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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-J - CGT events relating to roll-overs    View history reference

SECTION 104-175  Company ceasing to be member of wholly-owned group after roll-over: CGT event J1  

104-175(1)  

 ITAA 36
CGT event J1 happens if:


(a) there is a roll-over under Subdivision 126-B for a *CGT event (the roll-over event ) that happens in relation to a *CGT asset (the roll-over asset ) involving 2 companies that are members of the same *wholly-owned group; and


(b) the company (the recipient company ) that owns the roll-over asset just after the roll-over stops being a 100% subsidiary of a company in the group in the circumstances set out in subsection (2) or (3); and


(c) at the time of the roll-over, the recipient company was a *100% subsidiary of:


(i) the other company involved in the roll-over event (the originating company ); or

(ii) another member of the same *wholly-owned group.

Note:

If the roll-over was under former section 160ZZO of the Income Tax Assessment Act 1936 , CGT event J1 does not happen if there would not have been a deemed disposal and re-acquisition under that Act: see section 104-175 of the Income Tax (Transitional Provisions) Act 1997 .

104-175(2)  

 ITAA 36
This condition applies if there has been only one roll-over within the *wholly-owned group under Subdivision 126-B involving the roll-over asset.

The recipient company must stop, at a time (the break-up time ) when it still owns the roll-over asset, being a *100% subsidiary of a member of the group (the ultimate holding company ) that is not a 100% subsidiary of any other member of the group at the time of the roll-over event.

104-175(3)  

 ITAA 36
This condition applies if the roll-over event was the last in a series of *CGT events involving the roll-over asset and there was a roll-over within the *wholly-owned group under Subdivision 126-B for all the events.

The recipient company must stop, at a time (also the break-up time ) when it still owns the roll-over asset, being a *100% subsidiary of another member of the group (also the ultimate holding company ) that was not a 100% subsidiary of any other member of the group at the time of the first of the events.

104-175(4)  

 ITAA 36
The time of the event is the break-up time.

104-175(5)  

 View history reference ITAA 36
The recipient company makes a capital gain if the roll-over asset ' s *market value (at the break-up time) is more than its *cost base. It makes a capital loss if that market value is less than its *reduced cost base.

Exceptions

104-175(6)  

 View history reference ITAA 36
CGT event J1 does not happen if the conditions in section 104-180 or 104-182 are satisfied.

104-175(7)  

 View history reference [No equivalent]
A *capital gain or *capital loss the recipient company makes is disregarded if the roll-over asset is taken to have been *acquired by it before 20 September 1985 under Subdivision 126-B (except where the roll-over asset has stopped being a *pre-CGT asset, for example, because of Division 149 ).

Note:

CGT event J1 does not happen to a demerged entity or a member of a demerger group if CGT event A1 or C2 happens to a demerging entity under a demerger: see section 125-160 .

Acquisition rule

104-175(8)  

 ITAA 36
The recipient company is taken to have *acquired the roll-over asset at the break-up time.

Cost base adjustment

104-175(9)  

 ITAA 36
The first element of the recipient company ' s *cost base and *reduced cost base of the roll-over asset (just after the break-up time) is its *market value (at the break-up time).


 



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