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INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

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

Division 112 - Modifications to cost base and reduced cost base  

Subdivision 112-A - General modifications  

SECTION 112-25  Split, changed or merged assets  

 ITAA 36

Split or changed assets

112-25(1)  

This section sets out what happens if:


(a) a *CGT asset (the original asset ) is split into 2 or more assets (the new assets ); or


(b) a *CGT asset (also the original asset ) changes in whole or in part into an asset (also the new asset ) of a different nature;

and you are the beneficial owner of the original asset and each new asset.

Example:

You subdivide a block of land into 3 separate blocks. Each of those blocks is a new asset .

112-25(2)  

The splitting or change is not a *CGT event.

112-25(3)  

You work out the *cost base and *reduced cost base of each new asset as follows:

Method statement

Step 1. 

Work out each element of the *cost base and *reduced cost base of the original asset at the time of the event referred to in subsection (1).


Step 2. 

Apportion in a reasonable way each element to each new asset. The result is each corresponding element of the new asset's *cost base and *reduced cost base.

Merged assets

112-25(4)  

If 2 or more *CGT assets (the original assets ) are merged into a single asset (the new asset ) and you are the beneficial owner of the original assets and the new asset:


(a) the merger is not a *CGT event; and


(b) each element of the *cost base and *reduced cost base of the new asset (at the time of the merging) is the sum of the corresponding elements of each original asset.


 



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