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INCOME TAX ASSESSMENT ACT 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 40 - Capital allowances    View history reference

Subdivision 40-D - Balancing adjustments    View history reference

Operative provisions

SECTION 40-340  Roll-over relief  

 View history reference [41-14; 41-15; 41-20(1), (2); 41-23; 41-55; 42-330; 42-335; 330-520; 330-547; 373-85; 380-100]

Automatic roll-over relief

40-340(1)  

 View history reference
There is roll-over relief if:


(a) there is a *balancing adjustment event because an entity (the transferor) disposes of a *depreciating asset in an income year to another entity (the transferee); and


(b) the disposal involves a *CGT event; and
 View history reference


(c) the conditions in an item in this table are satisfied.
CGT roll-overs that qualify transferor for relief
ItemType of CGT roll-overConditions
1Disposal of asset to wholly-owned companyThe transferor is able to choose a roll-over under Subdivision 122-A for the *CGT event.
...........
2Disposal of asset by partnership to wholly-owned companyThe transferor is a partnership, the property is partnership property and the partners are able to choose a roll-over under Subdivision 122-B for the disposal by the partners of the *CGT assets consisting of their interests in the property.
...........
2ATransfer of a *CGT asset of a trust to a company under a trust restructureThe transferor and transferee are able to choose a roll-over under Subdivision 124-N for the *CGT event.
...........
3Marriage or relationship breakdownThere is a roll-over under Subdivision 126-A for the *CGT event.
...........
4Disposal of asset to another member of the same wholly-owned groupThe transferor is able to choose a roll-over under Subdivision 126-B for the *CGT event.
...........
5*Disposal of asset between certain trustsThe trustees of the trusts choose to obtain a roll-over under Subdivision 126-G in relation to the disposal.
...........
6Disposal of asset as part of merger of superannuation fundsThe transferor chooses a roll-over under Subdivision 310-D in relation to the disposal.
...........
7Disposal of asset as part of transfer to a *MySuper productThe transferor chooses a roll-over under Subdivision 311-B in relation to the disposal.
...........
8Transfer of asset under a small business restructure roll-overA roll-over under Subdivision 328-G would be available in relation to the asset if the asset were not a *depreciating asset.

Note 1:

Section 40-345 sets out what the relief is.

Note 2:

This Act also applies as if there were roll-over relief under this subsection in the circumstances set out in section 620-30 (which is about a body incorporated under one law ceasing to exist and disposing of its assets to a company incorporated under another law that has not significantly different ownership).

[CCH Note 1: S 40-340(1) will be amended by No 19 of 2010 (as amended by No 158 of 2012), s 3 and Sch 2 item 12, by repealing table item 6, effective 1 July 2019. For savings provisions relating to the repeal see note under Div 310 heading.]

[CCH Note 2: S 40-340(1) will be amended by No 89 of 2013, s 3 and Sch 1 item 14, by repealing table item 7, effective 2 July 2019.]

40-340(2)  

In applying an item in the table in subsection (1), disregard the following so far as they relate to the *depreciating asset you disposed of:


(a) an exemption in Division 118 (which contains the general exemptions from CGT); and


(b) subsection 122-25(3) (which excludes certain assets from some kinds of CGT roll-over); and
 View history reference


(c) subsection 124-870(5) (which excludes certain assets from roll-over relief under Subdivision 124-N).

Choosing roll-over relief

40-340(3)  

 View history reference
There is also roll-over relief if:


(a) there is a *balancing adjustment event for a *depreciating asset because of subsection 40-295(2) (about a change in the holding of, or in interests in, the asset); and


(b) the entity or entities that had an interest in the asset before the change (also the transferor) and the entity or entities that have an interest in the asset after the change (also the transferee) jointly choose the roll-over relief.
 View history reference

Example:

The change could be a variation in the constitution of a partnership or in the interests of the partners.

Note 1:

Section 40-345 sets out what the relief is.

Note 2:

Subdivision 328-D sets out what the relief is for small business entities that calculate deductions for their depreciating assets under that Subdivision.

40-340(4)  

The choice must:


(a) be in writing; and


(b) contain enough information about the transferor's holding of the property for the transferee to work out how this Division or Subdivision 328-D applies to the transferee's holding of the *depreciating asset; and
 View history reference


(c) be made within 6 months after the end of the transferee's income year in which the *balancing adjustment event occurred, or within a longer period allowed by the Commissioner.

40-340(5)  

If you die before the end of the time allowed for jointly choosing roll-over relief, the trustee of your estate may be a party to the choice.

40-340(6)  

The transferor must keep the choice or a copy of it for 5 years after the *balancing adjustment event occurred.

Penalty: 30 penalty units.

40-340(7)  

The transferee must keep the choice or a copy of it until the end of 5 years after the next *balancing adjustment event occurs for the *depreciating asset.

Penalty: 30 penalty units.

Exception: Subdivision 170-D applies

40-340(8)  

There can be no roll-over relief if Subdivision 170-D (about transactions by a company that is a member of a linked group) applies to the disposal of the *depreciating asset or the change in interests in it.


 



This information is provided by CCH Australia Limited. View the disclaimer and notice of copyright.
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