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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 104-197  Failure to acquire replacement asset and to incur fourth element expenditure after a roll-over under Subdivision 152-E: CGT event J5  

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104-197(1)  

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CGT event J5 happens if you choose a small business roll-over under Subdivision 152-E for a *CGT event that happens in relation to a *CGT asset in an income year and, by the end of the *replacement asset period:


(a) you have not *acquired a replacement asset (the replacement asset), and have not incurred *fourth element expenditure in relation to a CGT asset (also the replacement asset); or


(b) the replacement asset does not satisfy the conditions set out in subsection (2).

Note:

You do not have to satisfy the basic conditions in Subdivision 152-A for the gain in relation to CGT event J5 (see subsection 152-305(4)).

104-197(2)  

The conditions are:


(a) the replacement asset must be your *active asset; and


(b) if the replacement asset is a *share in a company or an interest in a trust:


(i) you, or an entity *connected with you, must be a *CGT concession stakeholder in the company or trust; or

(ii) CGT concession stakeholders in the company or trust must have a *small business participation percentage in you of at least 90%.

Example:

Joseph owns 50% of the shares in Company A and Company B. He is therefore a CGT concession stakeholder in the companies: see section 152-60. The companies are connected with Joseph (see section 328-125) because he controls both of them.

Company A owns land which it leases to Joseph for use in a business. It sells the land at a profit and buys shares in Company B.

Subsection (2) is satisfied for the shares because Joseph is connected with Company A and is a CGT concession stakeholder in Company B.

104-197(3)  

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The time of the event is at the end of the *replacement asset period.

104-197(4)  

You make a capital gain equal to the amount of the *capital gain that you disregarded under Subdivision 152-E.

104-197(5)  

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The *replacement asset period may be modified or extended as mentioned in section 104-190.


 



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