Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 727.645

  (1)   If:

  (a)   this Subdivision applies to a * realisation event that is a * CGT event that happens to an * affected interest in the * losing entity; and

  (b)   section   727 - 615 reduces a loss that would, apart from this Division, be * realised for income tax purposes by the CGT event; and

  (c)   there is a roll - over for the CGT event;

the interest's * reduced cost base at the time of the CGT event is taken to have been reduced by the amount by which section   727 - 615 reduces that loss, but is so taken only for the purposes of working out:

  (d)   the interest's reduced cost base, from time to time after the roll - over, for the entity that * acquired the interest because of the CGT event; and

  (e)   in the case of a * replacement - asset roll - over--the reduced cost base of the replacement CGT asset, from time to time after the roll - over, for the entity that * disposed of the interest.

Note:   Because of the roll - over, the loss reduction under section   727 - 615 will have no tax effect. This subsection ensures that the loss reduction is passed on, through the reduction in reduced cost base, to prevent or reduce a loss arising on a later CGT event.

  (2)   If:

  (a)   this Subdivision applies to a * realisation event that is a * CGT event that happens to an * affected interest in the * gaining entity; and

  (b)   section   727 - 620 reduces a gain that would, apart from this Division, be * realised for income tax purposes by the CGT event; and

  (c)   there is a roll - over for the CGT event;

the interest's * cost base at the time of the CGT event is taken to have been uplifted by the amount by which section   727 - 620 reduces that gain, but is so taken only for the purposes of working out:

  (d)   the interest's cost base, from time to time after the roll - over, for the entity that * acquired the interest because of the CGT event; and

  (e)   in the case of a * replacement - asset roll - over--the cost base of the replacement CGT asset, from time to time after the roll - over, for the entity that * disposed of the interest.

Note:   Because of the roll - over, the gain reduction under section   727 - 620 will have no tax effect. This subsection ensures that the gain reduction is passed on, through the uplift in cost base, to prevent or reduce a gain arising on a later CGT event.