 160ZNE and subsection 160ZNSB(5) .

shareholding interest
has the meaning given by section 175-65 of the Income Tax Assessment Act 1997 .

special company
has the same meaning as in the Income Tax Assessment Act 1997 .

substantial continuity of ownership
has the meaning given by section 160ZNSG .

substantial shareholding
: see part of a substantial shareholding .

superannuation fund
has the meaning given by section 10 of the Superannuation Industry (Supervision) Act 1993 .

test period
has the meaning given by section 160ZNSB .

test time
has the meaning given by sections 160ZNB , 160ZND , 160ZNE and 160ZNSB .

voting share
in a company means:


(a) if the company is a body corporate - a voting share as defined by section 9 of the Corporations Law; and


(b) otherwise - a share that would be a voting share as defined by that section if the company were a body corporate.

voting shareholding of less than 1%
has the meaning given by section 160ZNSQ .

SECTION 160K   OTHER INTERPRETATIVE PROVISIONS  

160K(1)   [Definitions]  

In this Part, unless the contrary intention appears:

"building"
includes a structure;

"Crown lease"
means:


(a) a lease of land granted by the Crown under a statutory law of the Commonwealth, of a State or of a Territory; or


(b) a similar lease granted under a statutory law of a foreign country (whether or not that country is a republic);

"land"
includes:


(a) a legal or equitable estate or interest in land;


(b) a right, power or privilege over, or in connection with, land;


(c) a legal or equitable estate or interest in a stratum unit; or


(d) a share in a company that owns land on which a building is erected, being a share that entitles the holder to a right of occupancy of a dwelling of a kind known as a flat or home unit contained in the building;

"law"
, in relation to a foreign country, means a law of that country, or of any part of, or place in, that country;

"relevant exempting provision"
means any of the following provisions:


(a) section 50-5, 50-10, 50-15, 50-20, 50-25, 50-30, 50-40 or 50-45 of the Income Tax Assessment Act 1997 ;


(b) paragraph 23(ja) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987 ;


(baa) paragraph 23(x) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 2) 1988 ;


(ba) section 23F , 23FA or 23FB , as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987 ;


(bb) paragraph 23(jaa) or section 23FC or 23FD , as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 2) 1989 ;


(bca) section 24AM ;


(bc) regulations under the International Organisations (Privileges and Immunities) Act 1963 , insofar as those regulations provide that an organisation is not liable to income tax;


(c) any provision of an Act other than this Act to the effect that income of a particular person or body is not subject to taxation under any law of the Commonwealth or to the effect that a particular person or body is not subject to taxation under any law of the Commonwealth;

"statutory law"
means a law, being a statutory instrument;

"stratum unit"
means a unit on a unit plan registered under a law of a State or Territory that provides for the registration of titles of a kind known as unit titles or strata titles, being a unit that comprises:


(a) a part of a building containing a dwelling, being a part consisting of a flat or home unit; or


(b) a part of a parcel of land, being a part on which a building containing the dwelling is constructed;

"transfer"
includes conveyance;

"will"
includes a codicil.

160K(2)   [Reference to spouse]  

In this Part (other than sections 160ZZM and 160ZZMA), or in a provision of this Act other than this Part insofar as that provision has effect for the purposes of this Part, a reference to the spouse of a person (in this subsection called the ``first person'' ) does not include a reference to a person who is legally married to the first person but is living separately and apart from the first person on a permanent basis.

160K(3)   [Entitlement to receive money or property]  

Areference in this Part to a person being entitled to receive money or property other than money includes a reference to a person being entitled to receive money or property other than money either immediately or at a future date and, in the case of money, either in a lump sum or by instalments.

160K(4)   [Requirement to pay money or give property]  

A reference in this Part to a person being required to pay money or give property other than money includes a reference to a person being required to pay money or give property other than money either immediately or at a future date and, in the case of money, either in a lump sum or by instalments.

160K(5)   [Amount expressed in foreign currency]  

Where an amount of money, or the value of any property, that is to be taken into account for the purposes of this Part as, or as part of:


(a) the cost base to a taxpayer in respect of an asset; or


(b) the consideration in respect of the disposal of an asset;

would, but for this subsection, be an amount in the currency of a foreign country, the amount to be so taken into account is the equivalent amount in Australian currency at the time when the costs were incurred or the time of disposal of the asset, as the case may be.

160K(6)   [When deemed consideration given]  

Where by virtue of a provision of this Part a taxpayer is deemed for the purposes of this Part to have paid or given any consideration in respect of the acquisition of an asset, the taxpayer shall be deemed, unless the contrary intention appears, to have paid or given that consideration at the time when the taxpayer acquired the asset.

160K(7)   [Person who did not pay consideration]  

Where a provision of this Part refers to a person who did not pay or give any consideration in respect of the acquisition of an asset, a person shall not be taken by reason of subsection 160ZH(9) not to be a person to whom the provision applies.

160K(8)   [Person who did not receive consideration]  

Where a provision of this Part refers to a person who did not receive any consideration in respect of the disposal of an asset, a person shall not be taken by reason of subsection 160ZD(2) not to be a person to whom the provision applies.

160K(9)   [Where Part does not apply to disposal]  

A provision of this Part that provides that this Part does not apply in respect of a disposal of an asset has effect only in relation to the person disposing of the asset and does not have effect in relation to the person who acquired the asset as a result of the disposal.

160K(10)   [Trustee]  

In this Part, unless the contrary intention appears, a reference to the trustee of a trust estate includes a reference to the trustee of a unit trust.

Division 2 - Application  

SECTION 160L   PART APPLIES IN RESPECT OF DISPOSALS OF ASSETS  

160L(1)   [Disposals on or after 20 September 1985 by residents]  

Subject to this section, this Part applies in respect of every disposal on or after 20 September 1985 of an asset, whether situated in Australia or elsewhere or not situated anywhere, that:


(a) immediately before the disposal took place, was owned by:


(i) a person (not being a person in the capacity of a trustee) who was a resident of Australia; or

(ii) a person in the capacity of a trustee of a resident trust estate or of a resident unit trust; and


(b) was acquired by that person on or after 20 September 1985.

160L(2)   [Disposals on or after 20 September 1985 by non-residents]  

Subject to this section, this Part also applies in respect of every disposal on or after 20 September 1985 of a taxable Australian asset that:


(a) immediately before the disposal took place, was owned by:


(i) a person (not being a person in the capacity of a trustee) who was not a resident of Australia; or

(ii) a person in the capacity of a trustee of a trust estate that was not a resident trust estate or of a unit trust that was not a resident unit trust; and


(b) was acquired by that person on or after 20 September 1985.

160L(3)   [Disposals not affected]  

This Part does not apply in respect of a disposal of an asset, not being an asset referred to in subsection (4) or (5), if:


(a) at the time of the disposal the asset constituted trading stock of the taxpayer for the purposes of this Act; or


(b) (Omitted by No 138 of 1994)


(c) as a result of the disposal an amount has been or will be, or but for section 23H would have been or would be, included in the assessable income of the taxpayer of any year of income by virtue of section 26AG ; or


(d) as a result of the disposal an amount has been or will be included in the assessable income of the taxpayer of any year of income by virtue of subsection 73B(27A) .

160L(4)   [Disposals not affected - trustees]  

This Part does not apply in respect of a disposal of an asset, being an asset which was owned by a taxpayer in the capacity of a trustee of a trust estate and to which a beneficiary was absolutely entitled immediately before the disposal, if:


(a) at the time of the disposal, the asset constituted trading stock of the trustee for the purposes of this Act; or


(b) (Omitted by No 138 of 1994)


(c) as a result of the disposal an amount has been or will be, or but for section 23H would have been or would be, included in the assessable income of the beneficiary, or the net income of the trust estate, of any year of income by virtue of section 26AG ; or


(d) as a result of the disposal an amount has been or will be included in the assessable income of the beneficiary, or the net income of the trust estate, of any year of income by virtue of subsection 73B(27A) .

160L(5)   [Disposals not affected - partnerships]  

This Part does not apply in respect of a disposal of a taxpayer's interest in a partnership asset of a partnership in which the taxpayer is a partner if:


(a) at the time of the disposal, the partnership asset constituted trading stock of the partnership for the purposes of this Act; or


(b) (Omitted by No 138 of 1994)


(c) as a result of the disposal an amount has been or will be, or but for section 23H would have been or would be, included in the net income of the partnership, or in the assessable income of a partner in the partnership, or taken into account in ascertaining the amount of the partnership loss, of any year of income by virtue of section 26AG; or


(d) as a result of the disposal an amount has been or will be included in the assessable income of a partner in the partnership of any year of income by virtue of subsection 73B(27A) .

160L(6)   [Valour or brave conduct decorations]  

This Part does not apply in respect of a disposal of a decoration awarded for valour or brave conduct if the person disposing of the decoration did not pay or give any consideration in respect of his or her acquisition of the decoration.

160L(6A)   [Payment or reimbursement under government schemes]  

This Part does not apply to a disposal (other than a disposal by way of assignment) by a taxpayer of a right to reimbursement, or to payment, under a scheme, of expenses of the taxpayer in participating in the scheme where the scheme is:


(a) established by the Commonwealth, a State or a Territory or by an authority of the Commonwealth, of a State or of a Territory; and


(b) prescribed for the purposes of this subsection under regulations applying to the time of the disposal (whether the regulations concerned are made before or after the time of the disposal).

160L(6B)   [Amendment of assessments]  

Nothing in section 170 prevents the amendment of an assessment for the purpose of giving effect to subsection (6A).

160L(7)   [Rights to mine]  

This Part does not apply in respect of a disposal being a sale, transfer or assignment of rights to mine if section 330-60 of the Income Tax Assessment Act 1997 applies in relation to the sale, transfer or assignment.

160L(8)   [Disposals of created assets]  

Where:


(a) an asset was disposed of by a taxpayer before 23 May 1986; and


(b) the asset was created after 19 September 1985 (whether the asset existed, either by itself or as part of another asset, before the disposal or was created by the disposal); and


(c) the asset consisted of a legal or equitable estate or interest in, or a right, power or privilege over, or in connection with, another asset that was acquired by that taxpayer before 20 September 1985;

this Part is taken not to have applied in respect of the disposal.

160L(9)   [Cultural Bequests Program]  

This Part does not apply in respect of the disposal by a person of an asset under the scheme formulated by the Australian Government and known as the Cultural Bequests Program.

SECTION 160M   WHAT CONSTITUTES A DISPOSAL OR ACQUISITION  

160M(1)   [Change in ownership]  

Subject to this Part, where a change has occurred in the ownership of an asset, the change shall be deemed, for the purposes of this Part, to have effected a disposal of the asset by the person who owned it immediately before the change and an acquisition of the asset by the person who owned it immediately after the change.

160M(1A)   [Change in beneficial ownership]  

It is declared for the avoidance of doubt that, subject to paragraphs (3)(a) and (aa), a change in the legal ownership of an asset does not constitute a change in the ownership of the asset for the purposes of this Part unless there is also a change in the beneficial ownership of the asset.

160M(2)   [Various means of change in ownership]  

A reference in subsection (1) to a change in the ownership of an asset is a reference to a change that has occurred in any way, including any of the following ways:


(a) by the execution of an instrument;


(b) by the entering into of a transaction;


(c) by the transmission of the asset by operation of law;


(d) by the delivery of the asset;


(e) by the doing of any other act or thing;


(f) by the occurrence of any event.

160M(3)   [Declaration of trust, choses in action, etc]  

Without limiting the generality of subsection (2), a change shall be taken to have occurred in the ownership of an asset by:


(a) the creation of a trust, by declaration or settlement, over the asset, other than where either:


(i) all of the following sub-subparagraphs apply:

(A) the person who owned the asset immediately before the creation of the trust is the sole beneficiary of the trust;

(B) that person is absolutely entitled to the asset as against the trustee or would, but for a legal disability, be so entitled;

(C) the trust is not a unit trust; or

(ii) all of the following sub-subparagraphs apply:

(A) the trust is created by the transfer of an asset to a trust from another trust;

(B) the beneficiaries of the trusts are identical;

(C) the terms of the trusts, including the interest of each beneficiary in the income and corpus of the trusts, are identical;


(aa) the conversion of a trust over an asset to a unit trust where:


(i) the trust is not an existing unit trust; and

(ii) immediately before the conversion, a person was absolutely entitled to the asset as against the trustee or would, but for a legal disability, have been so entitled;


(b) in the case of an asset being a debt, a chose in action or any other right, or an interest or right in or over property - the cancellation, release, discharge, satisfaction, surrender, forfeiture, expiry or abandonment, at law or in equity, of the asset;


(c) in the case of an asset being a share in or debenture of a company - the redemption in whole or in part, or the cancellation, of the share or debenture; or


(d) subject to subsection (4), a transaction in relation to the asset under which the use and enjoyment of the asset was or is obtained by a person for a period at the end of which the title to the asset will or may pass to that person.

160M(3A)   [Transfer of asset to trust]  

For the purposes of paragraph (3)(a), the transfer of an asset to a trust is taken to be the creation, by settlement, of a trust over the asset.

160M(4)   [Use and enjoyment but no title passes]  

A change shall not be taken to have occurred in the ownership of an asset by a transaction referred to in paragraph (3)(d) if the period for which the person referred to in that paragraph has the use and enjoyment of the asset terminates without the title to the asset passing to that person and nothing in section 170 prevents the amendment of an assessment for the purpose of giving effect to this subsection.

160M(4A)   [No beneficiary absolutely entitled to the asset]  

Subsection (4B) applies if:


(a) a change in the ownership of an asset results from the application of paragraph (3)(a); and


(b) the person who owned the asset immediately before the creation of the trust is the trustee of the trust; and


(c) immediately after the change, no beneficiary is absolutely entitled to the asset as against the trustee.

160M(4B)   [Cost base where no beneficiary absolutely entitled]  

If this subsection applies, then, for the purposes of the application of this Part to any later disposal of the asset by the trustee, the cost base, indexed cost base or reduced cost base of the asset is the amount that would apply if the trustee had acquired the asset, at the time of the change in ownership resulting from the application of paragraph (3)(a), for a consideration equal to its market value at that time.

160M(5)   [Issue or allotment of shares, units; construction or creation of assets]  

For the purposes of this Part:


(a) an issue or allotment of shares in a company constitutes an acquisition of the shares by the person to whom they were issued or allotted but does not constitute a disposal of the shares by the company;


(aa) an issue of units in a unit trust by the trustee of the unit trust constitutes an acquisition of the units by the person to whom they were issued but does not constitute a disposal of the units by the trustee of the unit trust;


(b) if:


(i) a person constructs or creates an asset; and

(ii) on its construction or creation, the asset is not vested in another person;
the person constructing or creating the asset is taken to have acquired, and to have commenced to own, the asset at the time applicable under subsection 160U(5) ; and


(c) if:


(i) a person constructs or creates an asset that is a form of corporeal property; and

(ii) on its construction or creation, the asset is vested in another person;
the other person is taken to have acquired, and to have commenced to own, the asset at the time applicable under subparagraph 160U(6)(a)(i) or (b)(i).

160M(6)   [Conditions for subsec (6A) and (6B) to apply]  

Subject to this Part (other than subsection (7) of this section), if:


(a) a person creates an asset that is not a form of corporeal property; and


(b) on its creation, the asset is vested in another person;

then subsections (6A) and (6B) apply.

160M(6A)   [Person creating asset]  

If subsection (6) applies:


(a) the person creating the asset is taken to have acquired, and to have commenced to own, the asset at the time applicable under subparagraph 160U(6)(a)(ii) or (b)(ii); and


(b) the person creating the asset is later taken to have disposed of the asset to the other person mentioned in paragraph (6)(b) of this section at the time applicable under subparagraph 160U(6)(a)(iii) or (b)(iii); and


(c) the person so taken to dispose of the asset is taken not to have paid or given any consideration, or incurred any costs or expenditure, referred to in any of paragraphs 160ZH(1)(a) to (d) (inclusive), (2)(a) to (d) (inclusive) and (3)(a) to (d) (inclusive) in respect of the asset; and


(d) paragraph 160ZD(2)(a) does not apply to that disposal of the asset.

160M(6B)   [Person acquiring asset]  

Also, if subsection (6) applies:


(a) the other person mentioned in paragraph (6)(b) is taken to have acquired the asset from the person creating it, and to have commenced to own it, at the time applicable under subparagraph 160U(6)(a)(i) or (b)(i); and


(b) paragraph 160ZH(9)(a) does not apply to that acquisition of the asset.

160M(6BA)   [Asset created not a form of corporeal property]  

Subject to this Part (other than subsection (7) of this section), subsection (6BB) applies if:


(a) a person creates an asset that is not a form of corporeal property; and


(b) on its creation, the asset is held by the person in the person's capacity as trustee of a trust estate; and


(c) at the time of that creation, no beneficial interest in the asset is held by a person in the person's capacity as a beneficiary of the trust estate; and


(d) the person has received consideration in respect of the creation of the asset.

160M(6BB)   [Deemed disposal and reacquisition of non-corporeal asset]  

If this subsection applies:


(a) the person creating the asset is taken to have acquired, and to have commenced to own, the asset at the time applicable under subparagraph 160U(6)(a)(ii) or (b)(iv); and


(b) that person is taken not to have paid or given any consideration, or incurred any costs or expenditure, referred to in paragraphs 160ZH(1)(a) to (d) (inclusive), (2)(a) to (d) (inclusive) and (3)(a) to (d) (inclusive) in respect of the creation of the asset; and


(c) that person is taken to have disposed of the asset at the time applicable under subparagraph 160U(6)(a)(iii) or (b)(iv) and to have immediately re-acquired it; and


(d) the person is taken to have received in respect of the disposal of the asset, and to have paid in respect of the re-acquisition, the market value of the asset at the time of the disposal.

160M(6C)   [Application of subsec 6]  

Subsections (6) and (6BA) apply to the creation of an asset:


(a) whether or not the asset is created out of, over or otherwise in connection with, an existing asset; and


(b) whether or not the person creating the asset owned or disposed of anything at the moment of creation of the asset.

160M(6D)   [``vest'']  

In subsections (5) and (6):

"vest"
, in relation to an asset, means:


(a) in the case of an asset that is not a right - confer ownership of the asset on a person; or


(b) in the case of an asset that is a right - create the right in a person (whether or not conferring ownership of the asset on the person).

160M(7)   [Entitlement to receive money or other consideration]  

Without limiting the generality of subsection (2) but subject to the other provisions of this Part, where -


(a) either:


(i) an act or transaction has taken place in relation to an asset, whether or not affecting the asset; or

(ii) an event affecting an asset has occurred;
where, in a subparagraph (i) case in which the asset was affected or in any subparagraph (ii) case, it does not matter whether the asset was affected adversely or beneficially, or neither adversely nor beneficially; and


(b) the person who owned the asset at the time of the act, transaction or event has received, or is entitled to receive, an amount of money or other consideration by reason of the act, transaction or event (whether or not any asset was or will be acquired by the person paying the money or giving the other consideration) including, but not limited to, an amount of money or other consideration -


(i) in the case of an asset being a right - in return for refraining from exercising the right; or

(ii) for use or exploitation of the asset,

the act, transaction or event constitutes a disposal by the person who received, or is entitled to receive, the money or other consideration of an asset created by the disposal and, for the purposes of the application of this Part in relation to that disposal -


(c) the money or other consideration constitutes the consideration in respect of the disposal; and


(d) the person shall be deemed not to have paid or given any consideration, or incurred any costs or expenditure, referred to in paragraph 160ZH(1)(a) , (b), (c) or (d), (2)(a), (b), (c) or (d) or (3)(a), (b), (c) or (d) in respect of the asset; and


(e) the person is taken to have acquired and owned the asset immediately before the disposal.

160M(7A)   [Transactions in period 20 September 1985 to 22 May 1986]  

Subsection (7), as in force before it was amended by the Taxation Laws Amendment Act (No. 4) 1992 , is taken not to have applied in relation to:


(a) an act or transaction that took place in relation to an asset during the period that commenced on 20 September 1985 and ended on 22 May 1986; or


(b) an event affecting an asset that occurred during that period;

if the requirement set out in subsection (7B) is met.

160M(7B)   [Requirements for former subsec (7) not to apply]  

For the purposes of subsection (7A), the requirement is:


(a) if the person who received, or was entitled to receive, the amount of money or other consideration referred to in paragraph (7)(b) owned the asset when the act or transaction took place, or the event occurred - that the person acquired the asset before 20 September 1985; or


(b) in any other case - that the person who owned the asset when the act or transaction took place, or the event occurred, acquired the asset before 23 May 1986.

160M(8)   [Person ceasing to be resident]  

Where a taxpayer, being a resident, has, on or after 20 September 1985, ceased to be a resident, the taxpayer shall be deemed for the purposes of this Part -


(a) to have, at the time when the taxpayer ceased to be a resident (in this subsection referred to as the ``relevant time'' ), disposed of every asset that was owned by the taxpayer immediately before the relevant time, other than -


(i) a taxable Australian asset;

(ii) any other asset that was acquired by the taxpayer before 20 September 1985; or

(iii) an asset to which subsection (9), (10) or (11) applies; and


(b) to have so disposed of every such asset for a consideration equal to the market value of the asset at the relevant time.

160M(9)   [Trust estate ceasing to be resident trust estate]  

Where a resident trust estate has, on or after 20 September 1985, ceased to be a resident trust estate, the trustee of the trust estate shall be deemed for the purposes of this Part -


(a) to have, at the time when the resident trust estate ceased to be a resident trust estate (in this subsection referred to as the ``relevant time'' ), disposed of every asset that was, immediately before the relevant time, owned by the trustee as a trustee of that trust estate, other than -


(i) a taxable Australian asset; or

(ii) any other asset that was acquired by the trustee before 20 September 1985; and


(b) to have so disposed of every such asset for a consideration equal to the market value of the asset at the relevant time.

160M(10)   [Unit trust ceasing to be resident unit trust]  

Where a resident unit trust has, on or after 20 September 1985, ceased to be a resident unit trust, the trustee of the unit trust shall be deemed for the purposes of this Part -


(a) to have, at the time when the resident unit trust ceased to be a resident unit trust (in this subsection referred to as the ``relevant time'' ), disposed of every asset that was, immediately before the relevant time, owned by the trustee as a trustee of that unit trust, other than -


(i) a taxable Australian asset; or

(ii) any other asset that was acquired by the trustee before 20 September 1985; and


(b) to have so disposed of every such asset for a consideration equal to the market value of the asset at the relevant time.

160M(11)  

160M(11A)   [Limits on deemed disposals]  

Subsection (8) does not deem a taxpayer to have disposed of a particular asset at a time (in this subsection called the ``relevant time'' ) when the taxpayer ceased to be a resident if:


(a) the taxpayer is a natural person;


(b) during the period of 10 years immediately before the relevant time, the taxpayer was a resident for a total period of less than 5 years; and


(c) the asset:


(i) was owned by the taxpayer immediately before the occasion (or last occasion, as the case requires) on which the taxpayer became a resident before the relevant time; or

(ii) was acquired by the taxpayer as a beneficiary of the estate of a deceased person, or as a survivor of a joint tenancy, and was so acquired after the occasion (or last occasion, as the case requires) on which the taxpayer became a resident before the relevant time.

160M(11B)   [Election re deemed disposal]  

Where:


(a) but for this subsection, a taxpayer would be deemed by subsection (8) to have disposed of a particular asset at a time (in this subsection called the ``relevant time'' ) when the taxpayer ceased to be a resident;


(b) the taxpayer is a natural person; and


(c) the taxpayer has elected that this subsection apply in relation to all assets of the taxpayer to which subsection (8) would apply at the relevant time;

the following paragraphs apply:


(d) subsection (8) does not deem the taxpayer to have disposed of the asset at the relevant time;


(e) the asset shall be taken to be a taxable Australian asset until immediately after whichever of the following first occurs:


(i) the taxpayer disposes of the asset;

(ii) the taxpayer becomes a resident.

160M(11C)   [Time of election]  

An election for the purposes of subsection (11B) shall be made on or before the date of lodgment of the return of income of the taxpayer for the year of income in which the relevant time referred to in that subsection occurred, or within such further time as the Commissioner allows.

160M(12)   [Person becoming resident]  

Where a taxpayer, being a non-resident, has, on or after 20 September 1985, become a resident, every asset that was owned by the taxpayer immediately before the time when the taxpayer became a resident (in this subsection referred to as the ``relevant time'' ), other than:


(a) a taxable Australian asset;


(b) any other asset that was acquired by the taxpayer before 20 September 1985; or


(c) an asset to which subsection (13), (14) or (15) applies;

shall be deemed for the purposes of this Part to have been acquired by the taxpayer at the relevant time and to have been so acquired for a consideration equal to the market value of the asset at the relevant time.

160M(12A)   [CFC becoming a resident]  

Where, at a particular time (in this section called the ``residence-change time'' ), a company that is a CFC ceases to be a resident of an unlisted country or a listed country and becomes a resident within the meaning of section 6 , then:


(a) subsection (12) does not apply; and


(b) subsections (12AA) and (12AB) apply.

160M(12AA)  [Application of sec 411 to 417]  

For the purposes of the application of this Part, sections 411 to 417 (inclusive) have, subject to subsection (12AB), the same effect, in relation to every commencing day non-taxable Australian asset of the company owned by the company at the residence-change time, as they would have if the taxable income, instead of the attributable income, of the company were being calculated under those sections.

160M(12AB)   [Capital gain subject to tax in listed country]  

If any capital gain on a commencing day non-taxable Australian asset in respect of the period before the residence-change time was subject to tax in a listed country, then, for the purposes of the application of this Part, sections 411 to 417 (inclusive) have the same effect in relation to the asset as they would have if:


(a) the taxable income, instead of the attributable income, of the company were being calculated under those sections; and


(b) any reference in those sections relating to the eligible CFC's commencing day or the day following the eligible CFC's commencing day were a reference relating respectively to the residence-change time or a time immediately after the residence-change time.

160M(12B)   [Interpretation]  

In subsections (12A) to (12AB):

"30 June 1990 non-taxable Australian asset"

"attributable income"
has the same meaning as in Part X;

"CFC"
has the same meaning as in Part X;

commencing day
has the same meaning as in Subdivision C of Division 7 of Part X .

commencing day non-taxable Australian asset
has the same meaning as in Subdivision C of Division 7 of Part X .

"resident of a listed country"
has the same meaning as in Part X;

"resident of an unlisted country"
has the same meaning as in Part X;

"subject to tax"
has the same meaning as in Part X.

160M(13)   [Trust estate becoming resident trust estate]  

Where a trust estate, other than a resident trust estate, has, on or after 20 September 1985, become a resident trust estate, every asset that was, immediately before the time when the trust estate became a resident trust estate (in this subsection referred to as the ``relevant time'' ), owned by the trustee as a trustee of that trust estate, other than:


(a) a taxable Australian asset; or


(b) any other asset that was acquired by the trustee before 20 September 1985;

shall be deemed for the purposes of this Part to have been acquired by the trustee as the trustee of that trust estate at the relevant time and to have been so acquired for a consideration equal to the market value of the asset at the relevant time.

160M(13A)   [Application of subsec (13) to a CFT]  

Subsection (13) does not apply where a trust estate becomes a resident trust estate if, immediately before it does so, it is a CFT, within the meaning of section 342 , because paragraph (a) of that section applies.

160M(14)   [Unit trust becoming a resident unit trust]  

Where a unit trust, other than a resident unit trust, has, on or after 20 September 1985, become a resident unit trust, every asset that was, immediately before the time when the unit trust became a resident unit trust (in this subsection referred to as the ``relevant time'' ), owned by the trustee as a trustee of that unit trust, other than:


(a) a taxable Australian asset; or


(b) any other asset that was acquired by the trustee before 20 September 1985;

shall be deemed for the purposes of this Part to have been acquired by the trustee as the trustee of that unit trust at the relevant time and to have been so acquired for a consideration equal to the market value of the asset at the relevant time.

160M(14A)   [Application of subsec (14) to a CFT]  

Subsection (14) does not apply where a unit trust becomes a resident unit trust if, immediately before it does so, it is a CFT, within the meaning of section 342 , because paragraph (a) of that section applies.

160M(15)  

SECTION 160MA   CERTAIN ASSET CREATION CASES NOT TO CONSTITUTE AN ACQUISITION OR DISPOSAL  

160MA(1)   Certain debts.  

If a person creates a debt by borrowing money or obtaining credit from another person, neither subsection 160M(6) nor subsection 160M(7) applies to the creation of the debt, but the other person is taken to acquire the debt for the purposes of this Part.

160MA(2)   Right to require Part IIIA disposal.  

If:


(a) a person creates a right in another person to require the first person to do any thing; and


(b) the doing of the thing will constitute the disposal of an asset for the purposes of this Part;

then neither subsection 160M(6) nor subsection 160M(7) applies to the creation of the right.

160MA(3)   Interpretive provision relating to paragraph (2)(b).  

In applying paragraph (2)(b), the exclusion from the definition of ``asset'' in section 160A of motor vehicles of a kind covered by paragraph 82AF(2)(a) , and interests in such motor vehicles, is to be ignored.

SECTION 160N   160N   ASSETS LOST OR DESTROYED  
For the purposes of this Part but subject to the other provisions of this Part:


(a) the entire loss or destruction of an asset constitutes a disposal of the asset; and


(b) the loss or destruction of part of an asset constitutes a disposal of that part of the asset;

whether or not any amount of money or other consideration by way of compensation or otherwise is received as a result of or in respect of the loss or destruction.

SECTION 160P   COMPOSITE ASSETS  

160P(1)   [Demolition of building and erection of new building]  

Where:


(a) land on which a building is erected was acquired by a taxpayer before 20 September 1985;


(b) after the acquisition of the land by the taxpayer the building was demolished and a new building was constructed on the land in replacement of the demolished building; and


(c) if the new building were a separate asset from the land, the new building would be taken for the purposes of this Part to have been acquired by the taxpayer on or after 20 September 1985;

the new building shall be deemed for the purposes of this Part to be an asset separate from the land.

160P(2)   [Construction of building on vacant land]  

Where:


(a) land was acquired by a taxpayer before 20 September 1985;


(b) after the acquisition of the land by the taxpayer a building was constructed on the land; and


(c) if the building were a separate asset from the land, the building would be taken for the purposes of this Part to have been acquired by the taxpayer on or after 20 September 1985;

the building shall be deemed for the purposes of this Part to be an asset separate from the land.

160P(3)   [Acquisitionof adjacent land]  

Where:


(a) land was acquired by a taxpayer before 20 September 1985; and


(b) on or after that date the taxpayer acquired land (whether or not a building was or is erected on that last-mentioned land) adjacent to the first-mentioned land;

the adjacent land shall be deemed for the purposes of this Part to be a separate asset from the first-mentioned land.

160P(4)   [Building or improvement a separate asset]  

Where a building or other improvement of a capital nature made to land is treated for the purposes of this Act other than this Part as an asset separate from the land, the building or other improvement shall be deemed for the purposes of this Part to be a separate asset from the land.

160P(5)   [Part of building a separate asset]  

Where an asset forming part of a building is treated for the purposes of this Act other than this Part as an asset separate from the building, the asset shall be deemed for the purposes of this Part to be a separate asset from the building.

160P(6)   [Capital improvement to asset]  

Where:


(a) an asset (other than a periodic roll-over asset) acquired by a taxpayer before 20 September 1985 has been disposed of on or after that date;


(b) an improvement of a capital nature to the asset was made after the taxpayer acquired the asset;


(c) if the improvement were a separate asset from the asset to which it was made:


(i) the improvement would be taken for the purposes of this Part to have been acquired by the taxpayer on or after 20 September 1985; and

(ii) subject to section 160Q , the indexed cost base to the taxpayer of the improvement would exceed $50,000; and


(d) the amount of the indexed cost base referred to in subparagraph (c)(ii) exceeds 5% of the consideration in respect of the disposal of the asset to which the improvement was made;

the improvement shall be deemed for the purposes of this Part to be an asset separate from the asset to which the improvement was made.

160P(6A)   [Capital improvement to periodic roll-over asset]  

Where:


(a) a periodic roll-over asset (in this subsection called the ``actual asset'' ) acquired by a taxpayer before 20 September 1985 has been disposed of on or after that date;


(b) if it were assumed that:


(i) the actual asset; and

(ii) all the predecessor assets of the actual asset;
together constituted a single asset (in this subsection called the ``overall asset'' ), an act or thing done in relation to the actual asset or any of the predecessor assets after the taxpayer first acquired any of the predecessor assets would constitute an improvement of a capital nature to the overall asset;


(c) if the improvement were a separate asset from the overall asset:


(i) the improvement would be taken, for the purposes of this Part, to have been acquired by the taxpayer on or after 20 September 1985; and

(ii) the indexed cost base to the taxpayer of the improvement would exceed the amount applicable for the purposes of subparagraph (6)(c)(ii) in relation to the year of income in which the actual asset was disposed of; and


(d) the amount of the indexed cost base referred to in subparagraph (c)(ii) exceeds 5% of the consideration in respect of the disposal of the actual asset;

the improvement shall be taken, for the purposes of this Part, to be an asset separate from the actual asset and each of those predecessor assets.

160P(7)   [Apportionment of disposal consideration]  

On the disposal of an asset that is, by this section, deemed for the purposes of this Part to comprise two or more separate assets, the consideration in respect of the disposal of the first-mentioned asset shall be apportioned between the separate assets.

160P(8)   [Single assets]  

Except as provided by this section, land, and any building or other improvement made to the land, shall be deemed for the purposes of this Part to be a single asset.

160P(9)   [Predecessor assets]  

For the purposes of this section:


(a) an asset is a predecessor of a second asset if the second asset replaced the first-mentioned asset in circumstances of a kind referred to in a periodic roll-over provision; and


(b) where there is a series of acquisitions of assets such that each asset replaced a previously acquired asset in circumstances of a kind referred to in a periodic roll-over provision, each of the assets involved in the series (other than the last asset to be acquired) shall be taken to be a predecessor of the last asset to be acquired.

160P(10)   [Definitions]  

In this section:

"periodic roll-over asset"
means an asset to which a periodic roll-over provision applies;

"periodic roll-over provision"
means section 160ZWA , 160ZZF or 160ZZPE.

SECTION 160Q   INDEXATION OF INDEXED COST BASE LIMIT  

160Q(1)   [Indexation for purposes of sec 160P(6)(c)]  

Subject to subsection (2), subparagraph 160P(6)(c)(ii) has effect in relation to a relevant year of income as if, for the reference in that subparagraph to $50,000, there were substituted a reference to an amount calculated by multiplying -


(a) in a case to which paragraph (b) does not apply - $50,000; or


(b) where subparagraph 160P(6)(c)(ii) has had effect in relation to a year of income or years of income preceding the relevant year of income as if a reference to another amount were substituted for the reference in that subsection to $50,000 or would have so had effect but for the operation of subsection (2) of this section - the substituted amount or the last substituted amount, or the amount or the last amount that would, but for the operation of subsection (2), have been so substituted, as the case may be,

by the factor ascertained in accordance with subsection (3).

160Q(2)   [Substituted amount not more than $50,000]  

Subsection (1) does not have effect in relation to a relevant year of income where, if it did so have effect, the amount that would be substituted in subparagraph 160P(6)(c)(ii) would not exceed $50,000.

160Q(3)   [Factor]  

The factor to be ascertained for the purposes of subsection (1) in relation to a relevant year of income is the number (calculated to 3 decimal places) ascertained by dividing the sum of -


(a) the index number in respect of the March quarter immediately preceding that relevant year of income; and


(b) the index numbers in respect of the 3 quarters that immediately preceded that quarter,

by the sum of -


(c) the index number in respect of the March quarter immediately preceding the year of income that next preceded that relevant year of income; and


(d) the index numbers in respect of the 3 quarters that immediately preceded that last-mentioned quarter.

160Q(4)   [Substitution index number]  

Subject to subsection (5), if at any time, whether before or after the commencement of this Part, the Australian Statistician has published or publishes an index number in respect of a quarter in substitution for an index number previously published by the Australian Statistician in respect of that quarter, the publication of the later index number shall be disregarded for the purposes of this section.

160Q(5)   [Change of reference base by Statistician]  

If, at any time, whether before or after the commencement of this Part, the Australian Statistician has changed or changes the reference base for the Consumer Price Index, then, for the purposes of the application of this section after the change took place or takes place, regard shall be had only to index numbers published in terms of the new reference base.

160Q(6)   [Rounding of decimal places]  

Where the factor ascertained in accordance with subsection (3) in relation to a relevant year of income would, if it were calculated to 4 decimal places, end with a number greater than 4, the factor ascertained in accordance with that subsection in relation to that relevant year of income shall be taken to be the factor calculated to 3 decimal places in accordance with that subsection and increased by 0.001.

160Q(7)   [Notification]  

The Commissioner must publish by written notice before the commencement of each relevant year of income:


(a) the factor ascertained in accordance with subsection (3) (as affected by subsection (6)) in relation to that year of income; and


(b) the amount that is to be substituted in subparagraph 160P(6)(c)(ii) in relation to that year of income for improvements to which subsection 160P(6) applies.

160Q(8)   [Rounding to whole dollars]  

Where, but for this subsection, this section would, by virtue of the preceding provisions of this section, have effect in relation to a relevant year of income as if, for the reference in subsection 160P(6) to $50,000, there were substituted a reference to another amount, being an amount that consists of a number of whole dollars and a number of cents (in this subsection referred to as the ``relevant number of cents'' ):


(a) in the case where the relevant number of cents is less than 50 - the other amount shall be reduced by the relevant number of cents; or


(b) in any other case - the other amount shall be increased by the amount by which the relevant number of cents is less than $1.

160Q(9)   [Rounding to whole dollars]  

Where, but for subsection (2), this section would, by virtue of the preceding provisions of this section, have effect in relation to a relevant year of income as if, for the reference in subsection 160P(6) to $50,000, there were substituted a reference to another amount, being an amount that consists of a number of whole dollars and a number of cents (in this subsection referred to as the ``relevant number of cents'' ), then, for the purposes of the application of paragraph (1)(b):


(a) in a case where the relevant number of cents is less than 50 - the other amount shall be reduced by the relevant number of cents; or


(b) in any other case - the other amount shall be increased by the amount by which the relevant number of cents is less than $1.

160Q(10)   [``Relevant year of income''; ``index number'']  

In this section:


(a) a reference to a relevant year of income is a reference to the year of income in which the asset to which the improvement referred to in paragraph 160P(6)(b) relates was disposed of, being the year of income commencing on 1 July 1986 or a subsequent year of income; and


(b) a reference to an index number, in relation to a quarter, is a reference to the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of that quarter.

SECTION 160R   160R   PART DISPOSALS  
For the purposes of this Part, a reference to a disposal of an asset includes, unless the contrary intention appears, a reference to a disposal of part of an asset.

SECTION 160S   TRANSFERS BY WAY OF SECURITY, ETC.  

160S(1)   [No acquisition or disposal]  

For the purposes of this Part, the transfer by way of security of an asset or of an interest or right in or over an asset, or the transfer of a subsisting interest or right by way of security in or over an asset (including a re-transfer on redemption of the security), does not constitute an acquisition or disposal of the asset.

160S(2)   [Acquisition free of security, acquisition subject to security]  

For the purposes of this Part:


(a) an asset shall be treated as having been acquired free of any interest or right by way of security subsisting at the time of acquisition and as having been disposed of free of any such interest or right subsisting at the time of disposal; and


(b) where an asset is acquired subject to any such interest or right - the full amount of the liability thereby assumed by the person acquiring the asset forms part of the consideration for the acquisition of the asset by that person, and for the disposal of the asset by the person from whom it was acquired, in addition to any other consideration paid or given for the acquisition and disposal.

SECTION 160T   DISPOSAL OF TAXABLE AUSTRALIAN ASSETS  

160T(1)   [Deemed disposal]  

For the purposes of this Part, a disposal of an asset shall be deemed to have been a disposal of a taxable Australian asset if:


(a) the asset comprised land or a building situated in Australia;


(b) the asset has at any time been used by the taxpayer in carrying on a trade or business wholly or partly at or through a permanent establishment in Australia;


(c) the asset comprised a share, or an interest in a share, in a company that, in relation to the year of income of the company in which the disposal took place, was a resident of Australia and was a private company;


(d) the asset comprised a share, or an interest in a share, in a company that, in relation to the year of income of the company in which the disposal took place, was a resident of Australia and was not a private company and at any time during so much of the period of 5 years immediately preceding the disposal as occurred after 19 September 1985:


(i) the taxpayer or an associate of the taxpayer was the beneficial owner of; or

(ii) any associates of the taxpayer, or the taxpayer and any associate or associates of the taxpayer, together were the beneficial owners of;
not less than 10%, by value, of the shares of the company (excluding any shares that carried no right to participate beyond a specified amount in a distribution of either profits or capital);


(e) (Omitted by No 48 of 1991)


(f) the asset comprised an interest in a trust estate that was a resident trust estate in relation to the year of income in which the disposal took place;


(g) the asset comprised a unit of a unit trust that, in relation to the year of income of the unit trust in which the disposal took place, was a resident unit trust, and at any time during so much of the period of 5 years immediately preceding the time of the disposal as occurred after 19 September 1985 the taxpayer or an associate of the taxpayer was the beneficial owner of, or any associates of the taxpayer or the taxpayer and any associate or associates of the taxpayer together were the beneficial owners of, not less than 10% of the issued units of the unit trust;


(h) the asset comprised an option or right to acquire an asset referred to in a preceding paragraph of this section;


(j) the asset comprised a share in, or security of, a company and the following conditions are satisfied in relation to the acquisition of the asset by the taxpayer:


(i) the asset was received by the taxpayer as consideration in respect of the disposal (in this paragraph called the ``previous disposal'' ) of another asset by the taxpayer to the company;

(ii) the previous disposal took place after 28 January 1988;

(iii) section 160ZZN , 160ZZNA or 160ZZO applied in respect of the previous disposal;

(iv) at the time of the previous disposal, the taxpayer:

(A) was not a trustee of a trust estate and was not a resident of Australia; or

(B) was a trustee of a trust estate that was not a resident trust estate or of a unit trust that was not a resident unit trust;


(k) the following conditions are satisfied in relation to the acquisition of the asset by the taxpayer:


(i) the taxpayer acquired the asset as a result of a disposal (in this paragraph called the ``previous disposal'' ) in respect of which section 160ZZN or 160ZZO applied;

(ii) the previous disposal was by:

(A) another taxpayer who was not a trustee of a trust estate and was not a resident of Australia; or

(B) a trustee of a trust estate that was not a resident trust estate or of a unit trust that was not a resident unit trust;

(iii) the previous disposal took place after 28 January 1988 and on or before 25 May 1988;


(l) the following conditions are satisfied:


(i) there is a disposal of the asset because paragraph 160M(6A)(b) or subsection 160M(6BB) applies; and

(ii) the asset is not a taxable Australian asset under another paragraph of this section; and

(iii) the consideration in respect of the disposal of the asset was derived from a source in Australia or if there had been such consideration it would have been derived from such a source; or


(m) the following conditions are satisfied:


(i) there is a disposal of the asset because subsection 160M(7) applies; and

(ii) the asset referred to in paragraph 160M(7)(a) is a taxable Australian asset under another paragraph of this section.

160T(2)   [Consideration deemed of income nature]  

If the consideration referred to in subparagraph (1)(l)(iii) is not of an income nature, then for the purpose of determining under that subparagraph whether the consideration was or would have been derived from a source in Australia, it is taken to be of an income nature.

SECTION 160U   TIME OF DISPOSAL AND ACQUISITION  

160U(1)   [Scope of section]  

Subject to the provisions of this Part other than this section, where an asset has been acquired or disposed of, the time of acquisition or disposal for the purposes of this Part shall be ascertained in accordance with this section.

160U(2)   [Later subsections take precedence to earlier subsections]  

If the time of acquisition or disposal as ascertained under a subsection of this section is different from the time of acquisition or disposal as ascertained under a subsequent subsection of this section, the time of acquisition or disposal shall be taken to have been the time of acquisition or disposal as ascertained under that subsequent subsection.

160U(3)   [Acquisition or disposal under contract]  

Where the asset was acquired or disposed of under a contract, the time of acquisition or disposal shall be taken to have been the time of the making of the contract.

160U(4)   [Acquisition or disposal not under contract]  

Where the asset was acquired or disposed of otherwise than under a contract, the time of acquisition or disposal shall be taken to have been the time when the change in the ownership of the asset that constituted or gave rise to the acquisition or disposal occurred.

160U(5)   [Deemed time of acquisition under subsec 160M(5)(b)]  

If paragraph 160M(5)(b) applies to the construction or creation of the asset, the asset is taken to have been acquired as mentioned in that paragraph when the construction of the asset commenced or when the work on, or work that resulted in, the creation of the asset commenced.

160U(6)   [Deemed time of acquisition or disposal in other cases]  

If paragraph 160M(5)(c) , 160M(6A)(a) or (b) or 160M(6B)(a) or subsection 160M(6BB) applies to the construction or creation of the asset:


(a) if the asset was constructed or created under a contract - the asset is taken:


(i) in a paragraph 160M(5)(c) or 160M(6B)(a) case - to have been acquired as mentioned in that paragraph at the time of making of the contract; and

(ii) in a paragraph 160M(6A)(a) or subsection 160M(6BB) case - to have been acquired as mentioned in that paragraph or subsection immediately before the time of making of the contract; and

(iii) in a paragraph 160M(6A)(b) or subsection 160M(6BB) case - to have been disposed of as mentioned in that paragraph or subsection at the time of making of the contract; and


(b) in any other case - the asset is taken:


(i) in a paragraph 160M(5)(c) or 160M (6B)(a) case - to have been acquired as mentioned in that paragraph at the time of the vesting referred to in paragraph 160M(5)(c) or in paragraph 160M(6)(b) , as the case requires; and

(ii) in a paragraph 160M(6A)(a) case - to have been acquired as mentioned in that paragraph immediately before the time of the vesting referred to in paragraph 160M(6)(b) ; and

(iii) in a paragraph 160M(6A)(b) case - to have been disposed of as mentioned in that paragraph at the time of the vesting referred to in paragraph 160M(6)(b) ; and

(iv) in a subsection 160M(6BB) case - to have been acquired as mentioned in paragraph 160M(6BB)(a) at the time of the creation referred to in paragraph 160M(6BA)(b) , and to have been disposed of as mentioned in paragraph 160M(6BB)(c) immediately after that time.

160U(6A)   [Time of acquisition or disposal where none provided]  

Where:


(a) a provision of this Part, other than a provision of section 160M ( ``the relevant section 160M provision'' ) referred to in subsection (5) or (6) of this section, applies to the construction or creation of an asset to deem there to have been an acquisition or disposal of the asset; and


(b) because the relevant section 160M provision does not apply, neither subsection (5) nor subsection (6) of this section applies; and


(c) the provision of this Part does not state the time at which the acquisition or disposal is taken to have occurred;

then the acquisition or disposal is taken to have occurred at the time that would have been applicable under subsection (5) or (6) of this section if the relevant section 160M provision had applied.

160U(7)   [Use and enjoyment]  

Where the acquisition or disposal of the asset occurred as a result of a transaction referred to in paragraph 160M(3)(d) , the time of acquisition or disposal shall be taken to have been the time when the use and enjoyment of the asset was first obtained by the person mentioned in that paragraph.

160U(8)   [Compulsory acquisition]  

Where the asset was disposed of as a result of the exercise of a power of compulsory acquisition conferred by a law, the time of disposal shall be taken to have been the time when the earliest of the following events occurred:


(a) an amount or an asset by way of compensation for the acquisition was received;


(b) the person acquiring the asset became the owner of the asset;


(c) the person acquiring the asset entered on the asset under the powers conferred on the person by that law;


(d) the person acquiring the asset took possession of the asset under the powers conferred on the person by that law.

160U(9)   [Loss or destruction]  

Where the asset is taken to have been disposed of by reason of the loss or destruction of the asset, the time of disposal shall be taken to have been:


(a) if an amount is or amounts are, or an asset is or assets are, received in respect of the loss or destruction - the time when the amount or the first amount, or the asset or the first asset, was received; or


(b) in any other case - the time when the loss was discovered or the destruction occurred, as the case may be.

160U(10)   [Amendment of assessment]  

Section 170 does not prevent the amendment of an assessment at any time to give effect to subsection (3) or (8) where the time of an acquisition or disposal is taken to have been before the making of the assessment.

SECTION 160V   DISPOSALS BY BARE TRUSTEES AND PERSONS ENFORCING SECURITIES  

160V(1)   [Absolutely entitled beneficiary]  

If an asset is held by a person as trustee for another person who is absolutely entitled to the asset as against the trustee, this Part applies as if the asset were vested in the other person and any acts of the trustee were the acts of the other person.

160V(1A)   [Persons under legal disability]  

For the purposes of subsection (1), where a person holds an asset as trustee for another person, the other person is not taken not to be absolutely entitled to the asset as against the trustee merely because the other person is under a legal disability.

160V(1B)   [Change in ownership of asset]  

For the avoidance of doubt, nothing in subsection (1) has the effect that a change in the ownership of an asset under paragraph 160M(3)(a) or (aa) is not taken to have occurred.

160V(2)   [Security, etc]  

Where:


(a) a person entitled to an asset by way of security or entitled to the benefit of a charge or encumbrance on an asset does any act in relation to the asset for the purpose of enforcing or giving effect to the security, charge or encumbrance; or


(b) a person appointed to enforce or give effect to a security in relation to an asset or to enforce or give effect to a charge or encumbrance on an asset does any act in relation to the asset for the purpose of enforcing or giving effect to the security, charge or encumbrance;

this Part applies as if the act were the act of the person who owned the asset that was subject to the security, charge or encumbrance.

SECTION 160W   160W   EFFECT OF BANKRUPTCY, ETC.  
Where an asset owned by a person:


(a) becomes vested, as a result of the bankruptcy of the person, in:


(i) the Official Trustee in Bankruptcy or a registered trustee; or

(ii) the holder of a similar office under the law of a foreign country;


(b) becomes vested in a trustee:


(i) under a deed of assignment or deed of arrangement made under Part X of the Bankruptcy Act 1966 or a similar instrument executed under the law of a foreign country; or

(ii) by virtue of a composition or scheme of arrangement approved under Part IV, or a composition accepted under Part X, of that Act or a similar arrangement with creditors under the law of a foreign country; or


(c) in the case of a person being a company, becomes vested:


(i) in the liquidator of the company under section 374 of the Companies Act 1981 or the corresponding law of a State or Territory; or

(ii) in the holder of a similar office under the law of a foreign country;

this Part applies as if the asset continued to be vested in the first-mentioned person and any act done in relation to the asset by the person in whom the asset so vested were the act of the first-mentioned person.

SECTION 160WA   DEEMED DISPOSAL AND RE-ACQUISITION OF VALUELESS SHARES IN COMPANIES IN LIQUIDATION  

160WA(1)   [Deemed disposal and re-acquisition for nil consideration]  

For the purposes of this Part, if:


(a) a taxpayer owns a share in a company as at a particular time (in this subsection called the ``test time'' ) after 11 November 1991; and


(b) there is a liquidator of the company; and


(c) at or after the test time, the liquidator makes a written declaration that the liquidator has reasonable grounds to believe that:


(i) if the share belongs to a particular class of shares in the company - there is no likelihood that the relevant class of shareholders in the company as at the test time will receive any distributions in the course of winding up the company; or

(ii) in any other case - there is no likelihood that the shareholders in the company as at the test time will receive any distributions in the course of winding up the company; and


(d) the taxpayer elects that this section applies in relation to the taxpayer and in relation to the share;

the taxpayer is taken:


(e) to have disposed of the share at the time the declaration was made for no consideration; and


(f) to have immediately re-acquired the share for no consideration.

160WA(2)   [Election by taxpayer]  

An election by a taxpayer under subsection (1) must be made by written notice given to the Commissioner on or before the date of lodgment of the taxpayer's return of income for the later of the following years of income:


(a) the year of income in which the declaration was made;


(b) the year of income in which this section commenced;

or within such further period as the Commissioner allows.

SECTION 160X   DEATH NOT TO CONSTITUTE DISPOSAL ETC.  

160X(1)   [Application]  

This section has effect subject to section 160Y .

160X(2)   [Death not a disposal]  

An asset owned by a person shall not be taken, for the purposes of the application of this Part in relation to that person, to have been disposed of by that person by reason of the death of that person.

160X(3)   [Position of legal personal representative, beneficiary]  

Where an asset that formed part of the estate of a deceased person has passed to the legal personal representative of the deceased person:


(a) if the asset subsequently passes to a beneficiary in that estate - the asset shall not thereby be taken, for the purposes of this Part, to have been disposed of by the legal personal representative; but


(b) if the asset is subsequently disposed of by the beneficiary - the cost base, the indexed cost base or the reduced cost base to the beneficiary of the asset for the purposes of this Part shall include any amount that would, if the legal personal representative had disposed of the asset at the time when the asset passed to the beneficiary, have been included in the cost base, the indexed cost base or the reduced cost base, as the case may be, of the asset to the legal personal representative as a result of the legal personal representative having incurred expenditure in respect of the asset.

160X(4)   [Death before 20 September 1985]  

Where a person died before 20 September 1985, any asset that formed part of the estate of the deceased person and passed to the legal personal representative of the deceased person or to a beneficiary in the estate of the deceased person shall be deemed, for the purposes of this Part, to have been acquired by the legal personal representative or the beneficiary before that date notwithstanding that the asset was transmitted or transferred to the legal personal representative or beneficiary on or after that date.

160X(5)   [Death on or after 20 September 1985]  

Where an asset that formed part of the estate of a person who died on or after 20 September 1985 has passed to the legal personal representative of the deceased person or to a beneficiary in the estate of the deceased person:


(a) if:


(i) the deceased person acquired the asset before 20 September 1985; or

(ii) the asset is a dwelling that was, immediately before the person's death, the person's sole or principal residence for the purposes of section 160ZZQ and was not, for the purposes of that section, then being used for the purpose of gaining or producing assessable income;
the asset shall be deemed, for the purposes of this Part, to have been acquired by the legal personal representative or the beneficiary on the date of the person's death and to have been so acquired for a consideration equal to the market value of the asset at the date of the person's death; or
Note:

In certain cases, a dwelling may be taken to have been a person's sole or principal residence, and any use for the purpose of gaining or producing assessable income may be disregarded, for the purposes of section 160ZZQ: see subsection 160ZZQ(11) .


(b) in any other case - the asset shall be deemed, for the purposes of this Part, to have been acquired by the legal personal representative or the beneficiary on the date of the person's death and:


(i) for the purpose of ascertaining whether a capital gain accrued to the legal personal representative or the beneficiary in the event of a subsequent disposal of the asset by the legal personal representative or the beneficiary - to have been so acquired for a consideration equal to the amount that would have been the indexed cost base to the deceased person of the asset for the purposes of this Part if the deceased person had disposed of the asset immediately before his or her death;

(ii) for the purpose of ascertaining whether the legal personal representative or the beneficiary incurred a capital loss in the event of a subsequent disposal of the asset by the legal personal representative or the beneficiary - to have been so acquired for a consideration equal to the amount that would have been the reduced cost base to the deceased person of the asset for the purposes of this Part if the deceased person had disposed of the asset immediately before his or her death; and

(iii) in the case of an asset that was a personal-use asset of the deceased person - to be a personal-use asset of the legal personal representative or of the beneficiary, as the case may be.

160X(6)   [Disposal within 12 months of deceased's acquisition]  

If, in the case of an asset to which subparagraph (5)(b)(i) applies, the asset was disposed of by the legal personal representative or the beneficiary within 12 months after the day on which the asset was acquired by the deceased person, the reference in that subparagraph to the indexed cost base to the deceased person of the asset shall be construed as a reference to the cost base to the deceased person of the asset.

SECTION 160Y   ASSET BEQUEATHED TO TAX-ADVANTAGED PERSON ETC.  

160Y(1)   [Tax-exempt person]  

A person is a tax-exempt person in relation to the year of income for the purposes of this section if the person is a person whose income of the year of income is exempt from tax by virtue of a relevant exempting provision.

160Y(2)   [Beneficiary is tax-exempt person]  

Where:


(a) a person died on or after 20 September 1985;


(b) an asset that formed part of the estate of the deceased person and was acquired by the deceased person on or after that date haspassed to a beneficiary in the estate of the deceased person; and


(c) the beneficiary is:


(i) a tax-exempt person in relation to the year of income; or

(ii) the trustee of a complying superannuation fund , a complying ADF, or a PST, within the meaning of Part IX, in relation to the year of income;

section 160X does not apply in respect of the asset but subsections (3) and (4) of this section have effect.

160Y(2A)   [Non-resident beneficiary]  

If:


(a) a person died after 2 April 1992; and


(b) an asset that formed part of the estate of the deceased person and was acquired by the deceased person on or after 20 September 1985 has passed to a beneficiary in the estate of the deceased person; and


(c) the deceased person was a resident; and


(d) the beneficiary is a non-resident; and


(e) the asset is not a taxable Australian asset;

section 160X does not apply in respect of the asset but subsections (3) and (4) of this section have effect.

160Y(3)   [Deemed disposal immediately before death]  

The asset shall be deemed for the purposes of this Part to have been disposed of by the deceased person, and acquired by the beneficiary, immediately before the death of the person for a consideration equal to the market value of the asset at the date of the death.

160Y(4)   [Asset passing from legal personal representative to beneficiary]  

If the asset passed from the legal personal representative of the deceased person to the beneficiary, then, on the subsequent disposal of the asset by the beneficiary, the cost base, the indexed cost base or the reduced cost base to the beneficiary of the asset for the purposes of this Part shall include any amount that would, if this section did not apply, have been included in that cost base, indexed cost base or reduced cost base, as the case may be, by virtue of paragraph 160X(3)(b) .

Division 3 - Determination of capital gains and capital losses  

SECTION 160Z   CAPITAL GAINS AND CAPITAL LOSSES  

160Z(1)   [Amount of capital gain]  

Subject to this Part, where an asset other than a personal-use asset has been disposed of during the year of income:


(a) if the consideration in respect of the disposal exceeds the indexed cost base to the taxpayer in respect of the asset - a capital gain equal to the excess shall be deemed for the purposes of this Part to have accrued to the taxpayer during the year of income and to have so accrued at the time of the disposal; or


(b) if the reduced cost base to the taxpayer in respect of the asset exceeds the consideration in respect of the disposal - a capital loss equal to the excess (less any amount by which that loss is reduced under subparagraph 245-90(2)(b)(i) of Schedule 2C). shall be deemed for the purposes of this Part to have been incurred by the taxpayer during the year of income and to have been so incurred at the time of the disposal.

Note:

The amount of a capital loss referred to in paragraph (1)(b) may be reduced under subsection 160ZZPR(2) or 160ZZPS (2).

160Z(2)   [Capital gain - non-listed personal-use asset]  

Subject to subsection (3), where:


(a) a non-listed personal-use asset has been disposed of during the year of income; and


(b) the consideration in respect of the disposal exceeds the indexed cost base to the taxpayer in respect of the asset;

a capital gain equal to the excess shall be deemed for the purposes of this Part to have accrued to the taxpayer during the year of income.

160Z(3)   [Disposal within 12 months of acquisition]  

If the disposal of an asset referred to in subsection (1) or (2) occurred within 12 months after the day on which the asset was acquired by the taxpayer, the reference in the subsection concerned to the indexed cost base to the taxpayer in respect of the asset shall be construed as a reference to the cost base to the taxpayer in respect of the asset.

160Z(4)   [Date of acquisition of asset of deceased]  

The reference in subsection (3) to the day on which an asset was acquired by the taxpayer shall, if the asset formed part of the estate of a deceased person and passed to the taxpayer as the legal personal representative of the deceased person or as a beneficiary in the estate of the deceased person, or if the asset is an interest that was deemed to be acquired by a surviving joint tenant by virtue of section 160ZN , be construed as a reference to the day on which the asset was acquired by the deceased person.

160Z(5)   [Date of acquisition - deemed acquisition]  

The reference in subsection (3) to the day on which an asset was acquired by the taxpayer shall, if the asset was deemed to be acquired by the taxpayer by virtue of subsection 160ZL(2) or (3) , subsection 160ZM(2) or 160ZT (1A), paragraph 160ZZOA(1)(e) , subsection 160ZZRDJ(3) or (4) , 160ZZRDM(2) or (5) , or 160ZZRE(3) or (4) or by virtue of subparagraph 160ZZD(4)(a)(i) or (5)(a)(i) (including the subparagraph concerned as it applies by virtue of subsection 160ZZD(6) ), be construed as a reference to the day on which the asset was (apart from the subsection, paragraph or subparagraph concerned) acquired by the taxpayer.

160Z(6)   [Asset solely used to produce eligible exempt income]  

Nothing in this Part operates to deem a capital gain to have accrued to a taxpayer during the year of income where the relevant disposal related to an asset that was used by the taxpayer solely for the purpose of producing eligible exempt income.

160Z(6A)   [Firearms surrender arrangements]  

Nothing in this Part operates to deem a capital gain to have accrued to a taxpayer during the year of income where the relevant disposal related to an asset for which the taxpayer received consideration under firearms surrender arrangements.

Note:

Firearms surrender arrangements has the meaning given by subsection 6(1) .