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INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

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

Division 104 - CGT events  

Subdivision 104-H - Special capital receipts  

SECTION 104-155  Receipt for event relating to a CGT asset: CGT event H2  

 ITAA 36

104-155(1)  

CGT event H2 happens if:


(a) an act, transaction or event occurs in relation to a *CGT asset that you own; and


(b) the act, transaction or event does not result in an adjustment being made to the asset's *cost base or *reduced cost base.

Example:

You own land on which you intend to construct a manufacturing facility. A business promotion organisation pays you $50,000 as an inducement to start construction early.

No contractual rights or obligations are created by the arrangement.

The payment is made because of an event (the inducement to start construction early) in relation to your land.

Note:

This event does not apply if any other CGT event applies: see section 102-25.

104-155(2)  

The time of the event is when the act, transaction or event occurs.

104-155(3)  

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You make a capital gain if the *capital proceeds because of the *CGT event are more than the *incidental costs you incurred that relate to the event. You make a capital loss if those capital proceeds are less.

104-155(4)  

The costs can include giving property: see section 103-5. However, they do not include an amount you have received as *recoupment of them and that is not included in your assessable income.

Exceptions

104-155(5)  

CGT event H2 does not happen if:


(a) the act, transaction or event is the borrowing of money or the obtaining of credit from another entity; or


(b) the act, transaction or event requires you to do something that is another *CGT event that happens to you; or


(c) a company issues or allots *equity interests or *non-equity shares in the company; or
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(d) the trustee of a unit trust issues units in the trust; or


(e) a company grants an option to acquire equity interests, non-equity shares or *debentures in the company; or
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(ea) a company grants an option to dispose of *shares in the company to the company; or
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(f) the trustee of a unit trust grants an option to acquire units or debentures in the trust; or
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(g) a company or a trust that is a member of a *demerger group issues new *ownership interests under a *demerger.

Note:

For demergers, see Division 125.


 



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