Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 112 - Modifications to cost base and reduced cost base  

Subdivision 112-E - Deemed sales just before, and reacquisitions on, 1 July 2027  

SECTION 112-175   Pre-CGT assets - deemed sale just before, and reacquisition on, 1 July 2027  

112-175(1)    
This section applies in relation to your asset if:

(a)    the asset is a * pre-CGT asset on 30 June 2027; and

(b)    you continue to hold the asset until a * realisation event happens in relation to the asset on or after 1 July 2027.

Deemed sale and reacquisition

112-175(2)    
For the purposes of this Part, Part 3-3 and Subdivision 960-M , you are taken:

(a)    to have sold the asset just before 1 July 2027, with your * capital proceeds for that sale taken to be the amount applying under subsection (3) ; and

(b)    to have * acquired the asset again just after that sale for an amount equal to those capital proceeds.

Note 1:

This subsection causes the asset to cease to be a pre-CGT asset, and for the first element of the asset ' s cost base to be reset, on 1 July 2027 (see paragraph 149-10(a) and subsection 110-25(2) ).

Note 2:

The sale under paragraph (a) happens on 30 June 2027, and the reacquisition under paragraph (b) happens on 1 July 2027.

Note 3:

Any capital gain or capital loss you make from the sale on 30 June 2027 is disregarded (see subsection 104-10(5) ).

Note 4:

For the purposes of working out whether you make a capital gain or capital loss from the realisation event, you are taken to have acquired the CGT asset at the time, and for the amount, applying under paragraph (b) .

Note 5:

Subdivision 960-M deals with indexation of a CGT asset ' s cost base.

112-175(3)    
The * capital proceeds are taken to be equal to:

(a)    unless paragraph (b) applies - the asset ' s * market value immediately before 1 July 2027; or

(b)    if you choose to use an apportioning method determined under section 112-185 - the amount of capital proceeds worked out using that method.

112-175(4)    
For the purposes of paragraph 103-25(1)(a) , the * realisation event is the relevant * CGT event for such a choice.

Note 1:

Section 103-25 sets out rules for making choices.

Note 2:

This subsection and section 103-25 mean you do not have to make a choice until the day you lodge your income tax return for the income year in which the realisation event happens (see paragraph 103-25(1)(a) ).

112-175(5)    
Except for the purposes of section 112-185 (about making apportioning determinations), none of the following apply in relation to a sale and acquisition mentioned in paragraphs (2)(a) and (b) for which a choice is made under paragraph (3)(b) :

(a)    Subdivisions 112-A , 112-B , 112-C and 112-D (about modifications of the cost base and reduced cost base);

(b)    sections 116-25 to 116-60 (about modifications of the general rules about capital proceeds).

112-175(6)    
To avoid doubt, subsection (2) applies only for the purposes of the provisions mentioned in that subsection. For example, it does not apply for the purposes of Subdivision EA of Division 7A of Part III of the Income Tax Assessment Act 1936 (about unpaid present entitlements).