INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 17 - Miscellaneous roll-over relief  

SECTION 160ZZN   TRANSFER OF ASSET TO WHOLLY-OWNED COMPANY  

160ZZN(1)   [``asset'']  

In this section, ``asset'' does not include a personal-use asset.

160ZZN(2)   [Taxpayer other than company or trustee]  

Where -


(a) one of the following subparagraphs applies:


(i) a taxpayer (other than a company or a taxpayer in the capacity of a trustee) who is a resident of Australia disposes of an asset (in this section called a ``roll-over asset'' ) to a company that is a resident of Australia;

(ii) a taxpayer (other than a company or a taxpayer in the capacity of a trustee) who is not a resident of Australia disposes of a taxable Australian asset (in this section also called a ``roll-over asset'' ) to a company that is a resident of Australia;

(iii) on or before 25 May 1988, a taxpayer (other than a company or a taxpayer in the capacity of a trustee) disposed of a taxable Australian asset (in this section also called a ``roll-over asset'' ) to a company that is not a resident of Australia;

(iv) both of the following conditions are satisfied:

(A) after 25 May 1988, a taxpayer (other than a company or a taxpayer in the capacity of a trustee) disposes of a taxable Australian asset (in this section also called a ``roll-over asset'' ) to a company that is not a resident of Australia;

(B) immediately after the disposal, the asset is a taxable Australian asset of the company;


(b) subject to subsection (5A), the consideration in respect of the disposal consists only of non-redeemable shares in the company;


(ba) the market value of the shares is substantially the same as the market value of the roll-over asset, reduced, if the company assumes in connection with the disposal a liability or liabilities in respect of the roll-over asset, by the amount of the liability or the total of the amounts of the liabilities;


(c) immediately after the disposal the taxpayer is the beneficial owner of all the shares in the company;


(ca) (Omitted by No 48 of 1991)


(caa) the roll-over asset is not trading stock of the company immediately after its acquisition by the company;


(cab) if:


(i) the roll-over asset is:

(A) a right to which Division 10 or 10A applies; or

(B) an option to which Division 11, 11A or 13 applies; or

(C) a convertible note to which Division 12 or 12A applies; and

(ii) as a result of the exercise of the right or option, or the conversion of the convertible note, the company acquires another asset (in this paragraph called the ``derived asset'' );
the derived asset is not trading stock of the company immediately after its acquisition by the company; and


(d) the taxpayer has, by notice in writing given to the Commissioner on or before the date of lodgment of the return of income of the taxpayer for the year of income in which the disposal took place, or within such further period as the Commissioner allows, elected that this subsection is to apply in respect of the disposal,

this Part (other than this section) does not apply in respect of the disposal and -


(e) if the roll-over asset was acquired by the taxpayer before 20 September 1985 - the company shall be deemed, for the purposes of this Part, to have acquired the roll-over asset before that date; and


(f) if the roll-over asset was acquired by the taxpayer on or after 20 September 1985, the company shall be deemed to have paid or given as consideration in respect of the acquisition of the roll-over asset an amount equal to -


(i) for the purpose of ascertaining whether a capital gain accrued to the company in the event of a subsequent disposal of the roll-over asset by the company - the amount that would have been the indexed cost base to the taxpayer of the roll-over asset for the purposes of this Part if this Part had applied in respect of the disposal of the roll-over asset by the taxpayer to the company; or

(ii) for the purpose of ascertaining whether the company incurred a capital loss in the event of a subsequent disposal of the roll-over asset by the company - the amount that would have been the reduced cost base to the taxpayer of the roll-over asset for the purposes of this Part if this Part had applied in respect of the disposal of the roll-over asset by the taxpayer to the company.

160ZZN(3)   [Asset disposed of by company within 12 months]  

If, in the case of a roll-over asset to which paragraph (2)(f) applies, the asset was disposed of by the company within 12 months after the day on which the asset was acquired by the taxpayer, the reference in that paragraph to the indexed cost base to the taxpayer of the asset shall be construed as a reference to the cost base to the taxpayer of the asset.

160ZZN(4)   [Trustee of trust estate or unit trust]  

Where -


(a) one of the following subparagraphs applies:


(i) a taxpayer in the capacity of a trustee of a trust estate that is a resident trust estate or of a unit trust that is a resident unit trust disposes of an asset (in this section also called a ``roll-over asset'' ) of the trust estate or of the unit trust to a company that is a resident of Australia;

(ii) a taxpayer in the capacity of a trustee of a trust estate that is not a resident trust estate or of a unit trust that is not a resident unit trust disposes of a taxable Australian asset (in this section also called a ``roll-over asset'' ) of the trust estate or of the unit trust to a company that is a resident of Australia;

(iii) on or before 25 May 1988, a taxpayer in the capacity of a trustee of a trust estate or of a unit trust disposed of a taxable Australian asset (in this section also called a ``roll-over asset'' ) of the trust estate or of the unit trust to a company that is not a resident of Australia;

(iv) both of the following conditions are satisfied:

(A) after 25 May 1988, a taxpayer in the capacity of a trustee of a trust estate or of a unit trust disposes of a taxable Australian asset (in this section also called a ``roll-over asset'' ) of the trust estate or of the unit trust to a company that is not a resident of Australia;

(B) immediately after the disposal, the asset is a taxable Australian asset of the company;


(b) subject to subsection (5A), the consideration in respect of the disposal consists only of non-redeemable shares in the company;


(ba) the market value of the shares is substantially the same as the market value of the roll-over asset, reduced, if the company assumes in connection with the disposal a liability or liabilities in respect of the roll-over asset, by the amount of the liability or the total of the amounts of the liabilities;


(c) immediately after the disposal the taxpayer owns all the shares in the company and holds those shares upon the same trust as the taxpayer held the roll-over asset that was disposed of to the company;


(ca) the roll-over asset is not trading stock of the company immediately after its acquisition by the company;


(cb) if:


(i) the roll-over asset is:

(A) a right to which Division 10 or 10A applies; or

(B) an option to which Division 11, 11A or 13 applies; or

(C) a convertible note to which Division 12 or 12A applies; and

(ii) as a result of the exercise of the right or option, or the conversion of the convertible note, the company acquires another asset (in this paragraph called the ``derived asset'' );
the derived asset is not trading stock of the company immediately after its acquisition by the company; and


(d) the taxpayer has, by notice in writing given to the Commissioner on or before the date of lodgment of the return of income of the taxpayer for the year of income in which the disposal took place, or within such further period as the Commissioner allows, elected that this subsection is to apply in respect of the disposal,

this Part (other than this section) does not apply in respect of the disposal and -


(e) if the roll-over asset was acquired by the taxpayer in the capacity of a trustee of the trust concerned before 20 September 1985 - the company shall be deemed, for the purposes of this Part, to have acquired the roll-over asset before that date; or


(f) if the roll-over asset was acquired by the taxpayer in the capacity of trustee of the trust concerned on or after 20 September 1985, the company shall be deemed to have paid or given as consideration in respect of the acquisition of the roll-over asset an amount equal to -


(i) for the purpose of ascertaining whether a capital gain accrued to the company in the event of a subsequent disposal of the roll-over asset by the company - the amount that would have been the indexed cost base to the taxpayer of the roll-over asset for the purposes of this Part if this Part had applied in respect of the disposal of the roll-over asset by the taxpayer to the company; or

(ii) for the purpose of ascertaining whether the company incurred a capital loss in the event of a subsequent disposal of the roll-over asset by the company - the amount that would have been the reduced cost base to the taxpayer of the roll-over asset for the purposes of this Part if this Part had applied in respect of the disposal of the roll-over asset by the taxpayer to the company.

160ZZN(5)   [Asset disposed of by company within 12 months of taxpayer's acquisition]  

If, in the case of a roll-over asset to which paragraph (4)(f) applies, the asset was disposed of by the company within 12 months after the day on which the asset was acquired by the taxpayer, the reference in that paragraph to the indexed cost base to the taxpayer of the asset shall be construed as a reference to the cost base to the taxpayer of the asset.

160ZZN(5A)   [Consideration re disposal of asset]  

The consideration in respect of the disposal of a roll-over asset is not taken not to consist only of non-redeemable shares in the company merely because the company assumes in connection with the disposal a liability or liabilities in respect of the asset but, if the company so assumes such a liability or liabilities, neither subsection (2) nor subsection (4) applies in relation to the disposal unless:


(a) if the asset was acquired by the taxpayer before 20 September 1985 - the amount of the liability or the total of the amounts of the liabilities does not exceed the market value of the asset at the time of the disposal; or


(b) if the asset was acquired by the taxpayer on or after 20 September 1985 - the amount of the liability or the total of the amounts of the liabilities does not exceed the amount that, if this Part had applied in respect of the disposal of the asset by the taxpayer to the company, would have been:


(i) if the asset was disposed of within the period of 12 months after the day on which the asset was acquired by the taxpayer - the cost base to the taxpayer of the asset; or

(ii) if the asset was disposed of after that period - the indexed cost base to the taxpayer of the asset.

160ZZN(6)  

160ZZN(6A)  

160ZZN(7)   [Acquisition of shares]  

The shares that constituted the consideration for a disposal by a taxpayer to a company of a roll-over asset to which subsection (2) or (4) applies -


(a) shall, if the asset was acquired by the taxpayer before 20 September 1985 - be deemed for the purposes of this Part to have been acquired before that date; or


(b) shall, if the asset was acquired by the taxpayer on or after 20 September 1985, be deemed for the purposes of this Part to have been acquired by the taxpayer for a consideration equal to -


(i) for the purpose of ascertaining whether a capital gain accrued to the taxpayer in the event of a subsequent disposal of the shares by the taxpayer - the amount that would have been the indexed cost base to the taxpayer of the asset for the purposes of this Part if this Part had applied in respect of the disposal of the asset by the taxpayer to the company, reduced, if the company assumed in connection with the disposal a liability or liabilities in respect of the asset, by the amount of the liability or the total of the amounts of the liabilities; or

(ii) for the purpose of ascertaining whether the taxpayer incurred a capital loss in the event of a subsequent disposal of the shares by the taxpayer - the amount that would have been the reduced cost base to the taxpayer of the asset for the purposes of this Part if this Part had applied in respect of the disposal of the asset by the taxpayer to the company, reduced, if the company assumed in connection with the disposal a liability or liabilities in respect of the asset, by the amount of the liability or the total of the amounts of the liabilities.

160ZZN(8)   [Disposal of shares within 12 months of acquisition]  

If, in the case of shares to which paragraph (7)(b) applies, the shares were disposed of by the taxpayer within 12 months after the day on which the roll-over asset was acquired by the taxpayer, the reference in that paragraph to the indexed cost base to the taxpayer of the roll-over asset shall be construed as a reference to the cost base to the taxpayer of the roll-over asset.

160ZZN(9)   [Income of company exempt]  

This section does not apply to the disposal of a roll-over asset to a company whose income of the year of income in which the asset was disposed of is exempt from tax by virtue of a relevant exempting provision.

160ZZN(10)   [Amendment of assessments]  

Section 170 does not prevent the amendment of an assessment at any time for the purpose of giving effect to paragraph (2)(cab) or (4)(cb).


 

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