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INCOME TAX ASSESSMENT AMENDMENT (CAPITAL GAINS) ACT 1986 No. 52 of 1986 - SECT 19
19. After Part III of the Principal Act the following Part is inserted:
"PART IIIA-CAPITAL GAINS AND CAPITAL LOSSES
"Division 1-Interpretation Assets to which Part applies
"160A. In this Part, unless the contrary intention appears, 'asset' means any
form of property and includes-
(a) an option, a debt, a chose in action, any other right, goodwill and
any other form of incorporeal property;
(b) currency of a foreign country; and
(c) any form of property created or constructed, or otherwise coming to be
owned without being acquired, but does not include a motor vehicle of
a kind mentioned in paragraph 82AF (2) (a). Personal-use assets
"160B. (1) 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.
"(2) 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 $100 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
sub-paragraphs;
(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).
"(3) For the purposes of this Part, 'non-listed personal-use asset' means a
personal-use asset other than a listed personal-use asset.
"(4) Where-
(a) a taxpayer owned two or more articles being non-listed 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 non-listed
personal-use asset and as if each disposal were a disposal of part of
that asset.
"(5) Sub-section (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.
"(6) Nothing in section 170 prevents the amendment of an assessment for the
purpose of giving effect to sub-section (4). Taxpayer
"160C. (1) 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
sub-section 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.
"(2) 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. Money or other property applied for benefit
of taxpayer
"160D. (1) 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.
"(2) For the purposes of this Part, a reference in sub-section (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.
"(3) Nothing in this section limits the operation of section 19. Associated
persons
"160E. 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
sub-paragraph (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
sub-paragraph 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, partnerships 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 sub-paragraph of this
paragraph, of a company that is an associate of the
taxpayer by virtue of another application of this
sub-paragraph 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-sub-paragraph (A) of this
sub-paragraph and the preceding sub-paragraphs of this
paragraph are, or the taxpayer and the persons who are
associates of the taxpayer by virtue of that
sub-sub-paragraph and those sub-paragraphs 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
sub-paragraph (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
sub-paragraph 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, partnerships 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-sub-paragraph (A) of this sub-paragraph, by virtue of
another sub-paragraph 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
sub-paragraph of this paragraph, of a company that is an
associate of the taxpayer company by virtue of another
application of this sub-paragraph 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-sub-paragraph
(A) of this sub-paragraph and the other sub-paragraphs of
this paragraph are, or the taxpayer company and the
persons who are associates of the taxpayer company by
virtue of that sub-sub-paragraph and those sub-paragraphs
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 sub-paragraph (iv) were the
taxpayer, would be an associate of that third person by virtue
of paragraph (a), by virtue of another sub-paragraph of this
paragraph or by virtue of paragraph (c);
(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, partnerships or trusts;
(ii) where a person who is an associate of the taxpayer by virtue of
sub-paragraph (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
sub-paragraph (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; or
(d) in the case of a taxpayer being a partnership-
(i) a partner in the partnership;
(ii) where any partner in the partnership 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 (c); or
(iii) where any partner in the partnership is a company-any person
who, if the company were the taxpayer, would be an associate of
the company by virtue of paragraph (b) or (c). Associated trust
estates
"160F. (1) 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.
"(2) 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 sub-section) are associated with
each other. Related companies
"160G. (1) 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.
"(2) For the purposes of this section, a company (in this sub-section referred
to as the 'subsidiary company') shall be taken to be the subsidiary of another
company (in this sub-section 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.
"(3) 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 sub-section), every company
that is a subsidiary of the first-mentioned company shall be taken to be a
subsidiary of that other company.
"(4) For the purposes of sub-section (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.
"(5) In sub-section (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. Resident trust estates, partnerships and unit trusts
"160H. (1) 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.
"(2) For the purposes of this Part, a partnership shall be taken to be a
resident partnership in relation to the year of income if-
(a) a partner in the partnership was a resident at any time during the
year of income; or
(b) the central management and control of the business or of the principal
business of the partnership was in Australia at any time during the
year of income.
"(3) 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. Asset
passing to personal representative or beneficiary
"160J. 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,
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. Other interpretative provisions
"160K. (1) In this Part, unless the contrary intention appears-
'building' includes a structure;
'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;
'relevant exempting provision' means any of the following provisions:
(a) paragraphs 23 (d), (e), (ea), (eb), (ec), (f), (g), (h), (i), (j),
(jaa), (ja) and (x);
(b) section 23F, 23FA or 23FB;
(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;
'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.
"(2) In this Part other than section 160ZZM, or in a provision of this Act
other than this Part in so far as that provision has effect for the purposes
of this Part-
(a) a reference to the spouse of a person (in this paragraph referred to
as the 'relevant person')-
(i) includes a reference to a de facto spouse of the relevant
person; but
(ii) does not include a reference to a person who is legally married
to the relevant person but is living separately and apart from
the relevant person on a permanent basis; and
(b) a reference to the de facto spouse of a person (in this paragraph
referred to as the 'relevant person') is a reference to a person who
is living with the relevant person as the husband or wife of the
relevant person on a bona fide domestic basis although not legally
married to the relevant person.
"(3) A reference 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.
"(4) 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.
"(5) 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 sub-section, 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.
"(6) 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.
"(7) 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 sub-section 160ZH (9) not to be a person to whom the
provision applies.
"(8) 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 sub-section 160ZD (2) not to be a person to whom the
provision applies.
"(9) 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.
"(10) 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 Part applies in respect of disposals of assets
"160L. (1) 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, 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.
"(2) 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.
"(3) This Part does not apply in respect of a disposal of an asset, not being
an asset referred to in sub-section (4) or (5), if-
(a) immediately before its disposal the asset constituted trading stock of
the taxpayer for the purposes of this Act;
(b) 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 section 26AAA; or
(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.
"(4) 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) immediately before its disposal, the asset constituted trading stock
of the trustee for the purposes of this Act;
(b) 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 section 26AAA; or
(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.
"(5) This Part does not apply in respect of a disposal of an asset of a
partnership if-
(a) immediately before its disposal, the asset constituted trading stock
of the partnership for the purposes of this Act;
(b) as a result of the disposal an amount has been or will 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 26AAA; or
(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.
"(6) 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.
"(7) This Part does not apply in respect of a disposal being a sale, transfer
or assignment of rights to mine if paragraph 23 (pa) applies in relation to
the sale, transfer or assignment. What constitutes a disposal or acquisition
"160M. (1) 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.
"(2) A reference in sub-section (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.
"(3) Without limiting the generality of sub-section (2), a change shall be
taken to have occurred in the ownership of an asset by-
(a) a declaration of trust in relation to the asset under which the
beneficiary is absolutely entitled to the asset as against the
trustee;
(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 sub-section (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.
"(4) 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 sub-section.
"(5) 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;
(b) the construction of an asset by or for a person constitutes the
acquisition of the asset by the person; and
(c) the creation of an asset by or for a person constitutes the
acquisition of the asset by the person.
"(6) A disposal of an asset that did not exist (either by itself or as part of
another asset) before the disposal, but is created by the disposal,
constitutes a disposal of the asset for the purposes of this Part, but the
person who so disposes of the asset 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.
"(7) Without limiting the generality of sub-section (2) but subject to the
other provisions of this Part, where-
(a) an act or transaction has taken place in relation to an asset or an
event affecting an asset has occurred; and
(b) a person 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 forfeiture
or surrender of the right or 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.
"(8) 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 sub-section 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 sub-section (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.
"(9) 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 sub-section 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.
"(10) 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 sub-section 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.
"(11) Where a resident partnership has, on or after 20 September 1985, ceased
to be a resident partnership, the partners in the partnership shall be deemed
for the purposes of this Part-
(a) to have, at the time when the partnership ceased to be a resident
partnership (in this sub-section referred to as the 'relevant time'),
disposed of every asset that was owned by the partners in the
partnership, and was the property of the partnership, immediately
before the relevant time, other than-
(i) a taxable Australian asset; or
(ii) any other asset that was acquired by the partners 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.
"(12) 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 sub-section 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 sub-section (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.
"(13) 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 sub-section 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.
"(14) 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 sub-section 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.
"(15) Where a partnership, other than a resident partnership, has, on or after
20 September 1985, become a resident partnership, every asset that was owned
by the partners in the partnership, and was the property of the partnership,
immediately before the time when the partnership became a resident partnership
(in this sub-section referred to as the 'relevant time'), other than-
(a) a taxable Australian asset; or
(b) any other asset that was acquired by the partners before
20 September 1985, shall be deemed for the purposes of this Part to have been
acquired by the partners as property of the partnership and to have been so
acquired for a consideration equal to the market value of the asset at the
relevant time. Assets lost or destroyed
"160N. 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. Composite assets
"160P. (1) 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.
"(2) 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.
"(3) 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.
"(4) 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.
"(5) 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.
"(6) Where -
(a) an 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 sub-paragraph (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.
"(7) 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.
"(8) 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. Indexation of indexed cost base limit
"160Q. (1) Subject to sub-section (2), sub-paragraph 160P (6) (c) (ii) has
effect in relation to a relevant year of income as if, for the reference in
that sub-paragraph 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 sub-paragraph 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 sub-section to $50,000 or would have so had effect
but for the operation of sub-section (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 sub-section (2),
have been so substituted, as the case may be, by the factor
ascertained in accordance with sub-section (3).
"(2) Sub-section (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 sub-paragraph 160P (6) (c) (ii) would not exceed $50,000.
"(3) The factor to be ascertained for the purposes of sub-section (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.
"(4) Subject to sub-section (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.
"(5) 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.
"(6) Where the factor ascertained in accordance with sub-section (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 sub-section in relation to that relevant year of income
shall be taken to be the factor calculated to 3 decimal places in accordance
with that sub-section and increased by 0.001.
"(7) The Treasurer shall cause to be published in the Gazette before the
commencement of each relevant year of income-
(a) the factor ascertained in accordance with sub-section (3) (as affected
by sub-section (6)) in relation to that year of income; and
(b) the amount that is to be substituted in sub-paragraph 160P (6) (c)
(ii) in relation to that year of income for improvements to which
sub-section 160P (6) applies.
"(8) Where, but for this sub-section, 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 sub-section 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
sub-section 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.
"(9) Where, but for sub-section (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 sub-section 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
sub-section 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.
"(10) 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) 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. Part disposals
"160R. 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. Transfers by way of security, &c.
"160S. (1) 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.
"(2) 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. Disposal of taxable
Australian assets
"160T. 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% of the issued share capital of the company (excluding any
part of that share capital that carried no right to participate beyond a
specified amount in a distribution of either profits or capital);
(e) the asset comprised an interest in a partnership that was a resident
partnership in relation to the year of income in which the disposal
took place;
(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; or
(h) the asset comprised an option or right to acquire an asset referred to
in a preceding paragraph of this section. Time of disposal and
acquisition
"160U. (1) 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.
"(2) If the time of acquisition or disposal as ascertained under a sub-section
of this section is different from the time of acquisition or disposal as
ascertained under a subsequent sub-section 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 sub-section.
"(3) 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.
"(4) 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.
"(5) Where the asset was constructed by a person otherwise than pursuant to a
contract under which the person constructed the asset for another person, the
time of acquisition of the asset by the first-mentioned person shall be taken
to have been the time when the construction commenced.
"(6) Where the asset was created by a person otherwise than pursuant to a
contract under which the person created the asset for another person, the
asset shall be taken to have been acquired by the first-mentioned person-
(a) if the asset did not exist (either by itself or as part of another
asset) before the disposal-immediately before the asset was disposed
of; or
(b) in any other case-at the time of commencement of work on, or of work
that resulted in, the creation of the asset.
"(7) 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.
"(8) 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.
"(9) 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. Disposals by bare trustees
and persons enforcing securities
"160V. (1) 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.
"(2) 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.
Effect of bankruptcy, &c.
"160W. 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. Death not to
constitute disposal, &c.
"160X. (1) This section has effect subject to section 160Y.
"(2) 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.
"(3) 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.
"(4) 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.
"(5) 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 the asset was acquired by the deceased person before 20 September
1985-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
(b) if the asset was acquired by the deceased person on or after 20
September 1985, 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.
"(6) If, in the case of an asset to which sub-paragraph (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 sub-paragraph 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. Asset bequeathed to
tax-exempt person
"160Y. (1) 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.
"(2) 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 has passed to a
beneficiary in the estate of the deceased person; and
(c) the beneficiary is a tax-exempt person in relation to the year of
income, section 160X does not apply in respect of the asset but the
following provisions of this section have effect.
"(3) 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.
"(4) 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 Capital gains
and capital losses
"160Z. (1) 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; 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 shall be deemed for the purposes of this Part to
have been incurred by the taxpayer during the year of income.
"(2) Subject to sub-section (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.
"(3) If the disposal of an asset referred to in sub-section (1) or (2)
occurred within 12 months after the day on which the asset was acquired by the
taxpayer, the reference in the sub-section 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.
"(4) The reference in sub-section (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, be construed as a reference to the day on which the asset was
acquired by the deceased person.
"(5) The reference in sub-section (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 sub-paragraph 160ZZD (4) (a) (i) or (5) (a) (i)
(including the sub-paragraph concerned as it applies by virtue of sub-section
160ZZD (6)), be construed as a reference to the day on which the asset was
actually acquired by the taxpayer.
"(6) 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 exempt
income.
"(7) Nothing in this Part operates to deem a capital loss to have been
incurred in respect of the disposal of a personal-use asset but this
sub-section does not preclude a listed personal-use asset loss from being
taken into account in accordance with section 160ZQ.
"(8) A capital gain shall not be deemed for the purposes of this Part to have
accrued to a taxpayer during the year of income if the taxpayer is a person
whose income of the year of income is exempt from tax by virtue of a relevant
exempting provision.
"(9) A capital loss shall not be deemed for the purposes of this Part to have
been incurred by a taxpayer during the year of income where-
(a) the taxpayer is a person whose income of the year of income is exempt
from tax by virtue of a relevant exempting provision;
(b) in the case of a taxpayer being a company, Subdivision B of Division
2A of Part III applies in relation to the company in relation to the
year of income;
(c) the relevant disposal related to an asset that was used by the
taxpayer solely for the purpose of producing exempt income; or
(d) the relevant disposal was the expiry, surrender, forfeiture or
assignment of a lease or sub-lease (other than a lease or sub-lease
that was granted in perpetuity or for a period of not less than 99
years) that was not used by the lessee or sub-lessee wholly or
principally for gaining or producing assessable income. Reductions of
capital gains in certain circumstances
"160ZA. (1) Where-
(a) a capital gain is, or capital gains are, deemed to have accrued to a
taxpayer during the year of income in respect of the disposal of a
prescribed asset or prescribed assets (in this sub-section referred to
as the 'relevant capital gain or gains'); and
(b) an amount of excess rental property loan interest was incurred by the
taxpayer in respect of the year of income, the amount of the relevant
capital gain or gains shall be reduced by so much of that amount of
excess rental property loan interest as does not exceed the amount of
the relevant capital gain or capital gains.
"(2) For the purposes of sub-section (1)-
(a) an asset is a prescribed asset in relation to a taxpayer in relation
to the year of income if-
(i) the asset is an interest in land that was used by the taxpayer
at any time for rent-producing purposes;
(ii) the asset is a share in a company that is a rental property
company in relation to-
(A) the year of income; or
(B) a preceding year of income, being a year of income during
the whole or any part of which the share was owned by the
taxpayer;
(iii) the asset is an interest in a partnership that is a rental
property partnership in relation to-
(A) the year of income; or
(B) a preceding year of income, being a year of income during
the whole or any part of which the interest was owned by
the taxpayer; or
(iv) the asset is an interest in a trust estate that is a rental
property trust estate in relation to-
(A) the year of income; or
(B) a preceding year of income, being a year of income during
the whole or any part of which the interest was owned by
the taxpayer; and
(b) an amount of excess rental property loan interest shall be taken to
have been incurred by a taxpayer in respect of a year of income if the
rental property loan interest of the taxpayer in relation to the year
of income exceeded the amount (if any) of the deduction allowable to
the taxpayer under section 51 in the year of income in respect of that
rental property loan interest.
"(3) Expressions used in Subdivision G of Division 3 of Part III that are also
used in sub-section (1) or (2) of this section have, in those sub-sections,
unless the contrary intention appears, the same meanings as those expressions
have in that Subdivision.
"(4) Where-
(a) a capital gain is deemed for the purposes of this Part to have accrued
to a taxpayer during the year of income in respect of the disposal of
an asset;
(b) as a result of the disposal of the asset an amount or amounts has or
have been, or will be, included in the assessable income of the
taxpayer in respect of any year of income (in this sub-section
referred to as the 'actual amount' or the 'actual amounts') under a
provision of this Act other than this Part; and
(c) if the consideration in respect of the disposal of the asset were
reduced by an amount equal to the amount of the capital gain, the
amount or the sum of the amounts that would have been or would be
included in the assessable income of the taxpayer as mentioned in
paragraph (b) (in this sub-section referred to as the 'notional
amount') would have been or would be less than the actual amount or
the sum of the actual amounts, the amount of the capital gain shall be
reduced by so much of the difference between the notional amount, and
the actual amount or the sum of the actual amounts, as does not exceed
the amount of the capital gain. Exemption of certain gains and losses
"160ZB. (1) A capital gain shall not be taken to have accrued to a taxpayer by
reason of the taxpayer having obtained a sum by way of compensation or damages
for any wrong or injury suffered by the taxpayer to his or her person or in
his or her profession or vocation and no such wrong or injury, or proceeding
instituted or other act done or transaction entered into by the taxpayer in
respect of such a wrong or injury, shall be taken to have resulted in the
taxpayer having incurred a capital loss.
"(2) A capital gain shall not be taken to have accrued to a taxpayer by reason
of the taxpayer having received winnings from betting (including pool
betting), a lottery or other form of gambling or a game with prizes but this
sub-section does not apply in relation to an amount of money or other
consideration received by a taxpayer as a result of the disposal of an asset
obtained from betting (including pool betting), a lottery or other form of
gambling or a game with prizes.
"(3) A taxpayer shall not be taken to have incurred a capital loss as a result
of any act done or transaction entered into by the taxpayer by way of betting
(including pool betting) or participating in a lottery or other form of
gambling or a game with prizes. Net capital gains and net capital losses
"160ZC. (1) For the purposes of this Part, a net capital gain shall be taken
to have accrued to a taxpayer in respect of the year of income if a capital
gain or capital gains accrued to the taxpayer during the year of income and-
(a) the taxpayer did not incur a capital loss during the year of income
and did not incur a net capital loss in respect of the immediately
preceding year of income; or
(b) where the taxpayer incurred a capital loss or capital losses during
the year of income or incurred a net capital loss in respect of the
immediately preceding year of income, the capital gain or the sum of
the capital gains exceeded-
(i) if the taxpayer incurred a capital loss or capital losses
during the year of income but did not incur a net capital loss
in respect of the immediately preceding year of income-that
capital loss or the sum of those capital losses;
(ii) if the taxpayer did not incur a capital loss during the year of
income but incurred a net capital loss in respect of the
immediately preceding year of income-that net capital loss; or
(iii) if the taxpayer incurred a capital loss or capital losses
during the year of income and incurred a net capital loss in
respect of the immediately preceding year of income-the sum of
that capital loss or those capital losses and that net capital
loss.
"(2) The amount of the net capital gain that, by virtue of sub-section (1), is
to be taken for the purposes of this Part to have accrued to a taxpayer in
respect of the year of income is an amount equal to-
(a) in a case to which paragraph (1) (a) applies-the capital gain or the
sum of the capital gains referred to in sub-section (1); or
(b) in a case to which paragraph (1) (b) applies-the excess referred to in
that paragraph.
"(3) For the purposes of this Part, a net capital loss shall be taken to have
been incurred by a taxpayer in respect of the year of income if-
(a) where no capital gain accrued to the taxpayer during the year of
income-the taxpayer incurred a capital loss or capital losses during
the year of income or incurred a net capital loss in respect of the
immediately preceding year of income; or
(b) where a capital gain or capital gains accrued to the taxpayer during
the year of income-
(i) if the taxpayer incurred a capital loss or capital losses
during the year of income but did not incur a net capital loss
in respect of the immediately preceding year of income-that
capital loss or the sum of those capital losses;
(ii) if the taxpayer did not incur a capital loss during the year of
income but incurred a net capital loss in respect of the
immediately preceding year of income-that net capital loss; or
(iii) if the taxpayer incurred a capital loss or capital losses
during the year of income and incurred a net capital loss in
respect of the immediately preceding year of income-the sum of
that capital loss or those capital losses and that net capital
loss,
exceeded the capital gain or the sum of the capital gains that accrued to the
taxpayer during the year of income.
"(4) The amount of the net capital loss that, by virtue of sub-section (3), is
to be taken for the purposes of this Part to have been incurred by a taxpayer
in respect of the year of income is an amount equal to-
(a) in a case to which paragraph (3) (a) applies-
(i) if the taxpayer incurred a capital loss or capital losses
during the year of income but did not incur a net capital loss
in respect of the immediately preceding year of income-that
capital loss or the sum of those capital losses;
(ii) if the taxpayer did not incur a capital loss during the year of
income but incurred a net capital loss in respect of the
immediately preceding year of income-that net capital loss; or
(iii) if the taxpayer incurred a capital loss or capital losses
during the year of income and incurred a net capital loss in
respect of the immediately preceding year of income-the sum of
that capital loss or those capital losses and that net capital
loss; or
(b) in a case to which paragraph (3) (b) applies-the excess referred to in
that paragraph.
"(5) A net capital loss that is to be taken to have been incurred by a
taxpayer being a company in respect of a year of income shall not be taken
into account in ascertaining whether a net capital gain accrued to the
taxpayer, or the taxpayer incurred a net capital loss, in the next succeeding
year of income where, if the net capital loss were a loss incurred by the
taxpayer within the meaning of section 80, the loss would not be taken into
account for the purposes of that section by reason of the operation of section
80A or 80DA. Consideration in respect of disposal
"160ZD. (1) Subject to this Part, for the purposes of this Part, the
consideration in respect of a disposal of an asset is-
(a) if the taxpayer has received or is entitled to receive an amount or
amounts of money as a result of or in respect of the disposal-that
amount or the sum of those amounts;
(b) if the taxpayer has received or is entitled to receive property other
than money as a result of or in respect of the disposal-the market
value of that property at the time of the disposal; or
(c) if the taxpayer has received or is entitled to receive both an amount
or amounts of money and property other than money as a result of or in
respect of the disposal-the sum of that amount or those amounts and
the market value of that property at the time of the disposal.
"(2) Where a taxpayer has disposed of an asset to another person and-
(a) there is no consideration in respect of the disposal;
(b) the whole or a part of the consideration received by the taxpayer in
respect of the disposal cannot be valued; or
(c) the consideration received by the taxpayer in respect of the disposal
would, but for this paragraph, be greater or less than the market
value of the asset at the time of the disposal and the taxpayer and
the other person were not dealing with each other at arm's length in
connection with the disposal of the asset, the taxpayer shall be
deemed to have received as consideration in respect of the disposal an
amount equal to the market value of the asset at the time of the
disposal.
"(3) Sub-section (2) does not apply by virtue of paragraph (a) of that
sub-section in relation to a disposal where another provision of this Part
(however expressed) deems no consideration to have been received in respect of
the disposal.
"(4) Where any consideration paid or given in respect of a transaction relates
in part only to the disposal of a particular asset, so much of that
consideration as may reasonably be attributed to the disposal of the asset
shall be taken to relate to the disposal of the asset.
"(5) Where-
(a) a decrease has taken place in the market value of a personal-use asset
that is owned by a company or is the property of a partnership or of a
trust estate;
(b) a disposal takes place of shares in the company or in a company that
is related to the company or of an interest in the partnership or in
the trust estate; and
(c) the amount that, under the preceding provisions of this section, would
be the consideration in respect of the disposal is less than the
amount (in this sub-section referred to as the 'notional amount')
that, but for the decrease, would, under those provisions, be that
consideration, the consideration in respect of the disposal shall be
deemed to be the notional amount. Consideration in respect of disposal
of non-listed personal-use assets
"160ZE. (1) For the purposes of this Part but subject to sub-section (2), if
the consideration in respect of a disposal of a non-listed personal-use asset
would, but for this section, be less than $5,000, the consideration in respect
of that disposal of that asset shall be deemed to be $5,000.
"(2) Where there is a disposal of a non-listed personal-use asset (in this
sub-section referred to as the 'relevant asset') that formed part of another
non-listed personal-use asset (in this sub-section referred to as the
'original asset'), sub-section (1) does not apply in relation to the disposal
but the consideration in respect of the disposal of the relevant asset shall
be deemed to be whichever is the greater of the following amounts:
(a) the amount that would, but for this section, be the consideration in
respect of the disposal;
(b) the amount that bears to $5,000 the same proportion as the amount that
would, but for section 160ZG, be the indexed cost base to the taxpayer
of the relevant asset bears to the amount that would, but for that
section, have been the indexed cost base to the taxpayer of the
original asset if the whole of the original asset had been disposed of
at the time of the disposal of the relevant asset. Adjustment where
consideration not received
"160ZF. (1) Subject to sub-section (3), where the whole or a part of the
consideration in respect of the disposal of an asset has not been, and is not
likely to be, received by the taxpayer, this Part (other than sub-section
160ZD (2)) applies as if there were no consideration in respect of the
disposal or the consideration in respect of the disposal did not include that
part of the consideration, as the case may be, and the debt that arose in
relation to or by reason of the disposal shall be deemed not to be an asset to
which this Part applies.
"(2) Sub-section (1) does not apply where the non-receipt or likely
non-receipt by the taxpayer of the whole or part of the consideration is
attributable to an act or thing done or omitted to be done by the taxpayer or
by an associate of the taxpayer or the taxpayer has not taken all reasonable
action to secure payment of the consideration or the unpaid part of the
consideration.
"(3) If, after the making in respect of the taxpayer of an assessment for the
purposes of which sub-section (1) has been applied, the consideration or part
of the consideration is received by the taxpayer, that sub-section shall be
deemed not to have been applicable, or not to have been applicable in relation
to that part of the consideration, as the case may be.
"(4) Nothing in section 170 prevents the amendment of an assessment for the
purpose of giving effect to this section. Cost base, &c., of non-listed
personal-use assets
"160ZG. (1) For the purposes of this Part but subject to sub-section (2), if
the indexed cost base to a taxpayer of a non-listed personal-use asset would,
but for this section, be less than $5,000, the indexed cost base to the
taxpayer of that asset shall be deemed to be $5,000.
"(2) Where a non-listed personal-use asset (in this sub-section referred to as
the 'relevant asset') that formed part of another non-listed personal-use
asset (in this sub-section referred to as the 'original asset') is disposed of
by a taxpayer, sub-section (1) does not apply in relation to the disposal but
the indexed cost base to the taxpayer of the relevant asset shall be deemed to
be whichever is the greater of the following amounts:
(a) the amount that would, but for this section, be the indexed cost base
to the taxpayer of the relevant asset;
(b) the amount that bears to $5,000 the same proportion as the amount
ascertained under paragraph (a) bears to the amount that would, but
for this section, have been the indexed cost base to the taxpayer of
the original asset if the whole of the original asset had been
disposed of at the time of the disposal of the relevant asset.
"(3) For the purposes of this Part but subject to sub-section (4), if the cost
base to a taxpayer of a non-listed personal-use asset would, but for this
section, be less than $5,000, the cost base to the taxpayer of that asset
shall be deemed to be $5,000.
"(4) Where a non-listed personal-use asset (in this sub-section referred to as
the 'relevant asset') that formed part of another non-listed personal-use
asset (in this sub-section referred to as the 'original asset') is disposed of
by a taxpayer, sub-section (3) does not apply in relation to the disposal but
the cost base to the taxpayer of the relevant asset shall be deemed to be
whichever is the greater of the following amounts:
(a) the amount that would, but for this section, be the cost base to the
taxpayer of the relevant asset;
(b) the amount that bears to $5,000 the same proportion as the amount
ascertained under paragraph (a) bears to the amount that would, but
for this section, have been the cost base to the taxpayer of the
original asset if the whole of the original asset had been disposed of
at the time of the disposal of the relevant asset. Cost base, &c.
"160ZH. (1) Subject to the following provisions of this section, for the
purposes of this Part, the cost base to a taxpayer of an asset is the sum of-
(a) the amount of any consideration in respect of the acquisition of the
asset;
(b) the amount of the incidental costs to the taxpayer of the acquisition
of the asset;
(c) the amount of any expenditure of a capital nature incurred by the
taxpayer to the extent to which it was incurred for the purpose of
enhancing the value of the asset and is reflected in the state or
nature of the asset at the time of disposal of the asset;
(d) the amount of any expenditure of a capital nature incurred by the
taxpayer to the extent to which it was incurred in establishing,
preserving or defending the taxpayer's title to, or a right over, the
asset; and
(e) the amount of the incidental costs to the taxpayer of the disposal of
the asset.
"(2) Subject to the following provisions of this section, for the purposes of
this Part, the indexed cost base to a taxpayer of an asset is the sum of-
(a) the indexed amount of any consideration in respect of the acquisition
of the asset;
(b) the indexed amount of the incidental costs to the taxpayer of the
acquisition of the asset;
(c) the indexed amount of any expenditure of a capital nature incurred by
the taxpayer to the extent to which it was incurred for the purpose of
enhancing the value of the asset and is reflected in the state or
nature of the asset at the time of disposal of the asset;
(d) the indexed amount of any expenditure of a capital nature incurred by
the taxpayer to the extent to which it was incurred in establishing,
preserving or defending the taxpayer's title to, or a right over, the
asset; and
(e) the indexed amount of the incidental costs to the taxpayer of the
disposal of the asset.
"(3) Subject to the following provisions of this section, for the purposes of
this Part, the reduced cost base to a taxpayer of an asset is the sum of-
(a) the reduced amount of any consideration in respect of the acquisition
of the asset;
(b) the reduced amount of the incidental costs to the taxpayer of the
acquisition of the asset;
(c) the reduced amount of any expenditure of a capital nature incurred by
the taxpayer to the extent to which it was incurred for the purpose of
enhancing the value of the asset and is reflected in the state or
nature of the asset at the time of disposal of the asset;
(d) the reduced amount of any expenditure of a capital nature incurred by
the taxpayer to the extent to which it was incurred in establishing,
preserving or defending the taxpayer's title to, or a right over, the
asset; and
(e) the reduced amount of the incidental costs to the taxpayer of the
disposal of the asset.
"(4) Subject to the following provisions of this section, for the purposes of
this Part, the consideration in respect of the acquisition of an asset is-
(a) if the taxpayer has paid or is required to pay an amount or amounts of
money in respect of the acquisition-that amount or the sum of those
amounts;
(b) if the taxpayer has given or is required to give property other than
money in respect of the acquisition-the market value of that property
at the time of the acquisition; or
(c) if the taxpayer has given or is required to give both an amount or
amounts of money and property other than money in respect of the
acquisition-the sum of that amount or those amounts and the market
value of that property at the time of the acquisition.
"(5) Subject to sub-section (6), a reference in sub-section (1), (2) or (3) to
the incidental costs to a taxpayer of the acquisition of an asset is a
reference to any expenditure incurred by the taxpayer to the extent to which
it was incurred in connection with the acquisition, being-
(a) fees, commission or remuneration for the professional services of a
surveyor, valuer, auctioneer, accountant, broker, agent, consultant or
legal adviser;
(b) costs of transfer, including stamp duty or other similar duty;
(c) costs of advertising to find a seller; or
(d) costs in relation to the making of any valuation or apportionment
under or for the purposes of this Part in respect of the acquisition,
but excluding any expenditure by way of fees, commission or
remuneration paid for professional advice concerning the operation of
this Act or of any other law relating to taxation.
"(6) The incidental costs to a taxpayer of the acquisition of an asset do not
include any amount referred to in paragraph (5) (a), (b), (c) or (d) that has
been allowed or is allowable as a deduction to the taxpayer in respect of any
year of income.
"(7) Subject to sub-section (8), a reference in sub-section (1), (2) or (3) to
the incidental costs to a taxpayer of the disposal of an asset is a reference
to any expenditure incurred by the taxpayer to the extent to which it was
incurred in connection with the disposal, being-
(a) fees, commission or remuneration for the professional services of a
surveyor, valuer, auctioneer, accountant, broker, agent, consultant or
legal adviser;
(b) costs of transfer, including stamp duty or other similar duty;
(c) costs of advertising to find a buyer; or
(d) costs in relation to the making of any valuation or apportionment
under or for the purposes of this Part in respect of the disposal, but
excluding any expenditure by way of fees, commission or remuneration
paid for professional advice concerning the operation of this Act or
of any other law relating to taxation.
"(8) The incidental costs to a taxpayer of the disposal of an asset do not
include any amount referred to in paragraph (7) (a), (b), (c) or (d) that has
been allowed or is allowable as a deduction to the taxpayer in respect of any
year of income.
"(9) For the purposes of the application of sub-section (1), (2) or (3) in
determining the cost base, the indexed cost base or the reduced cost base to a
taxpayer of an asset, if-
(a) the taxpayer acquired the asset from another person and did not pay or
give any consideration in respect of the acquisition;
(b) the whole or a part of the consideration paid or given by the taxpayer
in respect of the acquisition cannot be valued; or
(c) the consideration paid or given by the taxpayer in respect of the
acquisition would, but for this paragraph, be greater or less than the
market value of the asset at the time of the acquisition and the
taxpayer and the person from whom the taxpayer acquired the asset were
not dealing with each other at arm's length in connection with the
acquisition of the asset, the taxpayer shall be deemed to have paid or
given as consideration in respect of the acquisition of the asset an
amount equal to the market value of the asset at the time of the
acquisition.
"(10) Sub-section (9) does not apply by virtue of paragraph (a) of that
sub-section in relation to an acquisition by a taxpayer where another
provision of this Part (however expressed) deems no consideration to have been
paid or given by the taxpayer in respect of the acquisition.
"(11) In determining the cost base, the indexed cost base or the reduced cost
base to a taxpayer of an asset, account shall not be taken of the amount or
value of any part of the consideration paid or given by the taxpayer, or of
the amount of any costs or expenditure incurred by the taxpayer, in respect of
which the taxpayer has been recouped, or is entitled to be recouped, by any
person.
"(12) If, in the case of the happening of any of the following events without
any change in the beneficial ownership of the asset or assets concerned, that
is to say-
(a) two or more assets having been merged or an asset having been divided
into two or more assets; or
(b) an asset having been changed in whole or in part into an asset of a
different nature, the value of an asset as it existed after the
happening of the relevant event (in sub-sections (13) and (14)
referred to as the 'relevant asset') is in whole or in part derived
from or otherwise attributable to an asset as it existed immediately
before the happening of the relevant event (in sub-sections (13) and
(14) referred to as the 'original asset'), then sub-sections (13) and
(14) have effect.
"(13) For the purpose of determining the cost base, the indexed cost base or
the reduced cost base to a taxpayer of the relevant asset on the disposal of
that asset, any amount that would have been included in the cost base, the
indexed cost base or the reduced cost base, as the case may be, to the
taxpayer of the original asset if-
(a) the relevant event had not happened;
(b) the original asset had been disposed of at the time of the relevant
event; and
(c) this Part had been in force and applied in relation to the disposal,
shall, to such extent as is reasonable, be included in the cost base,
the indexed cost base or the reduced cost base, as the case may be, to
the taxpayer of the relevant asset.
"(14) If the original asset continued in existence to any extent after the
happening of the relevant event-
(a) for the purpose of determining the cost base, the indexed cost base or
the reduced cost base to the taxpayer of the original asset as so
continuing in existence in the event of the disposal of that asset,
the amount that would, if the relevant event had not happened, be that
cost base, indexed cost base or reduced cost base, as the case may be,
shall be reduced by any amount that, by virtue of the application of
sub-section (13) in relation to the original asset, is included in the
cost base, indexed cost base or reduced cost base, as the case may be,
to the taxpayer of the relevant asset; and
(b) to the extent (if any) to which it is necessary to apply this
paragraph for the purpose of determining the cost base, the indexed
cost base or the reduced cost base to the taxpayer of the original
asset as so continuing in existence in the event of the disposal of
that asset before the disposal of the relevant asset, the amount that
would, if the relevant event had not happened, be that cost base,
indexed cost base or reduced cost base shall be reduced by any amount
that would have been included in the cost base, the indexed cost base
or the reduced cost base, as the case may be, to the taxpayer of the
relevant asset by virtue of sub-section (13) if the relevant asset had
been disposed of immediately before the disposal of the original
asset. Apportionment of cost base upon disposal of part of asset
"160ZI. (1) Where part of an asset is disposed of, each amount (in this
sub-section referred to as the 'relevant amount') that, under section 160ZH,
is attributable to the asset shall be apportioned as follows:
(a) in respect of the part that is disposed of there shall be attributed
so much of the relevant amount as bears to the relevant amount the
same proportion as the amount of the consideration in respect of the
disposal bears to the sum of the amount of that consideration and the
market value of the part that remains undisposed of; and
(b) the remainder of the relevant amount shall be attributed to the part
that remains undisposed of.
"(2) Sub-section (1) shall not be taken as requiring the apportionment of an
amount that, on the facts, is wholly attributable to the part of an asset that
is disposed of, or is wholly attributable to the part of the asset that
remains undisposed of. Indexation of amounts for purposes of indexed cost base
"160ZJ. (1) In this section, 'index number', in relation to a quarter, means
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.
"(2) Subject to sub-section (3), 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.
"(3) 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.
"(4) Where a taxpayer has, in respect of an asset, paid or given any
consideration referred to in paragraph 160ZH (2) (a) or incurred any costs
referred to in paragraph 160ZH (2) (b) or (e) or any expenditure referred to
in paragraph 160ZH (2) (c) or (d), the reference in paragraph 160ZH (2) (a) to
the indexed amount of the consideration, the reference in paragraph 160ZH (2)
(b) or (e) to the indexed amount of the costs or the reference in paragraph
160ZH (2) (c) or (d) to the indexed amount of the expenditure is a reference
to-
(a) if the factor ascertained in accordance with sub-sections (5) and (6)
in relation to the amount of the consideration, the amount of the
costs or the amount of the expenditure, as the case may be, is greater
than 1-the amount of the consideration, the amount of the costs, or
the amount of the expenditure, as the case may be, multiplied by that
factor; or
(b) in any other case-the amount of the consideration, the amount of the
costs, or the amount of the expenditure, as the case may be.
"(5) The factor to be ascertained for the purposes of sub-section (4) in
relation to the amount of any consideration, the amount of any costs or the
amount of any expenditure is the number (calculated to 3 decimal places)
ascertained by dividing the index number in respect of the quarter of the year
in which that asset was disposed of by the taxpayer by the index number in
respect of the quarter of the year in which the liability to pay or give the
consideration arose, the costs were incurred or the expenditure was incurred,
as the case may be.
"(6) Where the factor ascertained in accordance with sub-section (5) in
relation to the amount of any consideration, the amount of any costs or the
amount of any expenditure would, if it were calculated to 4 decimal places,
end with a number greater than 4, that factor shall be taken to be the factor
calculated to 3 decimal places in accordance with that sub-section and
increased by 0.001. Reduction of amounts for purposes of reduced cost base
"160ZK. (1) A reference in sub-section 160ZH (3) to the reduced amount of any
consideration, the reduced amount of incidental costs, or the reduced amount
of any expenditure, in respect of an asset is a reference to the sum of-
(a) the amount of the consideration, the amount of the costs or the amount
of the expenditure, as the case may be, reduced by any part of the
consideration, of the costs or of the expenditure that has been
allowed or is allowable, or would but for section 61 be allowable, as
a deduction to the taxpayer in respect of any year of income; and
(b) any amount that, as a result of the disposal of the asset by the
taxpayer, is included in the assessable income of the taxpayer of any
year of income by virtue of a provision of this Act other than this
Part and is attributable to the part of the consideration, the part of
the costs or the part of the expenditure, as the case may be, that was
allowed or is allowable as a deduction.
"(2) The reference in paragraph (1) (b) to an amount that is included in the
assessable income of the taxpayer includes a reference to an amount that is
deemed by sub-section 60 (1A) to be so included for the purposes of
sub-section 60 (1). Return of capital on shares
"160ZL. (1) Where a company pays an amount that is not a dividend to a
taxpayer in respect of shares in the company (not being a payment in respect
of the disposal of the shares), the following provisions of this section have
effect for the purposes of this Part.
"(2) Subject to sub-section (4), where, if the taxpayer had disposed of the
shares at the time of the payment, the indexed cost base to the taxpayer in
respect of the shares would have exceeded the amount of the payment, the
taxpayer shall be deemed to have disposed of the shares at that time for a
consideration equal to the amount of that indexed cost base and to have
immediately re-acquired the shares-
(a) 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-for a consideration equal to the amount by which that indexed
cost base exceeded the amount of the payment; or
(b) 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-
(i) if, had the taxpayer disposed of the shares at the time of the
payment, the reduced cost base to the taxpayer in respect of
the shares would have exceeded the amount of the payment-for a
consideration equal to the excess; or
(ii) if, had the taxpayer disposed of the shares at the time of the
payment, the reduced cost base to the taxpayer in respect of
the shares would not have exceeded the amount of the
payment-without having paid or given any consideration in
respect of the re-acquisition.
"(3) Where, if the taxpayer had disposed of the shares at the time of the
payment, the indexed cost base to the taxpayer in respect of the shares would
not have exceeded the amount of the payment-
(a) the taxpayer shall be deemed-
(i) to have disposed of the shares at that time for a consideration
equal to the amount of that indexed cost base; and
(ii) to have immediately re-acquired the shares without having paid
or given any consideration for the re-acquisition; and
(b) if the amount of the payment would have exceeded that indexed cost
base-a capital gain equal to the excess shall be deemed to have
accrued to the taxpayer at the time of the payment.
"(4) If the payment to the taxpayer by the company was made within 12 months
after the taxpayer acquired the shares, sub-sections (2) and (3) have effect
as if the references in those sub-sections to the indexed cost base to the
taxpayer in respect of the shares were a reference to the cost base to the
taxpayer in respect of the shares. Return of capital on investment in trust
"160ZM. (1) Where the trustee of a trust pays an amount to a taxpayer that is
not assessable income of the taxpayer in respect of an interest or units in
the trust (not being a payment in respect of the disposal of the interest or
units), the following provisions of this section have effect for the purposes
of this Part.
"(2) Subject to sub-section (4), where, if the taxpayer had disposed of the
interest or units at the time of the payment, the indexed cost base to the
taxpayer in respect of the interest or units would have exceeded the amount of
the payment, the taxpayer shall be deemed to have disposed of the interest or
units at that time for a consideration equal to the amount of that indexed
cost base and to have immediately re-acquired the interest or units-
(a) for the purpose of ascertaining whether a capital gain accrued to the
taxpayer in the event of a subsequent disposal of the interest or
units by the taxpayer-for a consideration equal to the amount by which
that indexed cost base exceeded the amount of the payment; or
(b) for the purpose of ascertaining whether the taxpayer incurred a
capital loss in the event of a subsequent disposal of the interest or
units by the taxpayer-
(i) if, had the taxpayer disposed of the interest or units at the
time of the payment, the reduced cost base to the taxpayer in
respect of the interest or units would have exceeded the amount
of the payment-for a consideration equal to the excess; or
(ii) if, had the taxpayer disposed of the interest or units at the
time of the payment, the reduced cost base to the taxpayer in
respect of the interest or units would not have exceeded the
amount of the payment-without having paid or given any
consideration in respect of the re-acquisition.
"(3) Where, if the taxpayer had disposed of the interest or units at the time
of the payment, the indexed cost base to the taxpayer in respect of the
interest or units would not have exceeded the amount of the payment-
(a) the taxpayer shall be deemed-
(i) to have disposed of the interest or units at that time for a
consideration equal to the amount of that indexed cost base;
and
(ii) to have immediately re-acquired the interest or units without
having paid or given any consideration for the re-acquisition;
and
(b) if the amount of the payment would have exceeded that indexed cost
base-a capital gain equal to the excess shall be deemed to have
accrued to the taxpayer at the time of the payment.
"(4) If the payment to the taxpayer by the trustee of the trust was made
within 12 months after the taxpayer acquired the interest or units,
sub-sections (2) and (3) have effect as if the references in those
sub-sections to the indexed cost base to the taxpayer in respect of the
interest or units were a reference to the cost base to the taxpayer in respect
of the interest or units. Application to joint owners
"160ZN. (1) Subject to sub-section (2), where an asset is owned by persons as
joint tenants-
(a) this Part applies as if those persons owned the asset as tenants in
common in equal shares;
(b) if one of the joint tenants dies, the interest of the deceased person
in the asset shall be deemed for the purposes of this Part to have
been acquired by the survivor, or, if there are two or more survivors,
by those survivors in equal shares, on the date of the person's death;
(c) the interest so acquired by a surviving joint tenant shall be deemed
to have been acquired-
(i) for the purpose of ascertaining whether a capital gain accrued
to the survivor in the event of a subsequent disposal of the
interest by the survivor-for a consideration equal to the
amount that would have been the indexed cost base to the
deceased person of the interest for the purposes of this Part
if the deceased person had disposed of the interest immediately
before his or her death; or
(ii) for the purpose of ascertaining whether the survivor incurred a
capital loss in the event of a subsequent disposal of the
interest by the survivor-for a consideration equal to the
amount that would have been the reduced cost base to the
deceased person of the interest for the purposes of this Part
if the deceased person had disposed of the interest immediately
before his or her death; and
(d) if, in the case of an interest to which sub-paragraph (1) (c) (i)
applies, the interest was disposed of by the survivor within 12 months
after the day on which the interest was acquired by the deceased
person, the reference in that sub-paragraph to the indexed cost base
to the deceased person of the interest shall be construed as a
reference to the cost base to the deceased person of the interest.
"(2) Except where the contrary intention appears, this Part applies in
relation to two or more persons who own an asset in the capacity of trustees
of the one trust estate as if those persons were a single person.
"Division 4-Treatment of Gains and Losses Treatment of net capital gains and
net capital losses
"160ZO. (1) Where a net capital gain accrued to a taxpayer in respect of the
year of income, the assessable income of the taxpayer of the year of income
includes that net capital gain.
"(2) A net capital loss that was incurred by a taxpayer in respect of a year
of income shall be taken into account in accordance with section 160ZC but is
not otherwise allowable to the taxpayer as a deduction under this Act in
respect of any year of income. Transfer of net capital loss within company
group
"160ZP. (1) For the purposes of this section, a company shall be taken to be a
group company in relation to another company in relation to a year of income
if-
(a) one of the companies was a subsidiary of the other company; or
(b) each of the companies was a subsidiary of the same company, during the
whole of that year of income or, if either or both of those companies
was not or were not in existence during part of that year of income,
during that part of that year of income during which both companies
were in existence.
"(2) For the purposes of this section, a company (in this sub-section referred
to as the 'subsidiary company') shall be taken to be the subsidiary of another
company (in this sub-section referred to as the 'holding company') during a
period (in this sub-section referred to as the 'relevant period'), being the
whole or a part of a year of income, if-
(a) at all times during the relevant period, all the shares in the
subsidiary company were 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 was in a position during any part of the relevant period, or
would become in a position after the relevant period, to affect rights
of the holding company or of a subsidiary of the holding company in
relation to the subsidiary company.
"(3) 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 sub-section), every company
that is a subsidiary of the first-mentioned company shall be taken to be a
subsidiary of that other company.
"(4) For the purposes of sub-section (2), a person shall be taken to be in a
position during a year of income, or a part of a year of income, to affect any
rights of a company in relation to another company if, during the year of
income, or that part of the year of income, 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.
"(5) In sub-section (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.
"(6) For the purposes of this section, a company shall be taken to be in
existence if it has been incorporated and has not been dissolved.
"(7) Subject to this section, where-
(a) a company that is a resident (in this section referred to as the 'loss
company') incurred in respect of a year of income (in this section
referred to as the 'loss year') a net capital loss that, but for this
section, would be taken into account in ascertaining whether a net
capital gain accrued to the company, or the company incurred a net
capital loss, in respect of the next succeeding year of income;
(b) a net capital gain accrued, or would but for the operation of this
section have accrued, to a company that is a resident (in this section
referred to as the 'gain company') in respect of a year of income (in
this section referred to as the 'gain year');
(c) the loss company and the gain company give to the Commissioner, on or
before the date of lodgment of the return of income of the gain
company for the gain year or within such further time as the
Commissioner allows, a notice in writing signed by the public officer
of each of those companies stating-
(i) that so much of the whole or of a specified part of the net
capital loss as has not been taken into account in determining
whether a net capital gain accrued to the loss company, or the
loss company incurred a net capital loss, in respect of the
year of income next following the loss year should be treated
as a capital loss incurred by the gain company during the gain
year; and
(ii) the year of income in respect of which the net capital loss was
incurred by the loss company;
(d) in a case where the loss year is the same year of income as the gain
year-the loss company is a group company in relation to the gain
company in relation to the loss year; and
(e) in a case where the gain year is a year of income after the loss
year-the loss company is a group company in relation to the gain
company in relation to the loss year and the gain year and in relation
to any year of income commencing after the end of the loss year and
ending before the commencement of the gain year, the amount of the net
capital loss or of that part of the net capital loss, as the case may
be, shall, for the purposes of the application of this Part other than
this section, be deemed to be a capital loss incurred by the gain
company during the gain year, and the net capital loss incurred by the
loss company in respect of the loss year shall be deemed to be reduced
by that amount.
"(8) A notice under paragraph (7) (c) stating that the whole or a part of a
net capital loss should be treated as a capital loss incurred by the gain
company during the gain year has no effect to the extent (if any) that the sum
of the amount specified in the notice and any amounts specified in notices
previously given under that paragraph by any company stating that the whole or
a part of a net capital loss should be treated as a capital loss incurred by
the gain company during the gain year exceeds the net capital gain that
accrued, or would but for the operation of this section have accrued, to the
gain company in respect of the gain year.
"(9) Where Subdivision B of Division 2A of Part III applies in relation to the
loss company in relation to the loss year, no part of a net capital loss
incurred by that company in respect of that year is capable of being specified
in a notice under paragraph (7) (c).
"(10) Where the loss company gives to the Commissioner a notice or notices in
accordance with paragraph (7) (c) in relation to a part or parts of a net
capital loss incurred by the loss company, that company shall not give a
further notice in accordance with that paragraph in relation to that net
capital loss that purports to specify in relation to a company another part of
that net capital loss that exceeds the amount obtained by deducting from the
amount of that net capital loss the amount of that part of that net capital
loss, or the sum of the amounts of those parts of that net capital loss,
specified in the first-mentioned notice or notices.
"(11) Where the loss company is a shareholder in the gain company and receives
a payment from the gain company as consideration for the whole or a part of a
net capital loss incurred by the loss company being treated under sub-section
(7) as a capital loss incurred by the gain company, then, for the purposes of
this Act, the payment shall not be taken to be income derived by the loss
company.
"(12) Where the gain company makes a payment to the loss company as
consideration for the whole or a part of a net capital loss incurred by the
loss company being treated under sub-section (7) as a capital loss incurred by
the gain company, a deduction is not allowable under this Act in respect of
the payment. Treatment of gains and losses in respect of listed personal-use
assets
"160ZQ. (1) Subject to sub-section (2), where a listed 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 listed
personal-use asset gain equal to the excess shall be deemed for the
purposes of this section to have accrued to the taxpayer during the
year of income; or
(b) if the reduced cost base to the taxpayer in respect of the asset
exceed the consideration in respect of the disposal-a listed
personal-use asset loss equal to the excess shall be deemed for the
purposes of this section to have been incurred by the taxpayer during
the year of income.
"(2) If the disposal occurred within 12 months after the day on which the
asset was acquired by the taxpayer, the reference in sub-section (1) 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.
"(3) The reference in sub-section (2) to the day on which an asset was
acquired by a 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, be construed as a reference to the day on which the asset was
acquired by the deceased person.
"(4) Where-
(a) the amount that is deemed for the purposes of this Part to be the
consideration in respect of a disposal of an asset is increased
because of the operation of sub-section 160ZD (5);
(b) the amount of the increase (in this sub-section referred to as the
'relevant increase') was attributable in whole or in part to a
decrease in the market value of a listed personal-use asset; and
(c) as a result of the relevant increase-
(i) a capital gain that would not otherwise have accrued to a
taxpayer accrued to the taxpayer during a year of income;
(ii) the amount of a capital gain that accrued to a taxpayer during
a year of income is greater than it would otherwise have been;
(iii) a taxpayer has not incurred during a year of income a capital
loss that the taxpayer would otherwise have incurred; or
(iv) the amount of a capital loss that a taxpayer incurred during a
year of income is less than it would otherwise have been, the
taxpayer shall be deemed to have incurred, during the year of
income referred to in whichever of the sub-paragraphs of
paragraph (c) is applicable, a listed personal-use asset loss
equal to so much of the relevant increase as was attributable
to the decrease in the market value of the listed personal-use
asset.
"(5) For the purposes of this section, a net listed personal-use asset loss
shall be taken to have been incurred by a taxpayer in respect of the year of
income if-
(a) where no listed personal-use asset gain accrued to the taxpayer during
the year of income-the taxpayer incurred a listed personal-use asset
loss or listed personal-use asset losses during the year of income or
incurred a net listed personal-use asset loss in respect of the
immediately preceding year of income; or
(b) where a listed personal-use asset gain or listed personal-use asset
gains accrued to the taxpayer during the year of income-
(i) if the taxpayer incurred a listed personal-use asset loss or
listed personal-use asset losses during the year of income but
did not incur a net listed personal-use asset loss in respect
of the immediately preceding year of income-that listed
personal-use asset loss or the sum of those listed personal-use
asset losses;
(ii) if the taxpayer did not incur a listed personal-use asset loss
during the year of income but incurred a net listed
personal-use asset loss in respect of the immediately preceding
year of income-that net listed personal-use asset loss; or
(iii) if the taxpayer incurred a listed personal-use asset loss or
listed personal-use asset losses during the year of income and
incurred a net listed personal-use asset loss in respect of the
immediately preceding year of income-the sum of that listed
personal-use asset loss or those listed personal-use asset
losses and that net listed personal-use asset loss,
exceeded the listed personal-use asset gain or the sum of the listed
personal-use asset gains that accrued to the taxpayer during the year of
income.
"(6) The amount of the net listed personal-use asset loss that, by virtue of
sub-section (5), is to be taken for the purposes of this section to have been
incurred by a taxpayer in respect of the year of income is an amount equal to-
(a) in a case to which paragraph (5) (a) applies-
(i) if the taxpayer incurred a listed personal-use asset loss or
listed personal-use asset losses during the year of income and
did not incur a net listed personal-use asset loss in respect
of the immediately preceding year of income-that listed
personal-use asset loss or the sum of those listed personal-use
asset losses;
(ii) if the taxpayer did not incur a listed personal-use asset loss
during the year of income but incurred a net listed
personal-use asset loss in respect of the immediately preceding
year of income-that net listed personal-use asset loss; or
(iii) if the taxpayer incurred a listed personal-use asset loss or
listed personal-use asset losses during the year of income and
incurred a net listed personal-use asset loss in respect of the
immediately preceding year of income-the sum of that listed
personal-use asset loss or those listed personal-use asset
losses and that net listed personal-use asset loss; or
(b) in a case to which paragraph (5) (b) applies-the excess referred to in
that paragraph.
"(7) For the purposes of this Part, where-
(a) a listed personal-use asset gain or listed personal-use asset gains
accrued to the taxpayer during the year of income; and
(b) the taxpayer did not incur a listed personal-use asset loss during the
year of income and did not incur a net listed personal-use asset loss
in respect of the immediately preceding year of income, a capital gain
equal to the amount of the listed personal-use asset gain or the sum
of the listed personal-use asset gains shall be taken for the purposes
of this Part to have accrued to the taxpayer during the year of
income.
"(8) For the purposes of this Part, where-
(a) a listed personal-use asset gain or listed personal-use asset gains
accrued to the taxpayer during the year of income;
(b) the taxpayer incurred a listed personal-use asset loss or listed
personal-use asset losses during the year of income or incurred a net
listed personal-use asset loss in respect of the immediately preceding
year of income; and
(c) that listed personal-use asset gain or the sum of those listed
personal-use asset gains exceeded-
(i) where the taxpayer incurred a listed personal-use asset loss or
listed personal-use asset losses during the year of income but
did not incur a net listed personal-use asset loss in respect
of the immediately preceding year of income-that listed
personal-use asset loss or the sum of those listed personal-use
asset losses;
(ii) where the taxpayer did not incur a listed personal-use asset
loss during the year of income but incurred a net listed
personal-use asset loss in respect of the immediately preceding
year of income-that net listed personal-use asset loss; or
(iii) where the taxpayer incurred a listed personal-use asset loss or
listed personal-use asset losses during the year of income and
incurred a net listed personal-use asset loss in respect of the
immediately preceding year of income-the sum of that listed
personal-use asset loss or those listed personal-use asset
losses and that net listed personal-use asset loss, a capital
gain equal to the excess referred to in paragraph (c) shall be
taken for the purposes of this Part to have accrued to the
taxpayer during the year of income.
"Division 5-Leases
Interpretation
"160ZR. In this Division, 'lease' includes a sub-lease. Grant of lease to
constitute disposal
"160ZS. (1) For the purposes of this Part, the grant of a lease of property
shall not be taken to constitute the disposal of part of the property but
shall be deemed to constitute the disposal by the lessor to the lessee of an
asset (that is to say, the lease) created by the lessor for a consideration
equal to the premium paid or payable for the grant of the lease.
"(2) Notwithstanding section 160ZH, the cost base to a taxpayer of a lease of
property granted by the taxpayer comprises the amounts of expenditure incurred
by the taxpayer in respect of the grant of the lease and does not include any
other amounts, and the indexed cost base and the reduced cost base shall be
ascertained accordingly. Payments for variation of lease
"160ZT. (1) For the purposes of this Part, if the lessor under a lease of
property incurs expenditure in obtaining the consent of the lessee to the
variation or waiver of any of the terms of the lease-
(a) the lessor shall be deemed to have incurred a capital loss equal to
the amount of that expenditure; and
(b) the amount of the consideration paid or given by the lessee in respect
of the grant of the lease shall be deemed to be reduced by any amount
received by the lessee from the lessor in respect of the giving by the
lessee of consent to the variation or waiver.
"(2) For the purposes of this Part, if the lessee under a lease of property
incurs expenditure in obtaining the consent of the lessor to the variation or
waiver of any of the terms of the lease-
(a) that expenditure shall be deemed to be expenditure of a capital nature
incurred for the purpose of enhancing the value of the lease; and
(b) any amount received by the lessor in respect of the giving by the
lessor of consent to the variation or waiver shall be deemed to be
consideration received in respect of the disposal by the lessor of the
right to consent to the variation or waiver. Renewal or extension of
lease
"160ZU. Where a lease has been renewed or extended, the renewal or extension
shall be deemed for the purposes of this Part to have constituted the grant by
the lessor of a fresh lease that took effect at the time immediately after the
time when the first-mentioned lease would, but for the renewal or extension,
have expired. Consideration for disposal
"160ZV. (1) For the purposes of this Part, the consideration for the disposal
of an asset constituted by a lease, being a disposal by way of the expiry,
forfeiture or surrender of the lease, includes any amount paid or payable by
the lessor to the lessee upon the disposal in respect of expenditure of a
capital nature incurred by the lessee in making improvements to the property
that was the subject of the lease.
"(2) If an asset, being property that was the subject of a lease in respect of
the expiry, forfeiture or surrender of which an amount was paid or payable by
the lessor to the lessee as mentioned in sub-section (1), is subsequently
disposed of in whole or in part by the owner, the amount so paid or payable
shall be deemed, for the purpose of ascertaining the cost base, the indexed
cost base or the reduced cost base to the owner of the asset or part of the
asset so disposed of, be deemed to be expenditure to which paragraph 160ZH (1)
(c), (2) (c) or (3) (c), as the case may be, applies. Acquisition by lessee of
reversionary interest of lessor
"160ZW. (1) Where the lessee under a lease of land acquires the reversionary
interest of the lessor in the land, the following provisions of this section
have effect for the purposes of this Part.
"(2) If the lease was granted in perpetuity or for a term of not less than 99
years, the former lessee shall be deemed to have acquired the asset
constituted by the merger of the lease and the reversionary interest at the
time when the lease was granted, or assigned, to the former lessee and to have
paid as consideration for the acquisition of that asset the sum of any premium
paid by the former lessee for the grant or assignment of the lease and any
amount paid for the acquisition of the reversionary interest.
"(3) In the case of a lease to which sub-section (2) does not apply-
(a) where the former lessee acquired the lease, whether by grant or
assignment, before 20 September 1985, the former lessee shall be
deemed to have acquired the asset constituted by the merger of the
lease and the reversionary interest at the time when the merger took
place and to have paid as consideration for the acquisition an amount
equal to the market value of that asset at that time; or
(b) where the former lessee acquired the lease, whether by grant or
assignment, on or after 20 September 1985, the former lessee shall be
deemed to have acquired the asset constituted by the merger of the
lease and the reversionary interest at the time when the merger took
place and to have paid as consideration for the acquisition the sum of
any premium paid by the former lessee for the grant or assignment of
the lease and any amount paid for the acquisition of the reversionary
interest.
"Division 6-Trusts other than Unit Trusts Person becoming entitled to
beneficial ownership of trust asset
"160ZX. (1) Where-
(a) an asset is held by a person as trustee otherwise than as trustee of a
unit trust or of the estate of a deceased person; and
(b) a beneficiary under the trust becomes absolutely entitled to the asset
as against the trustee, the trustee shall be deemed, for the purposes
of this Part, to have disposed of the asset to the beneficiary at the
time when the beneficiary became so entitled.
"(2) Where-
(a) a trustee of a trust estate is deemed by sub-section (1) to have
disposed of an asset to a beneficiary; or
(b) a trustee of a trust estate other than the estate of a unit trust or
of a trust that arose upon or resulted from the death of a person
disposes of an asset of the trust estate to a beneficiary in
satisfaction of the interest or part of the interest of the
beneficiary in the corpus of the trust estate, the following
provisions of this section have effect.
"(3) The trustee shall be deemed for the purposes of this Part to have
disposed of the asset to the beneficiary for a consideration equal to the
market value of the asset at the time of the disposal.
"(4) The beneficiary shall be deemed to have, at the time when the asset was
disposed of, disposed of-
(a) in a case to which paragraph (2) (a) applies-the interest of the
beneficiary in the corpus of the trust estate to the extent to which
the interest was constituted by the asset; or
(b) in a case to which paragraph (2) (b) applies-the interest or part of
the interest of the beneficiary in the corpus of the trust estate that
is referred to in that paragraph, for a consideration equal to the
market value of the asset at the time of the disposal of the asset.
"(5) If the beneficiary did not pay or give any consideration in respect of
the acquisition of the interest or part of the interest referred to in
sub-section (4) and did not acquire the interest or part of the interest by
way of assignment from another person, the indexed cost base to the
beneficiary in respect of the acquisition of the interest or part of the
interest shall be deemed to be an amount equal to the market value of the
asset at the time of the disposal of the asset. Dealing with right to receive
income from trust
"160ZY. Where-
(a) a person acquired a right to receive income from a trust estate other
than the estate of a unit trust or of a trust that arose upon or
resulted from the death of another person; and
(b) the person did not, apart from any operation of sub-section 160ZH (9),
pay or give any consideration in respect of the acquisition of the
right and did not acquire the right by way of assignment from another
person, sub-section 160ZH (9) does not apply in relation to the right.
Transfer of asset in satisfaction of right to receive income from
trust
"160ZYA. Where a person (in this section referred to as the 'beneficiary') has
a right to receive income from a trust estate other than the estate of a unit
trust or of a trust that arose upon or resulted from the death of another
person and the trustee disposes of an asset of the trust estate to the
beneficiary in satisfaction of the right or a part of the right-
(a) the asset shall be deemed for the purposes of this Part to have been
so disposed of for a consideration equal to its market value; and
(b) the beneficiary shall be deemed to have, at the time when the asset
was so disposed of, disposed of the right or part of the right, as the
case may be, for a consideration equal to the market value of the
asset at that time. Dealing with interest in corpus of trust estate
"160ZYB. (1) Where-
(a) a person (in this section referred to as the 'beneficiary') acquires
an interest in the corpus of a trust estate, other than the estate of
a unit trust or of a trust that arose upon or resulted from the death
of another person;
(b) the beneficiary did not, apart from any operation of sub-section 160ZH
(9), pay or give any consideration in respect of the acquisition of
the interest and did not acquire the interest by way of assignment
from another person; and
(c) the interest is disposed of in whole or in part during the year of
income by the beneficiary, the following provisions of this section
have effect in relation to the disposal.
"(2) Subject to sub-section (3), where the consideration in respect of the
disposal exceeds-
(a) if the beneficiary is the only person having an interest in the corpus
of the trust estate and the disposal relates to the whole of that
interest-the amount (if any) remaining after deducting the total
amount of the liabilities of the trust from the amount ascertained in
accordance with the formula A+B, where-
A is the sum of-
(a) the market values at the time of the disposal of such of the assets
(other than money) included in that corpus as were acquired by the
trust estate before 20 September 1985; and
(b) the amounts that, if the trustee disposed of the remaining assets
(other than money) included in that corpus at that time, would be the
indexed cost bases to the trustee of those remaining assets; and
B is the sum of the amounts of any money included in that corpus;
(b) if there are two or more persons having an interest in the corpus of
the trust estate and the disposal relates to the whole of the
beneficiary's interest-so much of the amount (if any) that would be
ascertained in accordance with paragraph (a) if that paragraph were
applicable as bears to that amount the same proportion as the interest
of the beneficiary in that corpus bears to the total of all the
interests in that corpus; or
(c) if the disposal relates to part only of the beneficiary's interest in
the corpus of the trust estate-so much of the amount (if any) that
would be ascertained in accordance with paragraph (a) or (b),
whichever paragraph would be applicable if the disposal related to the
whole of that interest, as bears to that amount the same proportion as
that part of that interest bears to the whole of that interest, a
capital gain equal to the excess shall be deemed for the purposes of
this Part to have accrued to the beneficiary during the year of
income.
"(3) If the disposal of the interest or part of the interest occurred within
12 months after the day on which the interest was acquired by the beneficiary,
a reference in paragraph (2) (a) to the indexed cost base to the trustee of an
asset shall be construed as a reference to the cost base to the trustee of the
asset.
"(4) Where the consideration in respect of the disposal is less than-
(a) if the beneficiary is the only person having an interest in the corpus
of the trust estate and the disposal relates to the whole of that
interest-the amount (if any) remaining after deducting the total
amount of the liabilities of the trust from the amount ascertained in
accordance with the formula A+B, where-
A is the sum of-
(a) the market values at the time of the disposal of such of the assets
(other than money) included in that corpus as were acquired by the
trust estate before 20 September 1985; and
(b) the amounts that, if the trustee disposed of the remaining assets
(other than money) included in that corpus at that time, would be the
reduced cost bases to the trustee of those remaining assets; and
B is the sum of the amounts of any money included in that corpus;
(b) if there are two or more persons having an interest in the corpus of
the trust estate and the disposal relates to the whole of the
beneficiary's interest-so much of the amount (if any) that would be
ascertained in accordance with paragraph (a) if that paragraph were
applicable as bears to that amount the same proportion as the interest
of the beneficiary in that corpus bears to the total of all the
interests in that corpus; or
(c) if the disposal relates to part only of the beneficiary's interest in
the corpus of the trust estate-so much of the amount (if any) that
would be ascertained in accordance with paragraph (a) or (b),
whichever paragraph would be applicable if the disposal related to the
whole of that interest, as bears to that amount the same proportion as
that part of that interest bears to the whole of that interest, the
beneficiary shall be deemed for the purposes of this Part to have
incurred during the year of income a capital loss equal to the
difference between the consideration in respect of the disposal and
the amount ascertained in accordance with paragraph (a), (b) or (c),
whichever paragraph is applicable.
"(5) This section does not apply where the beneficiary is deemed to have
disposed of the interest or part of the interest by virtue of sub-section
160ZX (4).
"Division 7-Bonus Units in Unit Trusts
Application
"160ZYC. Where-
(a) a taxpayer holds units in a unit trust (in this Division referred to
as the 'original units');
(b) an amount (in this Division referred to as the 'relevant amount') is
payable to the taxpayer by the trustee of the unit trust in respect of
the original units;
(c) other units in the unit trust (in this Division referred to as the
'bonus units') are issued to the taxpayer;
(d) the unit trust is not a corporate unit trust within the meaning of
sub-section 102J (1), or a public trading trust within the meaning of
section 102R, in relation to the year of income in which the bonus
units are issued; and
(e) the relevant amount is applied by the trustee of the unit trust, in
whole or in part, in payment or part payment of the money payable by
the taxpayer in respect of the bonus units or the liability of the
trustee of the unit trust to pay the relevant amount to the taxpayer
is otherwise satisfied, in whole or in part, by the issue of the bonus
units, the following provisions of this Division have effect. Time of
acquisition of certain bonus units
"160ZYD. Where no part of the relevant amount was included in the assessable
income of the taxpayer of any year of income under a provision of this Act
other than this Part, the bonus units shall be deemed, for the purposes of
this Part, to have been acquired by the taxpayer at the time when the taxpayer
acquired the original units. Consideration in respect of acquisition
"160ZYE. (1) In respect of bonus units to which section 160ZYD applies, the
amount paid by the taxpayer in respect of the original units or, if more than
one amount was paid by the taxpayer in respect of the original units, each
amount shall be deemed for the purposes of this Part to have been paid by the
taxpayer as consideration in respect of the acquisition of the original units
and the bonus units in such proportions as is reasonable in the circumstances.
"(2) Where the relevant amount was included in the assessable income of the
taxpayer of any year of income under a provision of this Act other than this
Part, the taxpayer shall be deemed, for the purposes of this Part, to have
paid in respect of the acquisition of the bonus units, a consideration equal
to the amount so included in the assessable income of the taxpayer and to have
so paid that consideration at the time when the bonus units were issued to the
taxpayer.
"Division 8-Bonus Shares
Application
"160ZYF. Where-
(a) a person (in this Division referred to as the 'shareholder') holds
shares in a company (in this Division referred to as the 'original
shares'); and
(b) the company issues other shares (in this Division referred to as the
'bonus shares') to the shareholder in circumstances mentioned in
sub-section 6ba (1), the following provisions of this Division have
effect. Time of acquisition of bonus shares
"160ZYG. The bonus shares shall be deemed, for the purposes of this Part, to
have been acquired by the shareholder at the time when the shareholder
acquired the original shares. Consideration in respect of acquisition
"160ZYH. (1) The shareholder shall be deemed, for the purposes of this Part,
to have paid in respect of the acquisition of the original shares or of the
bonus shares a consideration equal to the amount, or the sum of the amounts,
that would be deemed to be payable in respect of the original shares or the
bonus shares, as the case may be, if it were necessary for the purposes of a
provision of this Act (other than this Part) to determine the amount of any
profit or loss arising on the sale or disposal of the original shares or the
bonus shares, as the case may be.
"(2) If the whole or a part of a relevant amount (as defined in section 6BA)-
(a) which is applied by the company in payment or part payment of the
moneys payable by the shareholder in respect of the bonus shares; or
(b) the liability of the company to pay which is otherwise satisfied by
the issue of the bonus shares, is not excluded by section 6ba from
being treated as being an amount paid or payable by the shareholder in
respect of the bonus shares or as in any other way constituting any
part of the cost to the shareholder of the bonus shares (which
relevant amount or part of a relevant amount is referred to in this
sub-section as the 'non-excluded amount'), so much of the
consideration that, by virtue of sub-section (1), the shareholder is
deemed for the purposes of this Part to have paid in respect of the
acquisition of the bonus shares as consists of the non-excluded amount
shall be deemed for the purposes of this Part to have been paid at the
time when the bonus shares were issued to the shareholder.
"(3) If an amount (in this sub-section referred to as the 'original amount')
paid or payable by the shareholder in respect of the original shares (whether
on purchase of the shares, on application for or allotment of the shares, to
meet calls or otherwise) is deemed by sub-section 6ba (3) to have been paid or
to be payable by the shareholder in respect of the bonus shares, so much of
the consideration that, by virtue of sub-section (1), the shareholder is
deemed for the purposes of this Part to have paid in respect of the
acquisition of the bonus shares as consists of the original amount shall be
deemed for the purposes of this Part to have been paid at the time when the
original amount was paid by the shareholder in respect of the original shares
or, if the original amount formed part of a larger amount, at the time when
the larger amount was paid by the shareholder in respect of the original
shares.
"(4) If the consideration that, by virtue of sub-section (1), the shareholder
is deemed for the purposes of this Part to have paid in respect of the
acquisition of the bonus shares includes an amount to which neither
sub-section (2) nor (3) applies, so much of that consideration as consists of
that amount shall be deemed for the purposes of this Part to have been paid at
the time when that amount was paid.
"Division 9-Employees' Shares Consideration for acquisition of shares by
employees
"160ZYI. If an amount is included in the assessable income of a taxpayer under
section 26aac as a result of the acquisition by the taxpayer of shares in a
company, the taxpayer shall be deemed for the purposes of this Part to have
paid-
(a) subject to paragraph (b), at the time when the shares were acquired by
the taxpayer; or
(b) in a case to which sub-section 26AAC (15) applies-at the time when the
shares are deemed for the purposes of section 26AAC to have been
acquired by the taxpayer, as consideration in respect of the
acquisition of the shares, an amount equal to the market value of the
shares at that time. Consideration for acquisition of share rights by
employees
"160ZYJ. If, by virtue of sub-section 26AAC (8C), an amount is included in the
assessable income of a taxpayer as a result of the acquisition by the taxpayer
of a right to acquire shares in a company, the taxpayer shall be deemed, for
the purposes of this Part to have paid, at the time when the taxpayer acquired
the right, in respect of the acquisition of the right, an amount equal to the
market value of the right at that time.
"Division 10-Rights to Acquire Shares
Application
"160ZYK. Where-
(a) a person (in this Division referred to as the 'shareholder') holds
shares in a company (in this Division referred to as the 'original
shares');
(b) the company issues to the shareholder rights (in this Division
referred to as the 'rights') to acquire shares (in this Division
referred to as the 'new shares') in the company or to acquire an
option (in this Division referred to as the 'option') to acquire
shares in the company; and
(c) the shareholder did not, apart from any operation of sub-section 160ZH
(9), pay or give any consideration in respect of the acquisition of
the rights, sections 160ZYL to 160ZYO (inclusive) have effect.
Exercise of rights not to constitute disposal
"160ZYL. The rights shall not be taken to have been disposed of by the
exercise of the rights. Time of acquisition of rights
"160ZYM. The rights shall be deemed, for the purposes of this Part, to have
been acquired by the shareholder at the time when the shareholder acquired the
original shares. Shareholder not to be deemed to have paid or given
consideration for rights
"160ZYN. The shareholder shall not be deemed to have paid or given any
consideration in respect of the acquisition of the rights. Exercise of rights
"160ZYO. (1) When the rights are exercised, whether by the shareholder or by a
person who acquired the rights directly of indirectly as a result of the
disposal of the rights by the shareholder, the person who exercised the rights
shall be deemed, for the purposes of this Part, to have acquired the new
shares or the option, as the case may be, at the time when the rights were
exercised.
"(2) Subject to sub-section (4), if the rights are exercised by the
shareholder, the shareholder shall be deemed, for the purposes of this Part,
to have paid or given as consideration in respect of the acquisition of the
new shares or the option, as the case may be, an amount equal to the amount
paid in respect of the exercise of the rights.
"(3) Subject to sub-section (4), if the rights are exercised by a person who
acquired the rights directly or indirectly as a result of the disposal of the
rights by the shareholder, that person shall be deemed, for the purposes of
this Part, to have paid or given as consideration in respect of the
acquisition of the new shares or the option, as the case may be, an amount
equal to the sum of the consideration paid or given by that person for the
acquisition of the rights and the amount paid in respect of the exercise of
the rights.
"(4) When the rights are exercised and-
(a) in the case of rights exercised by the shareholder-the rights are
deemed, by virtue of section 160ZYM, to have been acquired by the
shareholder before 20 September 1985; or
(b) in the case of rights exercised by a person who acquired the rights
directly or indirectly as a result of the disposal of the rights by
the shareholder-that person acquired the rights before 20 September
1985, the shareholder or other person who exercised the rights shall
be deemed, for the purposes of this Part, to have paid or given as
consideration in respect of the acquisition of the new shares or the
option, as the case may be, an amount equal to the sum of the market
value of the rights at the time when the rights were exercised and the
amount paid in respect of the exercise of the rights. Division to be
subject to Division 9
"160ZYP. This Division is subject to Division 9. Application of Division to
holders of convertible notes
"160ZYQ. In addition to the effect that it has apart from this section, the
Division also has the effect it would have if-
(a) the reference in paragraph 160ZYK (a) to a person who holds shares in
a company were a reference to a person who holds convertible notes
within the meaning of Division 3A of Part III issued by the company;
(b) references to the shareholder were references to the person who holds
the convertible notes; and
(c) references to the original shares were references to the convertible
notes held by that person. "Division 11-Company-issued Options to
Shareholders to Acquire Unissued Shares Application
"160ZYR. Where-
(a) a person (in this Division referred to as the 'shareholder') holds
shares in a company (in this Division referred to as the 'original
shares');
(b) the company issues to the shareholder an option (in this Division
referred to as the 'option') to acquire other shares (in this Division
referred to as the 'new shares') in the company; and
(c) the shareholder did not, apart from any operation of sub-section 160ZH
(9), pay or give any consideration in respect of the acquisition of
the option, sections 160ZYS to 160ZYV (inclusive) have effect.
Exercise of option not to constitute disposal
"160ZYS. The option shall not be taken to have been disposed of by the
exercise of the option. Time of acquisition of option
"160ZYT. The option shall be deemed, for the purposes of this Part, to have
been acquired by the shareholder at the time when the shareholder acquired the
original shares. Shareholder not to be deemed to have paid or given
consideration for option
"160ZYU. The shareholder shall not be deemed to have paid or given any
consideration in respect of the acquisition of the option. Exercise of option
"160ZYV. (1) When the option is exercised, whether by the shareholder or by a
person who acquired the option directly or indirectly as a result of the
disposal of the option by the shareholder, the person who exercised the option
shall be deemed, for the purposes of this Part, to have acquired the new
shares at the time when the option was exercised.
"(2) Subject to sub-section (4), if the option is exercised by the
shareholder, the shareholder shall be deemed, for the purposes of this Part,
to have paid or given as consideration in respect of the acquisition of the
new shares an amount equal to the amount paid in respect of the exercise of
the option.
"(3) Subject to sub-section (4), if the option is exercised by a person who
acquired the option directly or indirectly as a result of the disposal of the
option by the shareholder, that person shall be deemed, for the purposes of
this Part, to have paid or given as consideration in respect of the
acquisition of the new shares an amount equal to the sum of the consideration
paid or given by that person for the acquisition of the option and the amount
paid in respect of the exercise of the option.
"(4) When the option is exercised and-
(a) in the case of an option exercised by the shareholder-the option is
deemed, by virtue of section 160ZYT, to have been acquired by the
shareholder before 20 September 1985; or
(b) in the case of an option exercised by a person who acquired the option
directly or indirectly as a result of the disposal of the option by
the shareholder-that person acquired the option before 20 September
1985, the shareholder or other person who exercised the option shall
be deemed, for the purposes of this Part, to have paid or given as
consideration in respect of the acquisition of the new shares an
amount equal to the sum of the market value of the option at the time
when the option is exercised and the amount paid in respect of the
exercise of the option. Division to be subject to Division 9
"160ZYW. This Division is subject to Division 9. Application of Division to
holders of convertible notes
"160ZYX. In addition to the effect that it has apart from this section, the
Division also has the effect it would have if-
(a) the reference in paragraph 160ZYR (a) to a person who holds shares in
a company were a reference to a person who holds convertible notes
within the meaning of Division 3A of Part III issued by the company;
(b) references to the shareholder were references to the person who holds
the convertible notes; and
(c) references to the original shares were references to the convertible
notes held by that person.
"Division 12-Convertible Notes
Definition
"160ZYY. In this Division, 'convertible note' has the same meaning as in
Division 3A of Part III. Conversion of note not to constitute disposal
"160ZYZ. A convertible note shall not be taken to have been disposed of by the
conversion of the note into shares. Time of acquisition of shares
"160ZZ. Where shares are acquired by a taxpayer by the conversion of a
convertible note, the shares shall be deemed, for the purposes of this Part,
to have been acquired by the taxpayer-
(a) if the convertible note was acquired by the taxpayer before 20
September 1985 and the taxpayer did not pay or give any consideration
in respect of the conversion-at the time when the convertible note was
acquired; or
(b) if-
(i) the convertible note was acquired before 20 September 1985 and
the taxpayer paid or gave any consideration in respect of the
conversion; or
(ii) the convertible note was acquired on or after 20 September
1985,
at the time when the conversion took place. Consideration in respect of
acquisition
"160ZZA. A taxpayer who acquired shares by the conversion of a convertible
note shall be deemed, for the purposes of this Part, to have paid as
consideration in respect of the acquisition of the shares an amount equal to-
(a) if the convertible note was acquired before 20 September 1985 and the
taxpayer paid or gave any consideration in respect of the
conversion-the sum of the market value of the note at the time when
the conversion took place and the amount or value of the consideration
paid or given in respect of the conversion; or
(b) if the convertible note was acquired on or after 20 September 1985-
(i) if no consideration was paid or given by the taxpayer in
respect of the conversion-the amount or value of the
consideration paid or given by the taxpayer in respect of the
acquisition of the convertible note; or
(ii) if the taxpayer paid or gave any consideration in respect of
the conversion-the sum of the amount or value of that
consideration and the amount or value of the consideration paid
or given by the taxpayer in respect of the acquisition of the
convertible note. Division to be subject to Division 9
"160ZZB. This Division is subject to Division 9.
"Division 13-Options Generally Options
"160ZZC. (1) This section does not apply in relation to an option if Division
10 or 11 applies in relation to that option.
"(2) This section has effect for the purposes of this Part subject to the
provisions of this Part relating to options that are personal-use assets.
"(3) Subject to the following provisions of this section as to treating the
grant of an option as part of a larger transaction, where an option has been
granted-
(a) the grant of the option shall be deemed to have constituted a disposal
of the option at the time when the grant took effect; and
(b) the option shall be deemed to have been owned by the grantor
immediately before the disposal took place.
"(4) Sub-section (3) extends to-
(a) the case where the grantor of an option is bound by the option to
dispose of what the grantor does not own and, because the option
expires or is cancelled, released or abandoned, never has occasion to
own; and
(b) the case where the grantor is bound by the option to acquire what,
because the option expires or is cancelled, released or abandoned, the
grantor does not acquire.
"(5) Where an option has been renewed or extended, the renewal or extension
shall be deemed to have constituted the grant by the person who renewed or
extended the option of a fresh option that took effect at the time immediately
after the time when the first-mentioned option would, but for the renewal or
extension, have expired.
"(6) Notwithstanding section 160ZH, the cost base to a taxpayer of an option
granted by the taxpayer comprises the amounts of expenditure incurred by the
taxpayer in respect of the grant of the option and does not include any other
amounts, and the indexed cost base and the reduced cost base shall be
ascertained accordingly.
"(7) If an option is exercised, the grant of the option and the transaction
entered into by the grantor in fulfilment of the grantor's obligations under
the option shall be treated as a single transaction and accordingly, for the
purposes of the application of this Part in relation to the grantor-
(a) if the option binds the grantor to dispose of an asset, the
consideration for the option forms part of the consideration received
by the grantor in respect of the disposal; and
(b) if the option binds the grantor to acquire an asset, the consideration
for the option shall be deducted from the consideration paid or given
by the grantor in respect of the acquisition pursuant to the grantor's
obligations under the option.
"(8) An option shall not be taken to have been disposed of by the exercise of
the option but, if an option is exercised, the acquisition of the option
(whether directly from the grantor or not) and the transaction entered into by
the person exercising the option in the exercise of that person's rights under
the option shall be treated as a single transaction and accordingly, for the
purposes of the application of this Part in relation to the person who
exercised the option-
(a) if the option binds the grantor to dispose of an asset, the
consideration for the option forms part of the consideration paid or
given by the person who exercised the option in respect of the
acquisition of the asset; and
(b) if the option binds the grantor to acquire an asset, the consideration
for the option forms part of the incidental costs to the person who
exercised the option of the disposal of the asset acquired by the
grantor of the option.
"(9) If an option that binds the grantor to dispose of an asset was granted
before 20 September 1985 and exercised by the grantee on or after that date,
paragraph (8) (a) does not apply but the market value of the option at the
time when it was exercised forms part of the consideration paid or given by
the person who exercised the option in respect of the acquisition of the
asset.
"(10) Nothing in section 170 prevents the amendment of an assessment for the
purpose of giving effect to sub-section (7) or (8).
"(11) This section applies in relation to an option that binds the grantor
both to acquire and to dispose of an asset as if the option were two separate
options and one-half of the consideration in respect of the grant of the
option were attributed to each of the separate options.
"(12) Where a deposit of money or other consideration, being a deposit that
was made in respect of a prospective purchase or other transaction that is
cancelled or otherwise abandoned, is forfeited-
(a) the deposit shall be deemed to have been paid or given as
consideration in respect of the grant by the person who received the
benefit of the forfeiture of an option that bound the grantor to
dispose of an asset and was not exercised; and
(b) any costs that the person who received the benefit of the forfeiture
incurred in connection with the prospective purchase or other
transaction shall be deemed to be amounts of expenditure incurred by
that person in respect of the grant of the option.
"Division 14-Industrial Property
Industrial property
"160ZZD. (1) In this section, 'asset to which this section applies' means an
asset that is a unit of industrial property within the meaning of Division 10B
of Part III.
"(2) Where the grant of a licence in respect of an asset to which this section
applies constitutes a disposal of part of the asset for the purposes of
Division 10B, then, for the purposes of this Part, the grant of the licence
constitutes a disposal by the grantor of that part of the asset and
constitutes an acquisition of an asset (that is to say, the licence) by the
grantee.
"(3) Where, during the year of income, a taxpayer disposes of part of an asset
to which this section applies, the following provisions of this section have
effect for the purposes of this Part.
"(4) Where the disposal takes place more than 12 months after the day on which
the asset was acquired by the taxpayer-
(a) in a case to which paragraph (b) does not apply-
(i) if the consideration in respect of the disposal is less than
the indexed cost base to the taxpayer in respect of the asset,
this Part (other than this Division) does not apply in relation
to the disposal but the taxpayer shall be deemed also to have
disposed of, and to have immediately re-acquired, at the same
time as the first-mentioned disposal, so much of the asset as
was not disposed of by the first-mentioned disposal for a
consideration equal to the amount by which that indexed cost
base exceeded the consideration in respect of the
first-mentioned disposal; or
(ii) if the consideration in respect of the disposal is not less
than the indexed cost base to the taxpayer in respect of the
asset-
(A) the amount of that indexed cost base shall be deemed to
be nil; and
(B) if the consideration in respect of the disposal exceeds
that indexed cost base-a capital gain equal to the excess
shall be deemed to have accrued to the taxpayer during
the year of income; or
(b) if, as a result of a previous application or applications of this
section, the amount of the indexed cost base to the taxpayer in
respect of the asset is nil-a capital gain equal to the consideration
in respect of the disposal shall be deemed to have accrued to the
taxpayer during the year of income.
"(5) Where the disposal took place within 12 months after the day on which the
asset was acquired by the taxpayer-
(a) in a case to which paragraph (b) does not apply-
(i) if the consideration in respect of the disposal is less than
the cost base to the taxpayer in respect of the asset, this
Part (other than this Division) does not apply in relation to
the disposal but the taxpayer shall be deemed also to have
disposed of, and to have immediately re-acquired, at the same
time as the first-mentioned disposal, so much of the asset as
was not disposed of by the first-mentioned disposal for a
consideration equal to the amount by which that cost base
exceeded the consideration in respect of the first-mentioned
disposal; or
(ii) if the consideration in respect of the disposal is not less
than the cost base to the taxpayer in respect of the asset-
(A) the amount of that cost base shall be deemed to be nil;
and
(B) if the consideration in respect of the disposal exceeds
that cost base-a capital gain equal to the excess shall
be deemed to have accrued to the taxpayer during the year
of income; or
(b) if, as a result of a previous application or applications of this
section, the amount of the cost base to the taxpayer in respect of the
asset is nil-a capital gain equal to the consideration in respect of
the disposal shall be deemed to have accrued to the taxpayer during
the year of income.
"(6) Sub-sections (3), (4) and (5) apply in relation to an asset, being a
licence in respect of an asset to which this section applies, in the same
manner as those sub-sections apply in relation to an asset to which this
section applies.
"Division 15-Prospecting and Mining Rights Disposal of prospecting or mining
right
"160ZZE. Where-
(a) a taxpayer who carries on or has carried on prescribed mining
operations within the meaning of Division 10 of Part III or prescribed
petroleum operations within the meaning of Division 10aa of that Part
or has incurred expenditure to which Division 10aaa of that Part
applies disposes of an asset in respect of which, or in respect of the
acquisition of which, the taxpayer incurred expenditure of a capital
nature to which any of those Divisions applies; and
(b) the disposal has effect for the purposes of a provision of this Act
other than this Part as the disposal of several separate assets, the
disposal shall be deemed for the purposes of this Part to constitute
the disposal of those separate assets and the consideration in respect
of the disposal shall be apportioned in the same manner as it is
apportioned for the purposes of this Act other than this Part.
Conversion of prospecting right to mining right
"160ZZF. (1) In this section-
'mining right' means-
(a) an authority, licence, permit or right under a law of the
Commonwealth, of a State or of a Territory to mine minerals in a
particular area; or
(b) a lease of land under such a law by virtue of which the lessee is
entitled to mine minerals on the land,
and includes an interest in such an authority, licence, permit, right or
lease;
'prospecting right' means-
(a) an authority, licence, permit or right under a law of the
Commonwealth, of a State or of a Territory to prospect or explore for
minerals in a particular area; or
(b) a lease of land under such a law by virtue of which the lessee is
entitled to prospect or explore for minerals on the land,
and includes an interest in such an authority, licence, permit, right or
lease.
"(2) Where a taxpayer has acquired a mining right that was granted to the
taxpayer by reason of the taxpayer having discovered minerals as a result of
prospecting or exploration carried on by the taxpayer under a prospecting
right, the prospecting right shall be deemed to have merged with the mining
right and the taxpayer shall be deemed to have acquired the asset constituted
by the merger of the prospecting right and the mining right at the time when
the prospecting right was acquired by the taxpayer and to have paid as
consideration for the acquisition of that asset the sum of any amount paid by
the taxpayer for the acquisition of the prospecting right and any amount paid
by the taxpayer for the acquisition of the mining right. Disposal of right to
receive income from mining operations
"160ZZG. Where a person who owns a mining or prospecting right or an interest
in such a right grants to another person a right to receive income from
operations carried on pursuant to the mining or prospecting right, the grant
of the right to receive the income-
(a) does not constitute a disposal of part of the mining or prospecting
right; but
(b) constitutes the disposal by the first-mentioned person of a right
(that is to say, the right to receive the income)-
(i) which was created by that person immediately before it was
granted; and
(ii) which was acquired by that person without that person having
paid or given any consideration in respect of the acquisition.
"Division 16-Insurance and Superannuation
Policies of insurance
"160ZZH. (1) In this section, 'policy of insurance' does not include a policy
of assurance within the meaning of section 160ZZI.
"(2) This Part does not apply in respect of the disposal of, or of an interest
in, the rights of the insurer under a policy of insurance, whether the risks
insured relate to an asset or not.
"(3) This Part applies in respect of the disposal of, or of an interest in,
the rights of the insured under a policy of insurance against the risk of the
loss or destruction of, or damage to, property only to the extent that those
rights relate to an asset in respect of the disposal of which this Part would
apply or would have applied. Policies of life assurance
"160ZZI. (1) In this section, 'policy of life assurance' means a policy of
assurance on the life of a person and includes an instrument securing the
grant of an annuity, whether or not for a term dependent on the life of a
person.
"(2) Subject to sub-section (3), this Part does not apply in respect of the
disposal of, or of an interest in, any rights under a policy of life
assurance.
"(3) Sub-section (2) does not apply where the person making the disposal is
not the original beneficial owner and acquired the rights or interest for an
amount of money or other consideration.
"(4) For the purposes of this section but without limiting the generality of
section 160M, an act, transaction or event that results in-
(a) the payment of the sum or sums assured by a policy of life assurance;
(b) the transfer of investments or other assets to the owner of a policy
of life assurance in accordance with the policy; or
(c) the payment of the surrender value of a policy of life assurance,
constitutes the disposal of the right under the policy to the payment
of the sum or sums referred to in paragraph (a), to the transfer of
the investments or other assets referred to in paragraph (b) or to the
payment of the surrender value referred to in paragraph (c), as the
case may be. Superannuation and approved deposit funds
"160ZZJ. (1) This Part does not apply in respect of-
(a) the disposal of a right to, or to any part of, an allowance, annuity
or capital amount payable out of a superannuation fund or an approved
deposit fund; or
(b) the disposal of a right to, or to any part of, an asset of a
superannuation fund or of an approved deposit fund, not being a
disposal by the trustee of the fund.
"(2) For the purposes of sub-section (1) but without limiting the generality
of section 160M, an act, transaction or event that results in the payment of
an amount to a person out of a superannuation fund or an approved deposit fund
or the transfer to a person of property being an asset of a superannuation
fund or approved deposit fund constitutes the disposal of the right of the
person to the amount or property.
"(3) Sub-section (1) does not apply where the person who disposed of the right
received the payment or property otherwise than by virtue of being a member of
the superannuation fund or approved deposit fund and that person acquired the
right for an amount of money or other consideration.
"(4) For the purposes of this section-
'approved deposit fund' has the same meaning as in Subdivision AA of Division
2 of Part III;
'superannuation fund' means-
(a) a superannuation fund within the meaning of Division 9B of Part III;
or
(b) a scheme for the payment of benefits upon retirement or death, being a
scheme constituted by or under a law of the Commonwealth or of a State
or Territory.
"Division 17-Miscellaneous Roll-over Relief
Involuntary disposal
"160ZZK. (1) Where-
(a) a taxpayer is to be taken to have disposed of, or to have disposed of
part of, an asset (in this section referred to as the 'original
asset') by reason of an act, transaction or event as a result of which
the taxpayer has received an amount of money (in this section referred
to as the 'relevant amount')-
(i) by way of compensation for the compulsory acquisition of the
asset or for loss or destruction of, or damage to, the asset;
or
(ii) under a policy of insurance against the risk of loss or
destruction of, or damage to, the asset;
(b) not earlier than one year before the disposal took place and not later
than one year (or such further period as the Commissioner in special
circumstances allows) after the end of the year of income in which the
disposal took place the taxpayer incurred expenditure in acquiring an
asset (in this section referred to as the 'replacement asset') in
place of the original asset or incurred expenditure of a capital
nature in repairing or restoring the original asset;
(c) if, immediately before the disposal took place, the original asset 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 in the capacity of a trustee
of a unit trust that was not a resident unit trust,
and the taxpayer incurred expenditure as mentioned in paragraph (b) in
acquiring an asset in place of the original asset-the original asset was a
taxable Australian asset and the replacement asset is a taxable Australian
asset; 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
section is to apply in respect of the disposal, the following
provisions of this section have effect.
"(2) The reference in sub-paragraph (1) (a) (i) to the compulsory acquisition
of an asset is a reference to a compulsory acquisition of an asset by the
Commonwealth, a State or a Territory or an authority of the Commonwealth, of a
State or of a Territory.
"(3) The application of the provisions of this Part, other than this section,
in respect of the disposal is subject to this section.
"(4) If the original asset was acquired before 20 September 1985, the
replacement asset, or the original asset as repaired or restored, as the case
may be, shall be deemed, for the purposes of this Part, to have been acquired
before that date.
"(5) Sub-section (4) does not apply in relation to the replacement asset if
the consideration in respect of the acquisition of that asset exceeded the
market value of the original asset immediately before the disposal of the
original asset and the amount of the excess was more than 20% of that market
value.
"(6) Where, if this Part other than this section had applied in respect of the
disposal, a capital gain (in this sub-section referred to as the 'notional
capital gain') would have accrued to the taxpayer in respect of the disposal-
(a) if the relevant amount does not exceed the consideration that was paid
or given by the taxpayer in respect of the acquisition of the
replacement asset or the expenditure that was incurred in respect of
the repair or restoration of the original asset, as the case may
be-that consideration or expenditure shall, for the purposes of this
Part, be deemed to be reduced by the amount of the notional capital
gain; or
(b) if the relevant amount exceeds that consideration or expenditure-
(i) in the case where the notional capital gain is greater than the
excess-
(A) a capital gain equal to the excess shall, for the
purposes of this Part, be deemed to have accrued to the
taxpayer in the year of income in which the disposal took
place; and
(B) the consideration that was paid or given by the taxpayer
in respect of the acquisition of the replacement asset or
the expenditure that was incurred by the taxpayer in
respect of the repair or restoration of the original
asset, as the case may be, shall, for the purposes of
this Part, be deemed to be reduced by the amount by which
the notional capital gain is greater than the excess; or
(ii) in the case where the excess is greater than or equal to the
notional capital gain-a capital gain equal to the notional
capital gain shall be deemed to have accrued to the taxpayer in
the year of income in which the disposal took place.
"(7) For the purposes of this section-
(a) an asset shall be deemed to have been acquired by a taxpayer in
replacement of an asset disposed of by the taxpayer if-
(i) the asset disposed of was, immediately before the disposal took
place, used in a business carried on by the taxpayer and the
asset acquired is, for a reasonable time after its acquisition,
used by the taxpayer in that business; or
(ii) the asset acquired is, for a reasonable time after its
acquisition, used by the taxpayer for the same purpose as, or
for a similar purpose to, the purpose for which the asset
disposed of was used by the taxpayer immediately before the
disposal took place; and
(b) an asset shall be deemed to have been used in a particular business or
for a particular purpose immediately before its disposal if,
immediately before its disposal, it was being installed for use, or
was installed ready for use, in that business or for that purpose, as
the case may be. Asset received as a result of involuntary disposal
"160ZZL. (1) Where-
(a) a taxpayer would, but for this section, be taken to have disposed of,
or to have disposed of part of, an asset (in this section referred to
as the 'original asset') by reason of an act, transaction or event as
a result of which the taxpayer has received an asset (in this section
referred to as the 'replacement asset')-
(i) by way of compensation for the compulsory acquisition, or for
loss or destruction, of the original asset; or
(ii) under a policy of insurance against the risk of loss or
destruction of the original asset;
(b) if, immediately before the act, transaction or event took place, the
original asset 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 in the capacity of a trustee
of a unit trust that was not a resident unit trust,
the replacement asset is a taxable Australian asset;
(c) if the original asset was acquired by the taxpayer on or after 20
September 1985, the market value of the replacement asset at the time
when it was acquired by the taxpayer exceeded the amount that would
have been the indexed cost base to the taxpayer of the original asset;
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
section is to apply in respect of the disposal, the following
provisions of this section have effect.
"(2) The application of the provisions of this Part, other than this section,
in respect of the disposal is subject to this section.
"(3) If the original asset was acquired before 20 September 1985, the
replacement asset shall be deemed, for the purposes of this Part, to have been
acquired before that date.
"(4) The taxpayer shall not be taken for the purposes of this Part to have
disposed of the original asset but shall be deemed to have paid as
consideration in respect of the acquisition of the replacement asset an amount
equal to the indexed cost base to the taxpayer of the original asset.
"(5) The reference in sub-paragraph (1) (a) (i) to the compulsory acquisition
of an asset is a reference to a compulsory acquisition of an asset by the
Commonwealth, a State or a Territory or an authority of the Commonwealth, of a
State or of a Territory.
"(6) If the replacement asset is disposed of by the taxpayer within 12 months
after the original asset was acquired by the taxpayer, the references in
paragraph (1) (c) and sub-section (4) to the indexed cost base to the taxpayer
of the original asset shall be construed as references to the cost base to the
taxpayer of the original asset. Transfer of asset between spouses upon
breakdown of marriage
"160ZZM. (1) Where a taxpayer disposes of an asset to his or her spouse
pursuant to-
(a) an order of a court under the Family Law Act 1975 or under a
corresponding law of a foreign country; or
(b) a maintenance agreement approved by a court under section 87 of the
Family Law Act 1975 or a corresponding agreement approved by, or
otherwise sanctioned by, a court under a corresponding law of a
foreign country, this Part other than this section does not apply in
respect of the disposal and-
(c) if the asset was acquired by the taxpayer before 20 September 1985-the
spouse shall be deemed to have acquired the asset before that date; or
(d) if the asset was acquired by the taxpayer on or after 20 September
1985-
(i) the spouse shall be deemed to have paid as consideration in
respect of the acquisition of the asset an amount equal to-
(A) for the purpose of ascertaining whether a capital gain
accrued to the spouse in the event of a subsequent
disposal of the asset by the spouse-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 spouse; or
(B) for the purpose of ascertaining whether the spouse
incurred a capital loss in the event of a subsequent
disposal of the asset by the spouse-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 spouse; and
(ii) in the case of an asset that was a personal-use asset of the
taxpayer-the asset shall be taken for the purposes of this Part
to be a personal-use asset of the spouse.
"(2) If in the case of an asset to which paragraph (1) (d) applies, the asset
was disposed of by the spouse 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.
"(3) In this section, 'spouse', in relation to a taxpayer, includes a former
spouse of the taxpayer. Transfer of asset to wholly-owned company
"160ZZN. (1) In this section, 'asset' does not include a personal-use asset.
"(2) Where-
(a) one of the following sub-paragraphs 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 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 to a company that is a resident of
Australia; or
(iii) a taxpayer (other than a company or a taxpayer in the capacity
of a trustee) disposes of a taxable Australian asset to a
company that is not a resident of Australia;
(b) the consideration in respect of the disposal consists only of shares
in or securities of the company;
(c) immediately after the disposal the taxpayer is the beneficial owner of
all the shares in 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
sub-section 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 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 asset before that date; and
(f) if the 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 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
asset by the company-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; or
(ii) for the purpose of ascertaining whether the company incurred a
capital loss in the event of a subsequent disposal of the asset
by the company-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.
"(3) If, in the case of an 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.
"(4) Where-
(a) one of the following sub-paragraphs 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 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 of
the trust estate or of the unit trust to a company that is a
resident of Australia; or
(iii) a taxpayer in the capacity of a trustee of a trust estate or of
a unit trust disposes of a taxable Australian asset of the
trust estate or of the unit trust to a company that is not a
resident of Australia;
(b) the consideration in respect of the disposal consists only of shares
in or securities of the company;
(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 asset that was disposed of to 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
sub-section 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 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 asset
before that date; or
(f) if the 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 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
asset by the company-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; or
(ii) for the purpose of ascertaining whether the company incurred a
capital loss in the event of a subsequent disposal of the asset
by the company-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.
"(5) If, in the case of an 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.
"(6) Sub-section (2) applies to a taxpayer being a partnership notwithstanding
that one or more of the partners is a company provided that-
(a) at least one of the partners is a natural person; and
(b) immediately after the disposal the persons who were the partners in
the partnership beneficially owned the shares in the company in the
same proportions as they held their interests in the partnership
immediately before the disposal.
"(7) The shares or securities that constituted the consideration for a
disposal by a taxpayer to a company of an asset to which sub-section (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 or securities by the taxpayer-the amount that would have
been 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; or
(ii) for the purpose of ascertaining whether the taxpayer incurred a
capital loss in the event of a subsequent disposal of the asset
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.
"(8) If, in the case of shares or securities to which paragraph (7) (b)
applies, the shares or securities were disposed of by the taxpayer 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.
"(9) This section does not apply to the disposal of an 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. Transfer of asset
between companies in the same group
"160ZZO. (1) Where-
(a) one of the following sub-paragraphs applies:
(i) a company (in this section referred to as the 'transferor')
that is a resident of Australia disposes of an asset to another
company (in this section referred to as the 'transferee') that
is a resident of Australia;
(ii) a company (in this section also referred to as the
'transferor') that is not a resident of Australia disposes of a
taxable Australian asset to another company (in this section
also referred to as the 'transferee') that is a resident of
Australia; or
(iii) a company (in this section also referred to as the
'transferor') disposes of a taxable Australian asset to another
company (in this section also referred to as the 'transferee')
that is not a resident of Australia;
(b) the transferee is a group company in relation to the transferor in
relation to the year of income in which the disposal took place;
(c) the transferee is not a person whose income of the year of income in
which the disposal took place is exempt from tax by virtue of a
relevant exempting provision; and
(d) the transferor and the transferee have, by notice in writing given to
the Commissioner on or before the date of lodgment of the return of
income of the transferor for the year of income in which the disposal
took place, or within such further period as the Commissioner allows,
elected that this section 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 asset was acquired by the transferor before 20 September
1985-the transferee shall be deemed to have acquired the asset before
that date; or
(f) if the asset was acquired by the transferor on or after 20 September
1985, the transferee shall be deemed to have paid as consideration in
respect of the acquisition of the asset an amount equal to-
(i) for the purpose of ascertaining whether a capital gain accrued
to the transferee in the event of a subsequent disposal of the
asset by the transferee-the amount that would have been the
indexed cost base to the transferor of the asset for the
purposes of this Part if this Part had applied in respect of
the disposal of the asset by the transferor to the transferee;
or
(ii) for the purpose of ascertaining whether the transferee incurred
a capital loss in the event of a subsequent disposal of the
asset by the transferee-the amount that would have been the
reduced cost base to the transferor of the asset for the
purposes of this Part if this Part had applied in respect of
the disposal of the asset by the transferor to the transferee.
"(2) If, in the case of an asset to which paragraph (1) (f) applies, the asset
was disposed of by the transferee within 12 months after the day on which the
asset was acquired by the transferor, the reference in that paragraph to the
indexed cost base to the transferor of the asset shall be construed as a
reference to the cost base to the transferor of the asset.
"(3) For the purposes of this section, a company shall be taken to be a group
company in relation to another company in relation to a year of income if-
(a) one of the companies was a subsidiary of the other company; or
(b) each of the companies was a subsidiary of the same company, during the
whole of the year of income or, if either or both of those companies
was not or were not in existence during part of the year of income,
during that part of the year of income during which both companies
were in existence.
"(4) For the purposes of this section, a company (in this sub-section referred
to as the 'subsidiary company') shall be taken to be the subsidiary of another
company (in this sub-section referred to as the 'holding company') during a
period (in this sub-section referred to as the 'relevant period'), being the
whole or a part of a year of income, if-
(a) at all times during the relevant period, all the shares in the
subsidiary company were beneficially owned by-
(i) the holding company;
(ii) a company that is, or 2 or more companies each of which is, a
subsidiary of the holding company; or
(iii) the holding company and a company that is, or 2 or more
companies each of which is, a subsidiary of the holding
company; and
(b) no person was in a position during any part of the relevant period, or
would become in a position after the relevant period, to affect rights
of the holding company or of a subsidiary of the holding company in
relation to the subsidiary company.
"(5) 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 sub-section), every company
that is a subsidiary of the first-mentioned company shall be taken to be a
subsidiary of that other company.
"(6) For the purposes of sub-section (4), a person shall be taken to be in a
position during a year of income, or a part of a year of income, to affect any
rights of a company in relation to another company if, during the year of
income, or that part of the year of income, 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.
"(7) In sub-section (6), '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.
"(8) For the purposes of this section, a company shall be taken to be in
existence if it has been incorporated and has not been dissolved.
"(9) Where this section applies to the disposal of an asset that was a
personal-use asset of the transferor, the asset shall be taken for the
purposes of this Part to be a personal-use asset of the transferee. Exchange
of shares in the same company
"160ZZP. (1) Where-
(a) a company redeems or cancels all the shares of a particular class in
the company;
(b) a taxpayer holds shares of that class in the company (in this section
referred to as the 'original shares');
(c) the taxpayer is a resident of Australia or the redemption or
cancellation constitutes a disposal of a taxable Australian asset;
(d) the company issues to the taxpayer other shares in the company (in
this section referred to as the 'new shares') in substitution for the
original shares;
(e) the market value of the new shares immediately after they were issued
is not less than the market value of the original shares immediately
before the redemption or cancellation;
(f) the taxpayer did not receive any consideration other than the new
shares by reason of the redemption or cancellation; and
(g) 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
section is to apply in respect of the redemption or cancellation, this
Part (other than this section) does not apply in respect of the
redemption or cancellation and-
(h) if the original shares were acquired by the taxpayer before 20
September 1985-the taxpayer shall be deemed to have acquired the new
shares before that date; or
(j) if the original shares were acquired by the taxpayer on or after 20
September 1985, the taxpayer shall be deemed to have paid as
consideration in respect of the acquisition of the new shares an
amount 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
new shares by the taxpayer-the amount that would have been the
indexed cost base to the taxpayer of the original shares for
the purposes of this Part if this Part had applied in respect
of the disposal of the original shares by the taxpayer; or
(ii) for the purpose of ascertaining whether the taxpayer incurred a
capital loss in the event of a subsequent disposal of the new
shares by the taxpayer-the amount that would have been the
reduced cost base to the taxpayer of the original shares for
the purposes of this Part if this Part had applied in respect
of the disposal of the original shares by the taxpayer.
"(2) If, in a case to which paragraph (1) (j) applies, the new shares were
disposed of by the taxpayer within 12 months after the day on which the
original shares were acquired by the taxpayer, the reference in that paragraph
to the indexed cost base to the taxpayer of the original shares shall be
construed as a reference to the cost base to the taxpayer of the original
shares.
"Division 18-Principal Residence Exemption of principal residence
"160ZZQ. (1) In this section-
'dependent child', in relation to a taxpayer, means a child of the taxpayer
who is under the age of 18 years and is dependent on the taxpayer for economic
support;
'dwelling' includes-
(a) a unit of accommodation constituted by, or contained in, a building,
being a unit that consists, in whole or in substantial part, of
residential accommodation; and
(b) a caravan, houseboat or other mobile home;
'relevant period', in relation to the disposal of a dwelling by a taxpayer
other than a taxpayer in the capacity of a trustee, means the period after 19
September 1985 during which the dwelling was owned by the taxpayer and
includes any period after that date during which the land on which the
dwelling is erected was owned by the taxpayer before the erection of the
dwelling.
"(2) For the purposes of this section, a person shall be taken to own, or to
have acquired, a dwelling constituted by or contained in a building if the
person owns or has acquired, as the case may be-
(a) in the case of a dwelling other than a flat or home unit-an estate in
fee simple, or a lease in perpetuity or that was granted for a term of
not less than 99 years, in the land on which the dwelling is erected;
or
(b) in the case of a flat or home unit-
(i) an estate in fee simple, or a lease in perpetuity or that was
granted for a term of not less than 99 years, in a stratum unit
in relation to the flat or home unit; or
(ii) a share in a company that owns an estate in fee simple, or a
lease in perpetuity or that was granted for a term of not less
than 99 years, in the land on which the building containing the
flat or home unit is erected, being a share that entitles the
holder of the share to exclusive occupancy of the flat or home
unit.
"(3) For the purposes of this section, a dwelling owned by a person shall be
deemed to include-
(a) any land owned by the person that is adjacent to the dwelling to the
extent that-
(i) that land is used by the person primarily for private or
domestic purposes in association with the dwelling; and
(ii) the sum of the area of that land and the area of the land on
which the dwelling is situated does not exceed 2 hectares; and
(b) in the case of a dwelling being a flat or home unit-a garage,
storeroom or other structure owned by the person that forms part of or
is attached to or otherwise associated with the building containing
the flat or home unit and is used by the person primarily for private
or domestic purposes.
"(4) If-
(a) land that by virtue of paragraph (3) (a) forms part of a dwelling
owned by a person is disposed of by the person separately from the
rest of the dwelling; or
(b) a garage, storeroom or other structure that forms part of a dwelling
owned by a person is disposed of by the person separately from the
rest of the dwelling, this section does not apply in respect of the
disposal.
"(5) Where-
(a) after 19 September 1985 a taxpayer acquired a legal or equitable
interest (other than a life interest) in land;
(b) no dwelling was erected on the land at the time when the taxpayer
acquired that interest;
(c) a dwelling was erected on the land by the taxpayer after that time;
and
(d) the dwelling became the sole or principal residence of the taxpayer
for the purposes of this Part as soon as practicable after the
dwelling was erected and continued to be the sole or principal
residence of the taxpayer for those purposes for not less than 12
months, the period during which the dwelling was the sole or principal
residence of the taxpayer for the purposes of this Part includes that
part (if any) of-
(e) the period on and from the date on which the taxpayer acquired the
interest to and including the date on which the dwelling was erected
(other than any part of that period during which the taxpayer was the
dependent child of another taxpayer); or
(f) the period of 4 years immediately before the dwelling became the sole
or principal residence of the taxpayer (other than any part of that
period during which the taxpayer was the dependent child of another
taxpayer), whichever is the shorter period, during which neither the
taxpayer nor the spouse of the taxpayer owned another dwelling that
was the sole or principal residence of the taxpayer or of the spouse.
"(6) A reference in this section to a taxpayer having acquired a dwelling as a
beneficiary in the estate of a deceased person is a reference to a taxpayer
having acquired a dwelling-
(a) under the will of a deceased person, or under such a will as varied by
an order of a court; or
(b) by operation of a law as a result of the intestacy of a deceased
person, or by operation of law as a result of such an intestacy as the
operation of the law is varied by an order of a court, whether the
dwelling was transmitted directly to the taxpayer or was transferred
to the taxpayer by the executor of the will, or by the administrator
of the estate, of the deceased person.
"(7) A reference in this section to the acquisition or disposal by a person of
a dwelling or to the transmission or transfer of a dwelling to a person
includes a reference to the acquisition or disposal by a person or to the
transmission or transfer to a person, as the case may be, of the asset the
ownership of which, by virtue of sub-section (2), constitutes ownership of the
dwelling.
"(8) For the purposes of this section-
(a) a dwelling shall be deemed to be the sole or principal residence of a
person at a particular time notwithstanding that it is used at that
time both for that purpose and another purpose or other purposes; and
(b) where-
(i) a taxpayer disposes of a dwelling that-
(A) was the sole or principal residence of the taxpayer for a
continuous period of not less than 3 months included in
the period of 12 months ending at the time of disposal;
and
(B) the dwelling was not used for gaining or producing
assessable income in any part of that period of 12 months
other than the part of that period in which the dwelling
was also the sole or principal residence of the taxpayer;
and
(ii) before disposing of the dwelling, the taxpayer acquired another
dwelling and that other dwelling became the next sole or
principal residence of the taxpayer,
each of those dwellings shall be deemed to be the sole or principal residence
of the taxpayer during-
(iii) in a case where the taxpayer acquired that other dwelling more
than 3 months before the time of disposal-the period of 3
months ending at the time of disposal; or
(iv) in any other case-the period commencing on the day on which the
taxpayer acquired that other dwelling and ending at the time of
disposal.
"(9) Where-
(a) a dwelling is the sole or principal residence of a taxpayer at a
particular time; and
(b) at that time, another dwelling is the sole or principal residence of
the taxpayer's spouse or of a dependent child of the taxpayer,
whichever of those dwellings is nominated by the taxpayer and the
taxpayer's spouse, or by the taxpayer, as the case may be, shall, for
the purposes of this section, be deemed to be the sole or principal
residence of the taxpayer and the taxpayer's spouse, or the taxpayer
and the dependent child of the taxpayer, as the case may be, at that
time.
"(10) Where, under sub-section (9), a taxpayer nominates a dwelling, and the
taxpayer's spouse nominates a different dwelling, in relation to the same
period-
(a) in the case of the dwelling nominated by the taxpayer-
(i) if the interest of the taxpayer in the dwelling throughout that
period did not exceed one-half of the total of all the
interests in the dwelling-the dwelling shall, for the purposes
of this section, be deemed to have been the sole or principal
residence of the taxpayer during that period; or
(ii) in any other case-the dwelling shall, for the purposes of this
section, be deemed to have been the sole or principal residence
of the taxpayer during one-half of that period; or
(b) in the case of the dwelling nominated by the taxpayer's spouse-
(i) if the interest of the spouse in the dwelling throughout that
period did not exceed one-half of the total of all the
interests in the dwelling-the dwelling shall, for the purposes
of this section, be deemed to have been the sole or principal
residence of the spouse during that period; or
(ii) in any other case-the dwelling shall, for the purposes of this
section, be deemed to have been the sole or principal residence
of the spouse during one-half of that period.
"(11) Where-
(a) a dwelling owned by a taxpayer temporarily ceases to be the sole or
principal residence of the taxpayer;
(b) the dwelling again becomes the sole or principal residence of the
taxpayer within the period of 4 years after that cessation; and
(c) the taxpayer notifies the Commissioner in writing, not later than the
date of lodgment of the taxpayer's return of income for the year of
income in which the dwelling again became the sole or principal
residence of the taxpayer, that the taxpayer elects that this
sub-section is to apply in relation to the dwelling, then, for the
purposes of this section, during the period from the time when the
dwelling temporarily ceased to be the sole or principal residence of
the taxpayer until the time when it again became the sole or principal
residence of the taxpayer-
(d) the dwelling shall be deemed to have been the sole or principal
residence of the taxpayer;
(e) no other dwelling shall be deemed to have been the sole or principal
residence of the taxpayer; and
(f) any use for the purpose of gaining or producing assessable income of
the part of the dwelling that was the sole or principal residence of
the taxpayer before it temporarily ceased to be his or her sole or
principal residence shall be disregarded.
"(12) Subject to sub-section (21), where-
(a) a dwelling owned by a taxpayer, being a natural person other than-
(i) a person who acquired the dwelling as a beneficiary in the
estate of a deceased person; or
(ii) a person in the capacity of a trustee,
is disposed of; and
(b) the dwelling was, throughout the relevant period, the sole or
principal residence of the taxpayer, a capital gain shall not be
deemed to have accrued to the taxpayer, and a capital loss shall not
be deemed to have been incurred by the taxpayer, as the case requires,
in respect of the disposal of the dwelling.
"(13) Subject to sub-section (21), where-
(a) a dwelling owned by a taxpayer, being a natural person who acquired
the dwelling as a beneficiary in the estate of a deceased person, is
disposed of;
(b) the dwelling was the sole or principal residence of the taxpayer
throughout that part of the relevant period during which the taxpayer
was (disregarding section 160X) the owner of the dwelling;
(c) if the dwelling was acquired by the deceased person after 19 September
1985-the dwelling was, throughout the period during which the dwelling
was owned by the deceased person, the sole or principal residence of
the deceased person; and
(d) the dwelling was, throughout the period from the death of the deceased
person during which the dwelling was owned by the legal personal
representative of the deceased person, the sole or principal residence
of the person who was, immediately before the death of the deceased
person, the spouse of the deceased person, a capital gain shall not be
deemed to have accrued to the taxpayer, and a capital loss shall not
be deemed to have been incurred by the taxpayer, as the case requires,
in respect of the disposal of the dwelling.
"(14) Subject to sub-section (21), where-
(a) a taxpayer, being a natural person, disposes of a dwelling that the
taxpayer acquired as a beneficiary in the estate of a deceased person;
(b) the disposal took place within 12 months after the date of the death
of the deceased person; and
(c) if the dwelling was acquired by the deceased person after 19 September
1985, the dwelling was, throughout the period during which the
dwelling was owned by the deceased person, the sole or principal
residence of the deceased person, a capital gain shall not be deemed
to have accrued to the taxpayer, and a capital loss shall not be
deemed to have been incurred by the taxpayer, as the case requires, in
respect of the disposal of the dwelling.
"(15) Subject to sub-section (21), where-
(a) a dwelling owned by a taxpayer in the capacity of the trustee of the
estate of a deceased person is disposed of;
(b) either of the following sub-paragraphs is applicable:
(i) the disposal took place within 12 months after the date of the
death of the deceased person; or
(ii) the dwelling was, throughout the period from the death of the
deceased person to the time of disposal of the dwelling by the
taxpayer, the sole or principal residence of the person who
was, immediately before the death of the deceased person, the
spouse of the deceased person; and
(c) if the dwelling was acquired by the deceased person after 19 September
1985, the dwelling was, throughout the period during which the
dwelling was owned by the deceased person, the sole or principal
residence of the deceased person, a capital gain shall not be deemed
to have accrued to the taxpayer, and a capital loss shall not be
deemed to have been incurred by the taxpayer, as the case requires, in
respect of the disposal of the dwelling.
"(16) Subject to sub-section (21), where-
(a) a dwelling owned by a taxpayer referred to in paragraph (12) (a) is
disposed of;
(b) the dwelling was the sole or principal residence of the taxpayer
during part only of the relevant period; and
(c) but for this section and sub-section 160ZA (1), a capital gain would
have accrued to the taxpayer, or the taxpayer would have incurred a
capital loss, in respect of the disposal, a capital gain shall be
deemed to have accrued to the taxpayer, or the taxpayer shall be
deemed to have incurred a capital loss, as the case may be, in respect
of the disposal of the dwelling, of an amount calculated in accordance
with the formula AB , where-
---
C
A is the amount of the capital gain or of the capital loss, as the case may
be, referred to in paragraph (c);
B is the number of days in the part of the relevant period during which the
dwelling was not the sole or principal residence of the taxpayer; and
C is the number of days in the relevant period.
"(17) Subject to sub-section (21), where-
(a) a dwelling owned by a taxpayer referred to in paragraph (13) (a) is
disposed of after 12 months after the date of the death of the
deceased person;
(b) any one or more of the following sub-paragraphs is or are applicable:
(i) the dwelling was the sole or principal residence of the
taxpayer during portion only of the part of the relevant period
referred to in paragraph (13) (b);
(ii) in a case to which paragraph (13) (c) applies-the dwelling was
the sole or principal residence of the deceased person referred
to in that paragraph during part only of the period referred to
in that paragraph;
(iii) in a case to which paragraph (13) (d) applies-the dwelling was
the sole or principal residence of the spouse of the deceased
person referred to in that paragraph during part only of the
period referred to in that paragraph; and
(c) but for this section and sub-section 160ZA (1), a capital gain would
have accrued to the taxpayer, or the taxpayer would have incurred a
capital loss, in respect of the disposal, a capital gain shall be
deemed to have accrued to the taxpayer, or the taxpayer shall be
deemed to have incurred a capital loss, as the case may be, in respect
of the disposal of the dwelling, of an amount calculated in accordance
with the formula AB , where-
---
C
A is the amount of the capital gain or of the capital loss, as the case may
be, referred to in paragraph (c);
B is-
(d) in a case to which sub-paragraph (b) (i) applies-the number of days in
the portion of the part of the relevant period referred to in
paragraph (13) (b) during which the dwelling was not the sole or
principal residence of the taxpayer;
(e) in a case to which sub-paragraph (b) (ii) applies-the number of days
in the part of the period referred to in that sub-paragraph during
which the dwelling was not the sole or principal residence of the
deceased person;
(f) in a case to which sub-paragraph (b) (iii) applies-the number of days
in the part of the period referred to in that sub-paragraph during
which the dwelling was not the sole or principal residence of the
spouse of the deceased person; or
(g) in a case to which two or more of sub-paragraphs (b) (i), (ii) and
(iii) apply-the sum of the numbers of days referred to in whichever of
paragraphs (d), (e) and (f) relate to those sub-paragraphs; and
C is-
(h) in a case where the dwelling was acquired by the deceased person
before 20 September 1985-the number of days in the period from and
including the date of the death of the deceased person to and
including the day immediately before the date of the disposal; or
(j) in a case where the dwelling was acquired by the deceased person on or
after 20 September 1985-the number of days in the period from and
including the date on which the dwelling was acquired by the deceased
person to and including the day immediately before the date of
disposal.
"(18) Subject to sub-section (21), where-
(a) a dwelling owned by a taxpayer referred to in paragraph (14) (a) is
disposed of;
(b) the disposal took place within 12 months after the date of death of
the deceased person;
(c) the dwelling was the sole or principal residence of the deceased
person referred to in paragraph (14) (a) during part only of the
period referred to in paragraph (14) (c); and
(d) but for this section and sub-section 160ZA (1) a capital gain would
have accrued to the taxpayer, or the taxpayer would have incurred a
capital loss, in respect of the disposal, a capital gain shall be
deemed to have accrued to the taxpayer, or the taxpayer shall be
deemed to have incurred a capital loss, as the case may be, in respect
of the disposal of the dwelling, of an amount calculated in accordance
with the formula AB , where-
----
C
A is the amount of the capital gain or of the capital loss, as the case may
be, referred to in paragraph (d);
B is the number of days in the part of the period referred to in paragraph
(14) (c) during which the dwelling was not the sole or principal residence of
the deceased person; and
C is the number of days in the period referred to in paragraph (14) (c).
"(19) Subject to sub-section (21), where-
(a) a dwelling owned by a taxpayer in the capacity of the trustee of the
estate of a deceased person is disposed of after 12 months after the
date of the death of the deceased person;
(b) either or both of the following sub-paragraphs is or are applicable:
(i) the dwelling was the sole or principal residence of the spouse
of the deceased person during part only of the period referred
to in sub-paragraph (15) (b) (ii);
(ii) in a case to which paragraph (15) (c) applies-the dwelling was
the sole or principal residence of the deceased person during
part only of the period referred to in that paragraph; and
(c) but for this section and sub-section 160ZA (1), a capital gain would
have accrued to the taxpayer, or the taxpayer would have incurred a
capital loss, as the case may be, in respect of the disposal, a
capital gain shall be deemed to have accrued to the taxpayer, or the
taxpayer shall be deemed to have incurred a capital loss, as the case
may be, in respect of the disposal of the dwelling, of an amount
calculated in accordance with the formula AB , where-
----
C
A is the amount of the capital gain or of the capital loss, as the case may
be, referred to in paragraph (c);
B is-
(d) in a case to which sub-paragraph (b) (i) applies-the number of days in
the part of the period referred to in that sub-paragraph during which
the dwelling was not the sole or principal residence of the spouse of
the deceased person;
(e) in a case to which sub-paragraph (b) (ii) applies-the number of days
in the part of the period referred to in that sub-paragraph during
which the dwelling was not the sole or principal residence of the
deceased person; or
(f) in a case to which both sub-paragraphs (b) (i) and (ii) apply-the sum
of the number of days referred to in paragraph (d) and the number of
days referred to in paragraph (e); and
C is-
(g) in a case where the dwelling was acquired by the deceased person
before 20 September 1985-the number of days in the period from and
including the date of the death of the deceased person to and
including the day immediately before the date of the disposal; or
(h) in a case where the dwelling was acquired by the deceased person on or
after 20 September 1985-the number of days in the period from and
including the date on which the dwelling was acquired by the deceased
person to and including the day immediately before the date of
disposal.
"(20) Subject to sub-section (21), where-
(a) a dwelling owned by a taxpayer referred to in paragraph (15) (a) is
disposed of;
(b) the disposal took place within 12 months after the date of death of
the deceased person;
(c) the dwelling was the sole or principal residence of the deceased
person referred to in paragraph (15) (a) during part only of the
period referred to in paragraph (15) (c); and
(d) but for this section and sub-section 160ZA (1) a capital gain would
have accrued to the taxpayer, or the taxpayer would have incurred a
capital loss, in respect of the disposal, a capital gain shall be
deemed to have accrued to the taxpayer, or the taxpayer shall be
deemed to have incurred a capital loss, as the case may be, in respect
of the disposal of the dwelling, of an amount calculated in accordance
with the formula AB , where-
----
C
A is the amount of the capital gain or of the capital loss, as the case may
be, referred to in paragraph (d);
B is the number of days in the part of the period referred to in paragraph
(15) (c) during which the dwelling was not the sole or principal residence of
the deceased person; and
C is the number of days in the period referred to in paragraph (15) (c).
"(21) Where-
(a) a dwelling owned by a taxpayer is disposed of;
(b) but for this sub-section, sub-section (12), (13), (14), (15), (16),
(17), (18), (19) or (20) would apply in respect of the disposal
because the dwelling was, during a particular period, the sole or
principal residence of the taxpayer or of another person; and
(c) the dwelling was, during the whole or a part of that period, also used
for the purpose of gaining or producing assessable income, that
sub-section does not apply in respect of the disposal of the dwelling
but a capital gain shall be deemed to have accrued to the taxpayer, or
the taxpayer shall be deemed to have incurred a capital loss, as the
case may be, in respect of the disposal of the dwelling, of such
amount as the Commissioner determines having regard to-
(d) if, apart from this sub-section and sub-section 160ZA (1), a capital
gain would be deemed to have accrued to the taxpayer, or a capital
loss would be deemed to have been incurred by the taxpayer, in respect
of the disposal of the dwelling-the amount of that capital gain or
capital loss; and
(e) the extent to which, and the period for which, the dwelling was used
in the first-mentioned period for the purpose of gaining or producing
assessable income.
"Division 19-Goodwill Exemption of part of gain attributable to goodwill
"160ZZR. (1) Where-
(a) a taxpayer disposes of, or of an interest in, a business (in this
section referred to as the 'relevant business'), being a disposal that
includes, or includes an interest in, the goodwill of the business;
(b) in a case to which paragraph (c) does not apply-the net value of the
relevant business, or the value of the taxpayer's interest in the net
value of the relevant business, as the case may be, is less than
$1,000,000;
(c) if, at the time of the disposal, there is another business that is, or
there are other businesses that are, associated with the relevant
business-the sum of the net values of the relevant business and the
associated business or associated businesses, or the sum of the values
of the taxpayer's interests in the net values of the relevant business
and the associated business or associated businesses, as the case may
be, is less than $1,000,000; and
(d) a capital gain is deemed for the purposes of this Part to have accrued
to the taxpayer in respect of the disposal of, or of the taxpayer's
interest in, the goodwill, the amount of the capital gain shall be
deemed to be reduced by one-fifth.
"(2) For the purposes of sub-section (1)-
(a) a business (in this paragraph referred to as the 'associated
business') shall be taken to be associated with the relevant business
if-
(i) where the taxpayer is not a company and does not carry on the
relevant business in the capacity of a trustee-the associated
business is carried on by the taxpayer otherwise than in the
capacity of a trustee;
(ii) where the taxpayer is a company (other than a company in the
capacity of a trustee)-the associated business is carried on by
the company, or by another company that is related to the
company, otherwise than in the capacity of a trustee; or
(iii) where the taxpayer carries on the relevant business in the
capacity of a trustee of a trust estate-the associated business
is carried on by the taxpayer in the capacity of a trustee of
that trust estate or of an associated trust estate; and
(b) a reference to the net value of a business is a reference to the
amount by which the sum of the values of the assets (including
goodwill) of the business exceeds the sum of the liabilities of the
business.
"Division 20-Transitional
When asset acquired
"160ZZS. (1) For the purposes of the application of this Part in relation to a
taxpayer, an asset acquired by the taxpayer on or before 19 September 1985
shall be deemed to have been acquired by the taxpayer after that date unless
the Commissioner is satisfied, or considers it reasonable to assume, that, at
all times after that date when the asset was held by the taxpayer, majority
underlying interests in the asset were held by natural persons who,
immediately before 20 September 1985, held majority underlying interests in
the asset.
"(2) For the purposes of this section, where, by reason of the death of a
person, a natural person acquires a percentage (in this sub-section referred
to as the 'acquired percentage') of the underlying interests in an asset, the
natural person shall be deemed to have held (in addition to any other part of
the total underlying interests that the person held or is deemed to have
held), at any time when the deceased person held a percentage (in this
sub-section referred to as the 'deceased person's percentage') of the total
underlying interests in the property, a percentage of the total underlying
interests in the property equal to the acquired percentage, or the deceased
person's percentage at that time, whichever is the less.
"(3) In this section, 'majority underlying interests' and 'underlying
interest', in relation to an asset, have the same meanings as those
expressions have in relation to property in Subdivision G of Division 3 of
Part III. Disposal of shares or interest in partnership or trust
"160ZZT. (1) Where-
(a) a taxpayer has, whether before or after the commencement of this Part,
disposed of an asset being-
(i) shares in a private company;
(ii) an interest in a partnership; or
(iii) an interest in a private trust estate;
(b) the taxpayer acquired the asset before 20 September 1985;
(c) immediately before the disposal of the asset by the taxpayer-
(i) in a case where the asset disposed of by the taxpayer consisted
of shares in a private company or an interest in a private
trust estate, the property of the company or trust estate, as
the case may be, included property (in this sub-section
referred to as the 'underlying property') that-
(A) was acquired by the company or trustee of the trust
estate, as the case may be, on or after 20 September
1985; and
(B) was not trading stock of the company or trust estate; or
(ii) the company, partnership or trustee of the trust estate, as the
case may be, held an interest, through one or more interposed
companies, partnerships or trusts, in property (in this
sub-section also referred to as the 'underlying property')
that-
(A) was acquired by another private company, partnership or
trustee of a private trust estate on or after 20
September 1985; and
(B) was not trading stock of the company, partnership or
trust estate referred to in sub-sub-paragraph (a); and
(d) immediately before the disposal of the asset by the taxpayer, the
value of-
(i) in a case to which sub-paragraph (c) (i) applies-the underlying
property referred to in that sub-paragraph; or
(ii) in a case to which sub-paragraph (c) (ii) applies-the interest
referred to in that sub-paragraph,
was not less than 75% of the net worth of the company, partnership or trust
estate referred to in paragraph (a), a capital gain shall be deemed to have
accrued to the taxpayer during the year of income in which the taxpayer
disposed of the asset equal to so much of the consideration received or
receivable by the taxpayer in respect of the disposal as may reasonably be
attributed to the amount (if any) by which the value of the underlying
property immediately before the disposal exceeds the sum of the amounts that
would be the indexed cost bases to the taxpayer of the underlying property if
the underlying property had been disposed of immediately before the disposal
of the asset.
"(2) Expressions used in sub-section (1) of this section to which meanings are
given by section 26AAA for the purposes of that section also have those
meanings for the purposes of sub-section (1) of this section.
"(3) In calculating the net worth of a company, partnership or trust estate
for the purposes of this section, the Commissioner shall, if satisfied that
liabilities were discharged or released or assets acquired for the purpose, or
for purposes that included the purpose, of ensuring that this section would
not apply in relation to a taxpayer, disregard the discharge or release of
those liabilities or the values of those assets, as the case may be.
"Division 21-Miscellaneous
Keeping of records
"160ZZU. (1) A person who has at any time after 19 September 1985 owned an
asset other than an excepted asset shall keep such records in the English
language as are necessary to enable the ready ascertainment of-
(a) the date on which the person acquired the asset;
(b) if the asset has not been disposed of-any amount that would, if the
asset were disposed of, form part of the cost base to the person in
respect of the asset; and
(c) if the asset has been disposed of by the person-
(i) the date of disposal;
(ii) any amount that formed part of the cost base to the person in
respect of the asset; and
(iii) the consideration in respect of the disposal.
Penalty: $2,000.
"(2) For the purpose of the application of sub-section (1) in relation to a
person, an asset is an excepted asset if-
(a) where the asset has been disposed of by the person-this Part did not
apply in respect of the disposal; or
(b) where the asset has not been disposed of by the person-this Part would
not, in the event of the disposal of the asset, apply in respect of
the disposal.
"(3) This section does not require the keeping of any records by a person if-
(a) a period of 7 years has elapsed since the asset to which the records
relate was disposed of by the person;
(b) the Commissioner has notified the person that the keeping of those
records is not required; or
(c) the records are records of a company that has been wound up and has
been dissolved.".
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