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This is a Bill, not an Act. For current law, see the Acts databases.
1998-99
The Parliament of
the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
Presented and read a first
time
New Business
Tax System (Capital Gains Tax) Bill 1999
No.
, 1999
(Treasury)
A
Bill for an Act to implement the New Business Tax System by amending the law
relating to capital gains tax, and for related purposes
ISBN: 0642
425264
Contents
Part 1—Insertion of new
Division 3
Income Tax Assessment Act
1997 3
Part 2—Consequential
amendments 30
Income Tax Assessment Act
1997 30
Income Tax Assessment Act
1936 41
Part 3—Application and
transitional 42
Income Tax Assessment Act
1997 43
Income Tax Assessment Act
1997 51
Pooled Development Funds Act
1992 56
Income Tax Assessment Act
1997 62
A Bill for an Act to implement the New Business Tax
System by amending the law relating to capital gains tax, and for related
purposes
The Parliament of Australia enacts:
This Act may be cited as the New Business Tax System (Capital Gains
Tax) Act 1999.
(1) Subject to subsection (2), this Act commences on the day on which it
receives the Royal Assent.
(2) If item 1 of Schedule 9 to the New Business Tax System (Integrity
and Other Measures) Act 1999 has not commenced before that day, Schedule 1
to this Act commences immediately after that item commences.
Subject to section 2, each Act that is specified in a Schedule to this
Act is amended or repealed as set out in the applicable items in the Schedule
concerned, and any other item in a Schedule to this Act has effect according to
its terms.
Section 170 of the Income Tax Assessment Act 1936 does not prevent
the amendment of an assessment made before the commencement of this section for
the purposes of giving effect to this Act.
Part
1—Insertion of new
Division
Income
Tax Assessment Act 1997
1 Section 149-170 (link
note)
Repeal the link note, substitute:
[The next Division is Division 152.]
To help small business, if the basic conditions for relief are satisfied,
capital gains can be reduced by the various concessions in this Division. Those
basic conditions are in Subdivision 152-A. Some of the concessions have
additional, specific conditions that must also be satisfied.
The 4 available small business concessions are:
(a) the 15-year exemption (in Subdivision 152-B);
(b) the 50% reduction (in Subdivision 152-C);
(c) the retirement concession (in Subdivision 152-D);
(d) the roll-over (in Subdivision 152-E).
A capital gain that qualifies for the 15-year exemption is disregarded
entirely and is not taken into account under the method statement in subsection
102-5(1). By contrast, the other concessions are only activated by step 4 of
that method statement. This means that you must apply all available capital
losses against your capital gains (under steps 1 and 2) before you can reduce
them using those 3 concessions.
Table of Subdivisions
152-A Basic conditions for relief under this
Division
152-B Small business 15-year exemption
152-C Applying the small business
concessions
152-D Small business retirement exemption
152-E Small business roll-over
[This is the end of the Guide.]
This Subdivision sets out some basic conditions for relief. If the basic
conditions are satisfied, then a small business entity may be able to reduce its
capital gains using the small business concessions in this Division.
The 3 major basic conditions are:
(a) a limit of $5,000,000 on the net value of assets that the business and
related entities own;
(b) the CGT asset must be an active asset;
(c) if the asset is a share or interest in a trust, there must be a
controlling individual just before the CGT event and the entity claiming the
concession must be a CGT concession stakeholder in the company or
trust.
Some of the concessions have additional, specific conditions that also must
be satisfied. For example, the 15-year exemption applies only if you have held
the CGT asset for at least 15 years and you retire.
The small business concessions (apart from small business roll-overs) are
not available for CGT events J2 and J3.
Table of sections
Basic conditions for relief
152-10 Basic conditions for relief
Maximum net asset value test
152-15 Maximum net asset value test
152-20 Meaning of net value of the CGT
assets
152-25 Meaning of small business CGT
affiliate
152-30 Meaning of connected with the
entity
Active asset test
152-35 Active asset test
152-40 Meaning of active asset
152-45 Continuing time periods for involuntary
disposals
Controlling individual test
152-50 Controlling individual test
152-55 Meaning of controlling
individual
CGT concession stakeholder
152-60 Meaning of CGT concession
stakeholder
[This is the end of the Guide.]
(1) A *capital gain you make may be
reduced or disregarded under this Division if the following basic conditions are
satisfied for the gain:
(a) a *CGT event happens in relation to a
*CGT asset of yours in an income
year;
(b) the event would (apart from this Division) have resulted in the
gain;
(c) you satisfy the maximum net asset value test (see section
152-15);
(d) the CGT asset satisfies the active asset test (see section
152-35).
(2) If the *CGT asset is a
*share in a company or an interest in a trust,
there are 2 additional basic conditions:
(a) the company or trust satisfies the controlling individual test (see
section 152-50);
(b) you are a *CGT concession stakeholder
in the company or trust.
Example: Ann and her spouse Brett carry on a business
through a company in which Ann owns 40% of the shares and Brett 60%. Ann sells
her shares and wants to claim the small business concessions. The condition in
paragraph (a) is satisfied because Brett’s 60% makes him a controlling
individual of the company. The condition in paragraph (b) is satisfied because
Ann is a CGT concession stakeholder in the company, in that Ann owned some
shares just before the CGT event and was the spouse of a controlling individual
(Brett) at that time.
(3) In addition to the basic conditions in this section, some of the
concessions in this Division have extra conditions that must be satisfied for
the concession to be available. These extra conditions are set out in the
relevant Subdivisions.
(4) This Division, apart from Subdivision 152-E, does not apply to
*CGT events J2 and J3.
Note: Those CGT events are about previous applications of
the roll-over in Subdivision 152-E.
You satisfy the maximum net asset value test if, just before the
*CGT event:
(a) the sum of the following amounts does not exceed $5,000,000:
(i) the *net value of the CGT assets of
yours;
(ii) the net value of the CGT assets of any entities
*connected with you;
(iii) the net value of the CGT assets of any
*small business CGT affiliates of yours or
entities connected with your small business CGT affiliates; and
Note: Some assets aren’t included in the definition of
net value of the CGT assets: see subsections 152-20(2) and
(3).
(b) if you are a partner in a partnership and the CGT event happens in
relation to a *CGT asset of the
partnership—the net value of the CGT assets of the partnership does not
exceed $5,000,000.
(1) The net value of the CGT assets of an entity is the
amount (if any) by which the sum of the market values of those assets exceeds
the sum of the liabilities of the entity that are related to the
assets.
(2) In working out the net value of the CGT assets of an
entity:
(a) disregard *shares, units or other
interests (except debt) in another entity that is
*connected with the first-mentioned
entity or with a *small business CGT affiliate
of the first-mentioned entity; and
(b) if the entity is an individual, disregard:
(i) assets being used solely for the personal use and enjoyment of the
entity, or the entity’s *small business
CGT affiliate; and
(ii) a *dwelling of the individual, or an
*ownership interest in such a dwelling, if the
individual uses the dwelling to produce assessable income to any extent but does
not satisfy paragraph 118-190(1)(c) (about deductibility of interest);
and
(iii) a right to, or to any part of, any allowance, annuity or capital
amount payable out of a *superannuation fund or
an *approved deposit fund; and
(iv) a right to, or to any part of, an asset of a superannuation fund or
of an approved deposit fund; and
(v) a *life insurance policy.
(3) In working out the net value of the CGT assets of an
entity that is your *small business CGT
affiliate, disregard assets of that entity that are not used, or held ready for
use, in carrying on a *business that you, or an
entity *connected with you, carry on (whether
alone or jointly with others).
(1) A person is a small business CGT affiliate of yours
if:
(a) you are an individual and the person is your spouse or child under 18
years; or
(b) the person acts, or could reasonably be expected to act, in accordance
with your directions or wishes, or in concert with you.
(2) Another partner in a partnership in which you are a partner is not
your small business CGT affiliate only because the partner acts,
or could reasonably be expected to act, in concert with you in relation to the
affairs of the partnership.
(1) An entity is connected with another entity if:
(a) either entity controls the other entity in the way described in this
section; or
(b) both entities are controlled in that way by the same third
entity.
Control of entity: 40% or more of rights
(2) An entity (the first entity) controls another entity if
the first entity, its *small business CGT
affiliates or the first entity together with its small business CGT
affiliates:
(a) beneficially own, or have the right to acquire the beneficial
ownership of, interests in the other entity that carry between them the right to
receive at least 40% (the control percentage) of any
distribution of income or capital by the other entity; or
(b) if the other entity is a company—beneficially own, or have the
right to acquire beneficial ownership of, shares in the company that carry
between them the right to exercise, or control the exercise of, at least 40%
(the control percentage) of the voting power in the
company; or
(c) if the other entity is a discretionary trust:
(i) are the trustee or trustees of the trust (other than the Public
Trustee of a State or Territory); or
(ii) have the power to determine the manner in which the trustee or
trustees of the trust exercise the power to make any payment of income or
capital to or for the benefit of beneficiaries of the trust.
(3) If the control percentage in subsection (2) is at least 40%, but less
than 50%, then the Commissioner may determine that the first entity does not
control the other entity if the Commissioner is satisfied, or thinks it
reasonable to assume, that the other entity is controlled by an entity other
than, or by entities that do not include, the first entity or any of its
*small business CGT affiliates.
Exception for trusts
(4) Paragraph (2)(c) does not apply if:
(a) a beneficiary of the trust mentioned in that paragraph controls the
trust in the way described in this section; and
(b) that beneficiary is not a *small
business CGT affiliate of any of the trustees of that trust or of a
person who has the power of determination mentioned in subparagraph
(2)(c)(ii).
Control of discretionary trust
(5) If the trustee or trustees of a discretionary trust have the power to
pay to, or apply for the benefit of, an entity any income or capital of the
trust, this section applies to the entity as if the entity beneficially owned
interests in any distribution of income or capital of the trust equal to the
maximum percentage of the income or capital that the trustee is empowered to pay
to, or apply for the benefit of, the entity.
(6) Subsection (5) does not apply to the entity if the entity is one of
these (a public entity):
(a) a company *shares in which (except
shares that carry the right to a fixed rate of
*dividend) are listed for quotation in the
official list of an *approved stock
exchange;
(b) a *publicly traded unit
trust;
(c) a *mutual insurance
company;
(d) a *mutual affiliate
company;
(e) a company (other than one covered by paragraph (a)) all the shares in
which are beneficially owned by one or more of the following:
(i) a company covered by paragraph (a);
(ii) a publicly traded unit trust;
(iii) a mutual insurance company;
(iv) a mutual affiliate company;
and the trustee or trustees have the power mentioned in that subsection
only because another beneficiary of the trust has an interest in the
entity.
Indirect control of entity
(7) This section applies to an entity that directly controls a second
entity as if it also controlled any other entity that is directly, or indirectly
by any other application or applications of this section, controlled by the
second entity.
(8) However, if an entity (the first entity) controls a
public entity, this section does not, merely because of subsection (7), apply to
the first entity as if it controlled any other entity that is controlled by the
public entity.
A *CGT asset satisfies the active asset
test if the asset was an *active
asset of yours:
(a) just before the earlier of:
(i) the *CGT event; and
(ii) if the relevant business ceased to be carried on in the last 12
months or any longer period that the Commissioner allows—the cessation of
the business; and
(b) during at least half of the period beginning at the later
of:
(i) when you acquired the asset; and
(ii) if you have owned the asset for more than 15 years—15 years
before the time that applies under paragraph (a);
and ending at the time that applies under paragraph (a).
(1) A *CGT asset is an active
asset at a given time if, at that time, you own it and:
(a) use it, or hold it ready for use, in the course of carrying on a
*business; or
(b) it is an intangible asset that is inherently connected with a business
that you carry on (for example, goodwill or the benefit of a restrictive
covenant); or
(c) it is used, or held ready for use, in the course of carrying on a
business by:
(i) your *small business CGT affiliate;
or
(ii) another entity that is *connected
with you.
(2) Subsection 392-20(1) is disregarded in determining, for the purposes
of subsection (1) of this section, whether an entity is carrying on a
*business.
Note: An entity would be taken to be carrying on a primary
production business under subsection 392-20(1) if the business is carried on by
a trust and the entity is presently entitled to trust income.
(3) A *CGT asset is also an active
asset at a given time if, at that time, you own it and:
(a) it is either a *share in a company
that is an Australian resident at that time or an interest in a trust that is a
*resident trust for CGT purposes for the income
year in which that time occurs; and
(b) the total of:
(i) the market values of the active assets of the company or trust;
and
(ii) any *capital proceeds that the
company or trust received, during the 2 years before that time, from
*CGT events happening to its active assets and
that the company or trust holds in the form of cash or debt pending the
acquisition of new active assets;
is 80% or more of the market value of all of the assets of the company or
trust.
Example: Paragraph 152-35(b) requires a CGT asset to have
been an active asset over a period of time. For a share in an Australian
resident company to meet this requirement, the company would have to satisfy the
80% test in this subsection throughout that same period.
Exceptions
(4) However, the following *CGT assets
cannot be active assets:
(a) interests in an entity that is
*connected with you, other than
*shares and interests covered by subsection
(3);
(b) shares in companies, other than shares covered by subsection
(3);
(c) interests in trusts, other than interests covered by subsection
(3);
(d) financial instruments (such as loans, debentures, bonds, promissory
notes, futures contracts, forward contracts, currency swap contracts and a right
or option in respect of a share, security, loan or contract);
(e) an asset whose main use in the course of carrying on the
*business mentioned in subsection (1) is to
derive interest, an annuity, rent, royalties or foreign exchange gains
unless:
(i) the asset is an intangible asset and has been substantially developed,
altered or improved by you so that its market value has been substantially
enhanced; or
(ii) its main use for deriving rent was only temporary.
Example: A company uses a house purely as an investment
property and rents it out. The house is not an active asset
because the company is not using the house in the course of carrying on a
business. If, on the other hand, the company ran the house as a guest house the
house would be an active asset because the company would be using
it to carry on a business and not to derive rent.
Compulsory acquisitions
(1) If a *CGT asset is an asset (the
new asset) you acquired to satisfy the requirement
in subsection 124-70(2) or 124-75(2) for a roll-over under Subdivision 124-B,
then the active asset test in section 152-35 applies as if:
(a) you had acquired the new asset when you acquired the old asset;
and
(b) the new asset had been your *active
asset at all times when the original asset was your active asset; and
(c) the new asset had not been your active asset at all times when the
original asset was not your active asset.
Note 1: Subdivision 124-B allows you to choose a roll-over
if your CGT asset is compulsorily acquired, lost or destroyed.
Note 2: If this subsection applies to a CGT asset, then
section 152-115 (which is about continuing time periods) will apply for the
15-year exemption.
Marriage breakdowns
(2) If you were the transferee of a *CGT
asset for which there has been a roll-over under Subdivision 126-A, then you may
choose that the active asset test in section 152-35 applies as if:
(a) you had acquired the asset when the transferor acquired the asset;
and
(b) the asset had been an *active asset
of yours at all times when the asset was an active asset of the transferor;
and
(c) the asset had not been an active asset of yours at all times when the
asset was not an active asset of the transferor.
Note 1: Section 103-25 tells you when the choice must be
made.
Note 2: There is a roll-over under Subdivision 126-A if CGT
assets are transferred because of a marriage breakdown.
Note 3: If you don’t make the choice, the time of
acquisition is simply the time of the transfer.
Note 4: Making the choice here has certain consequences for
the 15-year exemption: see section 152-115.
An entity satisfies the controlling individual test if the
entity had at least one *controlling individual
just before the *CGT event.
Companies
(1) An individual is a controlling individual of a company
at a time if, at that time, the individual holds the legal and equitable
interests in *shares, other than
*redeemable shares, that carry (between them)
the right to exercise at least 50% of the voting power in the company and
receive at least 50% of any *dividend the
company may pay and of any distribution of capital the company may
make.
Trusts
(2) An individual is a controlling individual of a
trust (where entities have entitlements to all the income and capital of the
trust) at a time if, at that time, the individual is beneficially entitled to at
least 50% of the income and capital of the trust.
(3) An individual is a controlling individual of a
trust (where entities do not have entitlements to all the income and capital
of the trust) at a time if, during the income year in which the time
occurs:
(a) the trust made a distribution of income or capital, or both;
and
(b) the individual was beneficially entitled to at least 50% of the total
of the distributions of income made by the trust during the income year;
and
(c) the individual was beneficially entitled to at least 50% of the total
of the distributions of capital made by the trust during the income
year.
CGT concession stakeholder of a company or trust
means:
(a) a *controlling individual of the
company or trust; or
(b) in the case of a company—a spouse of a controlling individual of
the company, if the spouse holds the legal and equitable interests in any amount
of shares in the company; or
(c) in the case of a trust mentioned in subsection 152-55(2)—a
spouse of a controlling individual of the trust, if the spouse is beneficially
entitled to any of the income or capital of the trust; or
(d) in the case of a trust mentioned in subsection 152-55(3)—a
spouse of a controlling individual of the trust, if, during the income year
referred to in that subsection, the trust made a distribution of income or
capital to which the spouse was beneficially entitled.
A small business entity can disregard a capital gain arising from a CGT
asset that it has owned for at least 15 years if certain conditions are met.
Capital losses are not affected.
Also, any amount of income a company or trust derives from a CGT event
covered by this Subdivision is neither assessable income nor exempt income. If
the company or trust makes payments to its CGT concession stakeholders that are
attributable to the exempt amount, the payments will not be taken into account
in determining the taxable income of the company, trust or recipient.
The main conditions are that:
• the basic conditions for relief in Subdivision 152-A are
satisfied;
• the entity continuously owned the asset for the 15-year period
leading up to the CGT event;
• if the entity is an individual, the individual retires or is
permanently incapacitated;
• if the entity is a company or trust, the entity had a controlling
individual throughout the period of ownership and the individual who was the
controlling individual just before the CGT event retires or is permanently
incapacitated.
The Subdivision also allows time periods to continue to run if there has
been a roll-over because of marriage breakdown or compulsory
acquisition.
Table of sections
152-105 15-year exemption for individuals
152-110 15-year exemption for companies and
trusts
152-115 Continuing time periods for involuntary
disposals
152-120 Discretionary trusts need not have a controlling
individual in a loss year
152-125 Payments to company’s or trust’s CGT
concession stakeholders are exempt
[This is the end of the Guide.]
If you are an individual, you can disregard any
*capital gain arising from a
*CGT event if all of the following conditions
are satisfied:
(a) the basic conditions in Subdivision 152-A are satisfied for the
gain;
(b) you continuously owned the *CGT asset
for the 15-year period ending just before the CGT event;
Note: Section 152-115 allows for continuation of the period
if there is an involuntary disposal of the asset.
(c) if the CGT asset is a *share in a
company or an interest in a trust—at all times during the whole period for
which you owned the CGT asset, the company or trust had a
*controlling individual (even if it was not the
same controlling individual during the whole period);
Note: There is an exception for discretionary trusts that
have tax losses in an income year: see section 152-120.
(d) either:
(i) you are 55 or over at the time of the CGT event and the event happens
in connection with your retirement; or
(ii) you are permanently incapacitated at the time of the CGT
event.
(1) An entity that is a company or trust can disregard any
*capital gain arising from a
*CGT event if all of the following conditions
are satisfied:
(a) the basic conditions in Subdivision 152-A are satisfied for the
gain;
(b) the entity continuously owned the
*CGT asset for the 15-year period ending just
before the CGT event;
Note: Section 152-115 allows for continuation of the period
if there is an involuntary disposal of the asset.
(c) at all times during the whole period for which the entity owned the
asset, the entity had a *controlling individual
(even if it was not the same controlling individual during the whole
period);
Note: There is an exception for discretionary trusts that
have tax losses in an income year: see section 152-120.
(d) an individual who was a controlling individual of the company or trust
just before the CGT event either:
(i) was 55 or over at that time and the event happened in connection with
the individual’s retirement; or
(ii) was permanently incapacitated at that time.
(2) Any income the company or trust
*derives from a
*CGT event that would be covered by subsection
(1) (assuming the event gave rise to a *capital
gain, even if it didn’t) is neither assessable income nor
*exempt income.
Compulsory acquisitions
(1) If a *CGT asset is an asset (the
new asset) you acquired to satisfy the requirement
in subsection 124-70(2) or 124-75(2) for a roll-over under Subdivision 124-B,
then paragraphs 152-105(b) and 152-110(1)(b) and (c) (the 15-year and
controlling individual rules) apply as if you had acquired the new asset when
you acquired the original asset.
Note: Subdivision 124-B allows you to choose a roll-over if
your CGT asset is compulsorily acquired, lost or destroyed.
Marriage breakdowns
(2) If you made the choice mentioned in subsection 152-45(2) for a
*CGT asset, then paragraphs 152-105(b) and (c)
and 152-110(1)(b) and (c) (the 15-year and controlling individual rules) apply
as if you had acquired the asset when the transferor acquired it.
Note: There is a roll-over under Subdivision 126-A if CGT
assets are transferred because of a marriage breakdown.
Paragraphs 152-105(c) and 152-110(1)(c) do not apply for a trust of the
kind mentioned in subsection 152-55(3) in relation to an income year during
which the trust did not make a distribution of income or capital, if the trust
had a *tax loss for that income year.
Note: This is because the trust might not have had the funds
to make a distribution during that income year, which would prevent it from
having a controlling individual in that year.
(1) This section applies if, under section 152-110, a
*capital gain of a company or trust is
disregarded or an amount of income is treated as neither assessable income nor
*exempt income of the company or trust. In this
section, that amount is called the exempt amount.
(2) Any payment the company or trust makes (whether directly or indirectly
through one or more interposed entities) within 2 years after the
*CGT event to an individual who was a
*CGT concession stakeholder of the company or
trust just before the event is not taken into account in determining the taxable
income of the company or trust, the individual or any of the interposed
entities.
(3) However, subsection (2) applies only to the extent that the total of
the payments made by the company or trust to a particular
*CGT concession stakeholder for an exempt
amount does not exceed the following limit:
where:
stakeholder’s control percentage means:
(a) in the case of a company—the percentage of the interests in
*shares in the company of the kind mentioned in
subsection 152-55(1) held by the CGT concession stakeholder just before the
*CGT event; or
(b) in the case of a trust mentioned in subsection 152-55(2)—the
percentage of the income and capital of the trust to which the CGT concession
stakeholder was beneficially entitled just before the CGT event; or
(c) in the case of a trust mentioned in subsection 152-55(3) that had a
single CGT concession stakeholder just before the CGT event—100%;
or
(d) in the case of a trust mentioned in subsection 152-55(3) that had 2
CGT concession stakeholders just before the CGT event—50% each.
This Subdivision tells you how to apply the small business CGT concessions
mentioned in step 4 of the method statement in subsection 102-5(1).
A capital gain is reduced by 50% if the basic conditions in Subdivision
152-A are satisfied.
If the capital gain has already been reduced by the discount percentage,
the 50% reduction under this Subdivision applies to that reduced gain.
The capital gain may be further reduced by the small business retirement
exemption or a small business rollover, or both.
None of these rules apply if the 15-year exemption already applies to the
capital gain, since such a gain is disregarded anyway.
Table of sections
152-205 You get the small business 50%
reduction
152-210 You may also get the small business retirement
exemption and small business roll-over relief
152-215 15-year rule has priority
[This is the end of the Guide.]
The amount of a *capital gain remaining
after applying step 3 of the method statement in subsection 102-5(1) is reduced
by 50%, if the basic conditions in Subdivision 152-A are satisfied for the
gain.
Example: For an individual (other than one who opts to claim
indexation instead of the discount), the discount percentage that applies under
step 3 of the method statement is 50%. Therefore, the combined effect of the
discount percentage and this section would be to reduce the original capital
gain by a total of 75%.
For an individual who opts to claim indexation, or a
company, there is no discount percentage, so the individual or company would
simply get the 50% reduction under this section.
(1) The *capital gain, as reduced under
section 152-205, may also qualify for:
(a) the small business retirement exemption (see Subdivision 152-D);
or
(b) a small business roll-over (see Subdivision 152-E);
or both.
(2) If it qualifies for both of those concessions, you may choose which
order to apply them in.
This Subdivision and Subdivisions 152-D and 152-E do not apply to a
*capital gain to which Subdivision 152-B
(15-year exemption) applies.
Note: Under that Subdivision, such a gain is entirely
disregarded, so there is no need for any further concession to
apply.
You can choose to disregard a capital gain from a CGT event happening to a
CGT asset of your small business if the capital proceeds from the event are used
in connection with your retirement.
There is a lifetime limit of $500,000 for all choices that can be made in
respect of an individual under this Subdivision.
The concession in section 152-205 (small business 50% reduction) applies
before this one. For an additional concession, see also Subdivision 152-E (small
business roll-over).
Table of sections
152-305 Choosing the exemption
152-310 Consequences of choice
152-315 Choosing the amount to disregard
152-320 Meaning of CGT retirement exemption
limit
152-325 Company or trust conditions
[This is the end of the Guide.]
Individual
(1) If you are an individual, you can choose to disregard all or part of a
*capital gain if:
(a) the basic conditions in Subdivision 152-A are satisfied for the gain;
and
(b) if you were under 55 just before you received an amount of
*capital proceeds from the
*CGT event (disregarding section
103-10)—an amount equal to the *eligible
termination payment mentioned in subsection 152-310(2) is rolled over (within
the meaning of Subdivision AA of Division 2 of Part III of the Income Tax
Assessment Act 1936) except by being paid as mentioned in paragraph
27A(12)(c) of that Act.
Note 1: Section 103-25 tells you when the choice must be
made.
Note 2: Paragraph 27A(12)(c) of the Income Tax Assessment
Act 1936 deals with payments to life companies or registered organisations
to purchase certain annuities.
Company or trust
(2) A company or a trust (except a public entity—see subsection (3))
can also choose to disregard such an amount if:
(a) the basic conditions in Subdivision 152-A are satisfied for the
*capital gain; and
(b) the entity satisfies the controlling individual test (see section
152-50); and
(c) the company or trust conditions in section 152-325 are
satisfied.
Note: Section 103-25 tells you when the choice must be
made.
(3) Public entities (within the meaning of
subsection 152-30(6)) cannot make the choice.
Consequences in all cases
(1) If the individual, company or trust makes the choice mentioned in
section 152-305 for any part of the *capital
gain from the *CGT asset, that part of the
capital gain equal to its *CGT exempt amount is
disregarded.
Additional consequence for an individual
(2) This Act applies to you as if the
*capital proceeds from the
*CGT event (to the extent of the asset’s
*CGT exempt amount) were an
*eligible termination payment made to you at
the later of:
(a) when you made the choice; and
(b) when you received the amount.
Note: For the rules about eligible termination payments, see
Subdivision AA of Division 2 of Part III of the Income Tax Assessment Act
1936.
(3) In working out those *capital
proceeds, disregard the market value substitution rule (see section
116-30).
(4) The amount of that *eligible
termination payment is, for the purposes of Subdivision AA of Division 2 of Part
III of the Income Tax Assessment Act 1936, a CGT exempt
component.
Additional consequences for a company or trust
(5) Any *eligible termination payment or
part of one the company or trust makes to comply with section 152-325:
(a) is, for the purposes of Subdivision AA of Division 2 of Part III of
the Income Tax Assessment Act 1936, a CGT exempt component; and
(b) cannot be deducted from the company’s or trust’s
assessable income.
(1) You can choose to disregard all or part of each
*capital gain to which this Subdivision
applies.
Note 1: You make capital gains equal to any parts that you
do not choose to disregard.
Note 2: Section 103-25 tells you when the choice must be
made.
(2) However, the choice must be made in a way that ensures that:
(a) for an individual—your *CGT
retirement exemption limit is not exceeded; or
(b) for a company or trust—the CGT retirement exemption limit of
each individual for whom the choice is made is not exceeded.
(3) The amount chosen for the asset is its CGT exempt
amount.
(4) The *CGT exempt amount must be
specified in writing.
(5) If a company or trust is making the choice and it has 2
*CGT concession stakeholders, it must specify
in writing the percentage of each *CGT
asset’s *CGT exempt amount that is
attributable to each of those stakeholders. One of the percentages may be nil,
but they must add up to 100%.
Example: Daryl is a controlling individual of a company. The
company specifies 90% for Daryl under subsection (5) (which means that the
percentage specified for the other stakeholder must be 10%). Daryl’s
retirement exemption limit is $500,000.
To determine whether subsection (2) is complied with, Daryl
would take 90% of the asset’s CGT exempt amount, add that to amounts
previously specified in choices made by or for him under this Subdivision and
see whether the total exceeds $500,000.
Note: Subsections
(4) and (5) are exceptions to the general rule about choices in section
103-25.
(1) An individual’s CGT retirement exemption limit at
a time is $500,000 reduced by the *CGT exempt
amounts of *CGT assets specified in choices
previously made by or for the individual under this Subdivision.
(2) If the individual was one of 2 *CGT
concession stakeholders of a company or trust, and the company or trust made a
choice for the individual, only the individual’s percentage (see
subsection 152-315(5)) of the assets’
*CGT exempt amounts is taken into account under
subsection (1) for that choice.
(1) Each time a company or trust receives an amount of
*capital proceeds from a
*CGT event for which it makes a choice under
this Subdivision, the company or trust must make an
*eligible termination payment in relation to
each of its *CGT concession
stakeholders.
(2) If there are 2 such stakeholders, the amount of each such
*eligible termination payment is to be worked
out by reference to each individual’s percentage (see subsection
152-315(5)) of the relevant *CGT exempt
amount.
(3) The payment must be made by the later of:
(a) 7 days after it makes the choice; and
(b) 7 days after it receives an amount of
*capital proceeds from the
*CGT event.
(4) In working out those *capital
proceeds, disregard:
(a) section 103-10 (which deals with proceeds that are applied for your
benefit rather than being paid directly to you); and
(b) the market value substitution rule (see section 116-30).
(5) The amount of the *eligible
termination payment, or the sum of the amounts of the eligible termination
payments, required to be made under subsection (1) must be equal to the lesser
of:
(a) the amount of *capital proceeds
received; and
(b) the relevant *CGT exempt
amount.
(6) If this section requires the company or trust to make 2 or more
*eligible termination payments to a single
stakeholder (whether or not by the same time), the company or trust may meet
that requirement by making one payment or by making separate payments.
(7) If a stakeholder is under 55 just before receiving an
*eligible termination payment under subsection
(1) (disregarding section 103-10), an amount equal to that payment must be
rolled over (within the meaning of Subdivision AA of Division 2 of Part III of
the Income Tax Assessment Act 1936) except by being paid as mentioned in
paragraph 27A(12)(c) of that Act.
Note: Paragraph 27A(12)(c) of the Income Tax Assessment
Act 1936 deals with payments to life companies or registered organisations
to purchase certain annuities.
A small business roll-over allows you to defer the making of a capital gain
from a CGT event happening in relation to one or more small business assets if
you acquire replacement assets.
The concession in section 152-205 (small business 50% reduction) applies
before this one. For an additional exemption, see also Subdivision 152-D (small
business retirement exemption).
Table of sections
152-405 Basic principles for the small business
roll-over
152-410 When you can obtain the roll-over
152-415 What the roll-over consists of
152-420 Replacement asset conditions
152-425 Rules where an individual who has obtained a
roll-over dies
(1) You can choose to obtain a roll-over if the basic conditions in
Subdivision 152-A are satisfied for the capital gain.
(2) You must acquire a replacement asset within the period from one year
before to 2 years after the happening of the last CGT event in the income year
for which you obtain the small business roll-over.
(3) The form of the roll-over is that the capital gain is disregarded to
the extent that it does not exceed the cost base of the replacement
asset.
(4) You will make a separate capital gain if a CGT event subsequently
happens to the replacement asset or if its status changes in particular
ways.
[This is the end of the Guide.]
You can choose to obtain a roll-over under this Subdivision for a
*capital gain if:
(a) the basic conditions in Subdivision 152-A are satisfied for the gain;
and
(b) within the period starting one year before, and ending 2 years after,
the last *CGT event during the year for which
you choose a small business roll-over, you choose one or more
*CGT assets as replacements (the
replacement asset); and
(c) the replacement asset satisfies the conditions set out in section
152-420.
Note: Paragraph (b) is an exception to the general rule
about choices in section 103-25.
If you choose the roll-over, so much of the
*capital gain that would have remained apart
from the roll-over as does not exceed the total of the first and second elements
of the *cost base of the replacement asset is
disregarded.
Note: If there is an amount of the capital gain that cannot
be so disregarded, you make a capital gain equal to that
amount.
Example: The original capital gain was $100. You have
reduced it to $25 under other concessions (apart from the roll-over). If the
total of the first and second elements of the cost base of the replacement asset
is $20, you can disregard $20 under this section, leaving a final capital gain
of $5.
(1) For an asset to be eligible to be a replacement asset, you must
*acquire it during the period starting one year
before, and ending 2 years after, the happening of the last
*CGT event in the income year for which you
obtain the small business roll-over.
Extension of time if all reasonable steps taken
(2) This time limit does not apply to the extent that your
*capital proceeds for the
*CGT event are increased under subsection
116-45(2) after that time is up. Instead, you have until 12 months after you
receive those additional proceeds to *acquire a
replacement asset the first and second elements of the
*cost base of which are at least equal to the
value of those additional proceeds.
Note 1: If you do not acquire a replacement asset with a
sufficiently large cost base within the new time limit, your roll-over will be
reduced accordingly under section 152-415.
Note 2: Section 116-45 applies if you do not receive your
capital proceeds despite having taken all reasonable steps to get
them.
(3) The Commissioner may extend the time limits under subsections (1) and
(2).
Type of replacement asset allowed
(4) A replacement asset must be an
*active asset when it is
*acquired or an active asset by the end of 2
years after the last *CGT event during the year
for which you choose a small business roll-over.
Note: If a replacement asset is an active asset and its
status subsequently changes, you may make a capital gain: see section 104-185
(CGT event J2). Special rules apply if you die: see section
152-425.
(5) If a replacement asset is a *share in
a company or an interest in a trust, you, or an entity
*connected with you, must be a
*controlling individual of the company or trust
just after you *acquire the share or
interest.
Example: Joseph owns 50% of the shares in Company A and
Company B. He is therefore a controlling individual of the companies (see
section 152-55). The companies are connected with Joseph (see section 152-30)
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.
The replacement asset test is satisfied because Joseph is
connected with Company A and is a controlling individual of
Company B.
Note: If a replacement asset is a share in a company and the
status of the company changes, or you or an entity connected with you ceases to
be its controlling individual, you may make a capital gain: see section 104-190
(CGT event J3). Special rules apply if you die: see section
152-425.
(1) If a replacement asset that formed part of the estate of an individual
who has died has devolved to the deceased’s
*legal personal representative and:
(a) the status of the replacement asset did not change in any of the ways
covered by subsection 104-185(1) while the deceased owned it; or
(b) if the replacement asset is a *share
in a company or an interest in a trust, the circumstances of the company or
trust did not change in any of the ways covered by subsection 104-190(1) while
the share or interest was in the hands of the deceased;
then, for the purposes of this Subdivision, anything done or not done by
the deceased in relation to the asset is treated as though it had been done or
not done by the legal personal representative.
(2) If the replacement asset has passed to a beneficiary of the deceased
individual and:
(a) the status of the replacement asset did not change in any of the ways
covered by subsection 104-185(1) while the deceased owned it; or
(b) if the replacement asset is a *share
in a company or an interest in a trust, the circumstances of the company or
trust did not change in any of the ways covered by subsection 104-190(1) while
the share or interest was in the hands of the deceased or the deceased’s
*legal personal representative;
then, for the purposes of this Subdivision, anything done or not done by
the deceased or by the deceased’s legal personal representative in
relation to the asset is treated as though it had been done or not done by the
beneficiary.
[The next Part is Part 3-5.]
Part
2—Consequential
amendments
Income
Tax Assessment Act 1997
2 Subsection 100-30(2)
Omit “4 categories”, substitute “5
categories”.
3 At the end of subsection 100-30(2) (before the
note)
Add:
5. small business relief.
4 Subsection 100-30(2) (at the end of the
note)
Add “The small business relief provisions are in Division
152.”.
5 Section 100-50 (after the note to step
3)
Insert:
4. If you carry on a small business, apply the small business concessions
in further reduction of your capital gains (whether or not the gains are
discount capital gains).
For the small business
concessions:
see Division 152.
6 Section 100-50 (step 4)
Omit “4. Add up:”, substitute “5. Add
up:”.
7 Subsection 102-5(1) (method
statement)
Repeal the method statement, substitute:
Working out your net capital gain
Step 1. Reduce the *capital gains
you made during the income year by the *capital
losses (if any) you made during the income year.
Note 1: You choose the order in which you reduce your
capital gains. You have a net capital loss for the income year if your capital
losses exceed your capital gains: see section 102-10.
Note 2: Some provisions of this Act (such as Divisions 104
and 118) permit or require you to disregard certain capital gains or losses when
working out your net capital gain. Subdivision 152-B permits you, in some
circumstances, to disregard a capital gain on an asset you held for at least 15
years.
Step 2. Apply any previously unapplied
*net capital losses from earlier income years
to reduce the amounts (if any) remaining after the reduction of
*capital gains under step 1 (including any
capital gains not reduced under that step because the
*capital losses were less than the total of
your capital gains).
Note 1: Section 102-15 explains how to apply net capital
losses.
Note 2: You choose the order in which you reduce the
amounts.
Step 3. Reduce by the *discount
percentage each amount of a *discount capital
gain remaining after step 2 (if any).
Note: Only some entities can have discount capital gains,
and only if they have capital gains from CGT assets acquired at least a year
before making the gains. See Division 115.
Step 4. If any of your *capital
gains (whether or not they are *discount
capital gains) qualify for any of the small business concessions in Subdivisions
152-C, 152-D and 152-E, apply those concessions to each capital gain as provided
for in those Subdivisions.
Note 1: The basic conditions for getting these concessions
are in Subdivision 152-A.
Note 2: The small business concessions (other than small
business roll-overs) are not available for CGT events J2 and
J3.
Step 5. Add up the amounts of
*capital gains (if any) remaining after step 4.
The sum is your net capital gain for the income year.
Note: For exceptions and modifications to these rules: see
section 102-30.
8 Subsection 102-25(2A)
(example)
Omit “Division 123”, substitute “Subdivision
152-E”.
9 Section 102-30 (table items 2A and
2B)
Repeal the items.
10 Section 102-30 (table item
2AA)
Repeal the item, substitute:
|
2AA |
Beneficiary of trust whose net income includes a net capital gain |
The beneficiary is treated as having: |
Subdivision 115-C |
11 Subsection 103-25(3)
Repeal the subsection, substitute:
(3) However, there are some exceptions:
(a) subsections 124-380(5) and 124-465(5) (relating to replacement asset
roll-overs) require a company to make the choice at the earlier time specified
in those subsections; and
(b) subsections 152-315(4) and (5) (relating to the small business
retirement exemption) require a choice to be made in writing; and
(c) paragraph 152-410(b) (relating to the small business roll-over)
requires a choice of replacement assets within the longer period specified in
that paragraph.
12 Section 104-5 (table item dealing with CGT
event J2)
Omit “Division 123” (first occurring), substitute
“Subdivision 152-E”.
13 Section 104-5 (table item dealing with CGT
event J2)
Omit “notional capital gain that you applied to the asset under
Division 123”, substitute “capital gain that you disregarded under
Subdivision 152-E”.
14 Section 104-5 (table item dealing with CGT
event J3)
Omit “a unit in a unit trust”, substitute “an interest in
a trust”.
15 Section 104-5 (table item dealing with CGT
event J3)
Omit “Division 123” (first occurring), substitute
“Subdivision 152-E”.
16 Section 104-5 (table item dealing with CGT
event J3)
Omit “notional capital gain that you applied to the share or unit
under Division 123”, substitute “capital gain that you disregarded
under Subdivision 152-E”.
17 Subsection 104-70(7A) (table items 1 and
2)
Omit “step 4”, substitute “step 3”.
18 Subsection 104-70(7A) (note
1)
Omit “Step 4”, substitute “Step 3”.
19 Section 104-185
(heading)
Omit “Division 123”, substitute “Subdivision
152-E”.
20 Subsection 104-185(1)
Omit “Division 123”, substitute “Subdivision
152-E”.
21 Paragraphs 104-185(1)(a) and
(b)
Omit “a unit in a unit trust”, substitute “an interest in
a trust”.
22 Subsection 104-185(3)
Omit “notional”.
23 Subsection 104-185(3)
Omit “Division 123”, substitute “Subdivision
152-E”.
24 Subsection 104-185(3)
(example)
Omit “notional” (wherever occurring).
25 Subsection 104-185(3)
(example)
Omit “Division 123”, substitute “Subdivision
152-E”.
26 Section 104-190
(heading)
Omit “unit”, substitute
“interest”.
27 Section 104-190
(heading)
Omit “Division 123”, substitute “Subdivision
152-E”.
28 Subsection 104-190(1)
Omit “a unit in a unit trust”, substitute “an interest in
a trust”.
29 Subsection 104-190(1)
Omit “Division 123”, substitute “Subdivision
152-E”.
30 Paragraph 104-190(1)(a)
Omit “requirements in section 123-75”, substitute
“conditions in section 152-420”.
31 Paragraph 104-190(1)(b)
Omit “requirements”, substitute
“conditions”.
32 Paragraphs 104-190(1)(c) and
(d)
Repeal the paragraphs, substitute:
(c) the *share or interest ceases to be
an *active asset;
33 Subsection 104-190(1)
Omit “share or unit”, substitute “share or
interest”.
34 Subsection 104-190(3)
Omit “notional”.
35 Subsection 104-190(3)
Omit “unit”, substitute “interest”.
36 Subsection 104-190(3)
Omit “Division 123”, substitute “Subdivision
152-E”.
37 Subsection 104-190(4)
Omit “requirements in section 123-75”, substitute
“conditions in section 152-420”.
38 Subsection 104-190(5)
Omit “total market values of the
*active assets fell below the specified
level”, substitute “share or interest ceased to be an
*active asset”.
39 Subsection 104-190(5)
Omit “unit”, substitute “interest”.
40 Section 112-115 (table item
3)
Omit “Division 123”, substitute “Subdivision
152-E”.
41 After paragraph
115-25(3)(h)
Insert:
(ha) *CGT event J2;
(hb) *CGT event J3;
Repeal the Subdivision, substitute:
This Subdivision sets out rules for dealing with the net income of a trust
that has a net capital gain. The rules treat parts of the net income
attributable to the trust’s net capital gain as capital gains made by the
beneficiary entitled to those parts. This lets the beneficiary reduce those
parts by any capital losses and unapplied net capital losses it has.
If the trust’s capital gain was reduced by either the general 50%
discount in step 3 of the method statement in subsection 102-5(1) or by the
small business 50% reduction in Subdivision 152-C (but not both), then the gain
is doubled. The beneficiary can then apply its capital losses to the gain before
applying the appropriate discount percentage (if any) or the small business 50%
reduction.
If the trust’s capital gain was reduced by both the general 50%
discount and the small business 50% reduction, then the gain is multiplied by 4.
The beneficiary can then apply its capital losses to the gain before applying
the appropriate discount percentage (if any) and the small business 50%
reduction.
The rules also give the beneficiary a deduction if necessary to prevent it
from being taxed twice on the same parts of the trust’s net
income.
Table of sections
Operative provisions
115-210 When this Subdivision applies
115-215 Assessing presently entitled
beneficiaries
115-220 Special rule for assessing trustee under subsection
98(3) of the Income Tax Assessment Act 1936
115-225 Special rule for assessing trustee under section 99A
of the Income Tax Assessment Act 1936
[This is the end of the Guide. The next section is section
115-210.]
(1) This Subdivision applies if a trust estate has a
*net capital gain for an income year that is
taken into account in working out the trust estate’s net income (as
defined in section 95 of the Income Tax Assessment Act 1936) for the
income year.
(2) If the trust estate has a beneficiary that is a
*complying superannuation entity that is a
trust, this Subdivision applies in relation to the complying superannuation
entity as a beneficiary but not as a trust estate. This Subdivision does not
apply otherwise to a *complying superannuation
entity that is a trust.
Purpose
(1) The purpose of this section is to ensure that appropriate amounts of
the trust estate’s net income attributable to the trust estate’s
*capital gains are treated as a
beneficiary’s capital gains when assessing the beneficiary, so:
(a) the beneficiary can apply *capital
losses against gains; and
(b) the beneficiary can apply the appropriate
*discount percentage (if any) to
gains.
Application
(2) This section treats you as having certain extra
*capital gains, and gives you a deduction,
if:
(a) you are the beneficiary of the trust estate; and
(b) your assessable income for the income year includes an amount (the
trust amount):
(i) under paragraph 97(1)(a) of the Income Tax Assessment Act 1936;
or
(ii) under subsection 98A(1) of that Act because you are a beneficiary
described in subsection 98(4) of that Act; or
(iii) under subsection 100(1) of that Act.
Extra capital gains
(3) For each *capital gain (the
trust gain) of the trust estate, Division 102 applies to you as if
you had:
(a) if the trust gain was not reduced under either step 3 of the
method statement in subsection 102-5(1)
(*discount capital gains) or Subdivision
152-C (small business 50% reduction)—a capital gain equal to the part (if
any) of the trust amount that is attributable to the trust gain; and
(b) if the trust gain was reduced under either step 3 of the method
statement or Subdivision 152-C but not both (even if it was further
reduced by the other small business concessions)—a capital gain equal to
twice the part (if any) of the trust amount that is attributable to the trust
gain; and
(c) if the trust gain was reduced under both step 3 of the method
statement and Subdivision 152-C (even if it was further reduced by the
other small business concessions)—a capital gain equal to 4 times the part
(if any) of the trust amount that is attributable to the trust gain.
(4) For each *capital gain of yours
mentioned in paragraph (3)(b) or (c):
(a) if the relevant trust gain was reduced under step 3 of the method
statement in subsection 102-5(1)—Division 102 also applies to you as if
your capital gain were a *discount capital
gain, if you are the kind of entity that can have a discount capital gain;
and
(b) if the relevant trust gain was reduced under Subdivision
152-C—the capital gain remaining after you apply step 3 of the method
statement is reduced by 50%.
Note: This ensures that your share of the trust
estate’s net capital gain is taxed as if it were a capital gain you made
(assuming you made the same choices about cost bases including indexation as the
trustee).
Section 118-20 does not reduce extra capital gains
(5) To avoid doubt, section 118-20 does not reduce a
*capital gain that subsection (3) treats you as
having for the purpose of applying Division 102.
Deduction
(6) You can deduct for the income year the part (if any) of the trust
amount that is attributable to the trust estate’s
*net capital gain mentioned in subsection
102-5(1).
Note: This deduction ensures you are not taxed twice on the
part of the trust amount that is attributable to the trust estate’s net
capital gain.
Purpose
(1) The purpose of this section is to ensure a trustee assessed under
subsection 98(3) of the Income Tax Assessment Act 1936 (in respect of the
share of the net income to which a beneficiary that is a company is entitled)
does not get the benefit in that assessment of the
*discount percentage that the company would not
have got if it had been assessed in respect of the share.
Modification of subsection 98(3)
(2) The trustee is to be assessed (and pay tax) under subsection 98(3) of
the Income Tax Assessment Act 1936 as if the part of the share that is
attributable to a *capital gain of the trust
estate that was reduced under step 3 of the method statement in subsection
102-5(1) were double the amount that it actually is.
Purpose
(1) The purpose of this section is to reverse the benefit of applying the
*discount percentage or the small business 50%
reduction under Subdivision 152-C in working out the trust estate’s net
income when the trustee is assessed under section 99A of the Income Tax
Assessment Act 1936 on an amount of the net income.
Modification of section 99A
(2) The trustee is to be assessed (and pay tax) under section 99A of the
Income Tax Assessment Act 1936 as if:
(a) if a *capital gain of the trust was
reduced under either step 3 of the method statement in subsection
102-5(1) (discount capital gains) or Subdivision 152-C (small business
50% reduction) but not both (even if it was further reduced by the other small
business concessions in Subdivisions 152-D and 152-E)—the part of the
amount that is attributable to the trust estate’s capital gain were double
the amount that it actually is; and
(b) if a capital gain was reduced under both step 3 of the method
statement and Subdivision 152-C (even if it was further reduced by the
other small business concessions)—the part of the amount that is
attributable to the trust estate’s gain were 4 times the amount that it
actually is.
43 Subsection 116-30(1)
(note)
Omit all the words after “see”, substitute “section
138-30 and subsections 152-310(3) and 152-325(4)”.
44 Section 118-1
After “Division 104 (exceptions from CGT events)”, insert
“, Division 152 (small business relief)”.
45 Subdivisions 118-C and
118-F
Repeal the Subdivisions.
46 Division 123
Repeal the Division, substitute:
[The next Division is Division 124.]
47 At the end of subsection
124-5(1)
Add:
Note: If you carry on a small business, you may also be able
to obtain a roll-over under Subdivision 152-E.
48 Section 136-10 (table item dealing with CGT
event J2)
Omit “Division 123”, substitute “Subdivision
152-E”.
49 Section 136-10 (table item dealing with CGT
event J3)
Omit “a unit in a unit trust”, substitute “an interest in
a trust”.
50 Section 136-10 (table item dealing with CGT
event J3)
Omit “Division 123”, substitute “Subdivision
152-E”.
51 At the end of paragraph
138-435(2)(c)
Add “(up to the end of 30 September 1999)”.
52 Section 960-265 (table item
4)
Repeal the item.
53 Subsection 960-275(1)
(example)
Repeal the example.
Income
Tax Assessment Act 1936
54 Subsection 27A(1) (paragraph (c) of the
definition of CGT exempt component)
Omit “subsection 118-415(4) or (5)”, substitute
“subsection 152-310(4) or (5)”.
55 Subsection 27A(1) (paragraph (jaa) of the
definition of eligible termination payment)
Omit “subsection 118-415(2)”, substitute “subsection
152-310(2)”.
56 Section 140C (paragraph (b) of the definition
of payer)
Omit “subsection 118-415(2)”, substitute “subsection
152-310(2)”.
57 Subsection 140M(6)
Omit “subsection 118-415(2)”, substitute “subsection
152-310(2)”.
58 Subsection 140N(4)
Omit “subsection 118-415(2)”, substitute “subsection
152-310(2)”.
59 Subsection 140P(3)
Omit “subsection 118-415(2)”, substitute “subsection
152-310(2)”.
60 Section 140ZJA
Omit “subsection 118-415(2)”, substitute “subsection
152-310(2)”.
Part
3—Application and
transitional
61 Application of
amendments
The amendments made by this Schedule apply to assessments for the income
year including 21 September 1999 and all later income years, if a CGT event
happens after 11.45 am, by legal time in the Australian Capital Territory, on 21
September 1999.
Note: The 15-year exemption in Subdivision 152-B of the
Income Tax Assessment Act 1997, as inserted by this Division, will
effectively only apply to CGT events that happen on or after 20 September 2000,
since the 15-year exemption is only relevant to CGT assets acquired on or after
20 September 1985.
62 Transitional—old CGT retirement
exemption limit carries over
If an individual’s CGT retirement exemption limit was reduced by one
or more amounts under:
(a) section 118-435 of the Income Tax Assessment Act 1997;
or
(b) section 160ZZPZN of the Income Tax Assessment Act
1936;
or both, then the individual’s CGT retirement exemption limit under
Subdivision 152-D of that Act (as inserted by this Schedule) is taken to have
been reduced by the total of all those amounts at 11.45 am, by legal time in the
Australian Capital Territory, on 21 September 1999.
Note: This could result in the individual’s new limit
being reduced to nil at that time, if he or she has already used it up under
those old provisions.
Income
Tax Assessment Act 1997
1
Section 112-115 (after table item 14)
Insert:
|
14A |
Scrip for scrip |
Subdivision 124-M |
Omit “124-L”, substitute “124-M”.
Insert:
Note: The consequences of a scrip for scrip roll-over are
set out in Subdivision 124-M.
4 After Subdivision 124-L
Insert:
This Subdivision allows you to choose a roll-over where post-CGT shares or
trust interests you own are replaced with other shares or trust interests, for
example, where there is a company takeover.
You can only choose the roll-over if you would have made a capital gain
from the exchange.
Table of sections
Operative provisions
124-780 Replacement of shares or trust
interest
124-785 What is the roll-over
124-790 Partial roll-over
124-795 Exceptions
124-800 Cost base of interest received for pre-CGT
interest
124-805 Meaning of trust voting interest
124-810 Certain companies and trusts not regarded as having
300 members or beneficiaries
[This
is the end of the Guide.]
(1) You can choose to obtain a roll-over if:
(a) you own:
(i) a *share that you
*acquired on or after 20 September 1985 or an
interest in such a share (your original interest) in a company
(the original entity); or
(ii) a unit or other interest that you acquired on or after that day or an
interest in such a unit or interest (also your original interest)
in a trust (also the original entity); and
(b) an entity (the acquiring entity) makes an offer to all
of the holders of interests in the original entity to
*acquire:
(i) if the original entity is a
company—*voting shares; and
(ii) if the original entity is a
trust—*trust voting interests in the
trust or, if there are none, units or other fixed interests in the trust;
and
(c) you exchange your original interest as mentioned in subsection (2);
and
(d) in consequence of the offer, the acquiring entity has:
(i) if the original entity is a company—at least 80% of the voting
shares in the original entity; or
(ii) if the original entity is a trust—at least 80% of the trust
voting interests in the original entity or, if there are none, interests in the
trust carrying entitlements to at least 80% of the income and capital of the
trust; and
(e) apart from the roll-over, you would make a
*capital gain from the exchange.
Note 1: There are some exceptions: see section
124-795.
Note 2: If you also exchange a CGT asset that you acquired
before 20 September 1985, the cost base of any interest received in exchange for
it is worked out under section 124-800.
(2) You must exchange your original interest in consequence of the offer
for:
(a) if your original interest was a
*share or interest in a share in a
company:
(i) a share or interest in a share (your replacement
interest) in another company that is the acquiring entity; or
(ii) a share or interest in a share in the acquiring entity (also your
replacement interest) and something else; or
(b) if your original interest was a unit or other interest in a trust or
an interest in such a unit or interest:
(i) a unit or other interest, or an interest in it (your replacement
interest) in another trust that is the acquiring entity; or
(ii) a unit or interest of that kind in the acquiring entity (also your
replacement interest) and something else.
Note: If you receive something else, you can obtain only a
partial roll-over: see section 124-790.
Rolling-over options, rights etc.
(3) Subsections (1) and (2) also allow you to choose to obtain a roll-over
if you exchange an option, right or similar interest issued by the original
entity that enables you to *acquire another
interest in that entity for the same kind of option, right or similar interest
issued by the acquiring entity.
Example: You can get a roll-over if you exchange your shares
in one entity for shares in another entity or if you exchange options in one
entity for options in another entity. You cannot get a roll-over if you exchange
options for shares.
Other requirements in certain cases
(4) The conditions specified in subsection (5) must exist if you and the
acquiring entity did not deal with each other at arm’s length
and:
(a) neither the original entity nor the acquiring entity has at least 300
members (for a company) or 300 beneficiaries (for a trust) just before you stop
owning your original interest; or
(b) you, the original entity and the acquiring entity are all members of
the same *linked group just before that
time.
Note: There are some cases where a company or trust will not
be regarded as having 300 members or beneficiaries: see section
124-810.
(5) The conditions are:
(a) the market value of your *capital
proceeds for the exchange must be substantially the same as the market value of
your original interest; and
(b) each of the interests you acquire in the acquiring entity must carry
the same rights and obligations as those attached to interests of that kind you
had in the original entity.
(1) A *capital gain you make from your
original interest is disregarded.
(2) You work out the first element of the
*cost base of each
*CGT asset you received as a result of the
exchange by reasonably attributing to it the cost base (or the part of it) of
your original interest for which it was exchanged and for which you obtained the
roll-over.
(3) In applying subsection (2), you reduce the
*cost base of your original interest (just
before you stop owning it) by so much of that cost base as is attributable to an
ineligible part (see section 124-790).
(4) The first element of the *reduced
cost base is worked out similarly.
Example 1: Lyn exchanges 1 share with a cost base of $10 for
another share. The cost base of the new share is $10.
Example 2: Glenn exchanges 2 shares with cost bases of $10
and $11 respectively for one new share. The cost base of the new share is
$21.
Example 3: Wayne exchanges 1 share with a cost base of $9
for share A with a market value of $5 and share B with a market value of $10.
The cost base of share A is $3 and the cost base of share B is
$6.
(1) You can obtain only a partial roll-over if you receive something other
than your replacement interest (the ineligible proceeds). There is
no roll-over for that part (the ineligible part) of your original
interest for which you received ineligible proceeds.
(2) The *cost base of the ineligible part
is that part of the cost base of your original interest as is reasonably
attributable to it.
Example: Ken owns 100 shares in Aim Ltd. Those shares have a
cost base of $2.
Ken accepts an offer from LBZ Ltd to acquire those shares.
The offer is 1 share in LBZ (market value $4) plus $1 for each Aim
share.
Ken chooses the roll-over to the extent that he
can.
The cost base of the ineligible part is [$100 × $200]
÷ $500 = $40.
Ken makes a capital gain of $100 − $40 =
$60.
(3) The *reduced cost base of the
ineligible part is worked out similarly.
(1) You cannot obtain the roll-over if, just before you stop owning your
original interest, you are not an Australian resident unless, just after you
*acquire your replacement interest, the
acquiring entity is an Australian resident or a
*resident trust for CGT purposes.
Note: If you are not an Australian resident and the
acquiring entity is, the replacement interest has the necessary connection
with Australia: see Division 136.
(2) You cannot obtain the roll-over if:
(a) any *capital gain you might make from
your replacement interest would be disregarded (except because of a roll-over);
or
(b) you and the acquiring entity are members of the same
*wholly-owned group just before you stop owning
your original interest.
Example: An example of a capital gain or loss being
disregarded as mentioned in paragraph (2)(a) is because the asset is trading
stock.
Note: A roll-over may be available under Subdivision 126-B
in the circumstances mentioned in paragraph (2)(b).
(3) You cannot obtain the roll-over if:
(a) the original entity or the acquiring entity is a trust; and
(b) entities do not have *fixed
entitlements to all of the income and capital of the trust.
If, as part of the exchange for which you obtain the roll-over, an
interest that you acquired before 20 September 1985 is
*acquired by the acquiring entity, the first
element of the *cost base of any
*CGT asset you acquire that is attributable to
that interest is its market value just after you acquired it.
A trust voting interest in a trust is an interest in the
trust that confers rights of the same or similar kind as the rights conferred by
a *voting share in a company.
(1) For the purposes of paragraph 124-780(4)(a), a company is treated as
if it did not have at least 300 *members if
subsection (3) or (5) applies to it.
(2) For the purposes of paragraph 124-780(4)(a), a trust is treated as if
it did not have at least 300 beneficiaries if subsection (4) or (5) applies to
it.
Concentrated ownership
(3) This subsection applies to a company if an individual owns, or up to
20 individuals own between them, directly or indirectly (through one or more
interposed entities) and for their own benefit,
*shares in the company:
(a) carrying fixed entitlements to:
(i) at least 75% of the company’s income; or
(ii) at least 75% of the company’s capital; or
(b) carrying at least 75% of the voting rights in the company.
(4) This subsection applies to a trust if an individual owns, or up to 20
individuals own between them, directly or indirectly (through one or more
interposed entities) and for their own benefit, units or other fixed interests
in the trust:
(a) carrying *fixed entitlements
to:
(i) at least 75% of the trust’s income; or
(ii) at least 75% of the trust’s capital; or
(b) if beneficiaries of the trust have a right to vote in respect of
activities of the trust—carrying at least 75% of those voting
rights.
Possible variation of rights etc.
(5) This subsection applies to a company or trust if, because
of:
(a) any provision in the entity’s constituent document, or in any
contract, agreement or instrument:
(i) authorising the variation or abrogation of rights attaching to any of
the *shares, units or other fixed interests in
the entity; or
(ii) relating to the conversion, cancellation, extinguishment or
redemption of any of those interests; or
(b) any contract, *arrangement, option or
instrument under which a person has power to acquire any of those interests;
or
(c) any power, authority or discretion in a person in relation to the
rights attaching to any of those shares, units or interests;
it is reasonable to conclude that the rights attaching to any of those
interests are capable of being varied or abrogated in such a way (even if they
are not in fact varied or abrogated in that way) that, directly or indirectly,
subsection (3) or (4) would apply to the entity.
Single individual
(6) For the purposes of subsections (3) and (4), all of the following are
taken to be a single individual:
(a) an individual, whether or not the individual holds
*shares, units or other interests in the entity
concerned;
(b) the individual’s
*associates;
(c) for any shares, units or interests in respect of which other
individuals are nominees of the individual or of the individual’s
associates—those other individuals.
Omit “8 categories”, substitute “9
categories”.
6
Section 136-25 (at the end of the table)
Add:
|
9 |
A *share in a company or a unit or
interest in a trust you *acquire where: |
The amendments made by this Schedule apply to CGT events happening on or
after the day on which this Act receives the Royal Assent.
Income
Tax Assessment Act 1997
1 Section 11-15 (before the table item headed
“life assurance”)
Insert:
|
foreign investment |
|
|
|
gain or profit from realisation of venture capital equity |
51-55 |
|
2 At the end of Division 26
Add:
You cannot deduct under this Act a loss made from the disposal or other
realisation of *venture capital equity in a
*resident investment vehicle if:
(a) it is made by a *venture capital
entity or a *limited partnership referred to in
subsection 118-515(2); and
(b) if that disposal or other realisation were a
*disposal of a
*CGT asset, any
*capital gain or
*capital loss would be disregarded under
Subdivision 118-G.
3 At the end of Division 51
Add:
Any gain or profit made from the disposal or other realisation of
*venture capital equity in a
*resident investment vehicle is exempt from
income tax if:
(a) it is made by a *venture capital
entity or a *limited partnership referred to in
subsection 118-515(2); and
(b) if that disposal or other realisation were a
*disposal of a
*CGT asset, any
*capital gain or
*capital loss would be disregarded under
Subdivision 118-G.
4 At the end of Division
118
Add:
A non-resident tax exempt pension fund that invests in venture capital
equity in an Australian company or fixed trust (a resident investment vehicle)
can disregard a capital gain or capital loss it makes from a CGT event that
happens to that equity if:
(a) the entity is registered under the Pooled Development Funds Act
1992; and
(b) the entity owned the equity for at least 12 months.
Table of sections
118-505 Exemption for certain foreign venture
capital
118-510 Meaning of resident investment
vehicle
118-515 Meaning of venture capital
entity
118-520 Meaning of foreign superannuation
fund
118-525 Meaning of venture capital
equity
[This is the end of the Guide.]
(1) A *capital gain or
*capital loss is disregarded if it is made from
a *CGT event happening in relation to a
*CGT asset that is
*venture capital equity where the
asset:
(a) was *acquired by a
*venture capital entity; and
(b) at the time of the CGT event:
(i) was owned by that entity; and
(ii) had been owned by that entity for at least 12 months.
(2) The *venture capital entity must be
registered under Part 7A of the Pooled Development Funds Act 1992 at the
time of the *CGT event.
(1) A resident investment vehicle is a company that is an
Australian resident, or a trust that is a
*resident trust for CGT purposes, if:
(a) the sum of:
(i) the total value of the assets of the company or trust, and
(ii) the total value of the assets of any company or trust
*connected with the first company or trust;
and
(iii) the amount of the investment proposed to be made in venture capital
equity in the company or trust by the relevant
*venture capital entity;
is not more than $50,000,000 just before the time (the acquisition
time) when the relevant venture capital entity acquires venture capital
equity in the company or trust; and
(b) the primary activity of the company or trust is not, at any time,
property development or land ownership.
(2) However, a trust is not a resident investment vehicle
unless entities have *fixed entitlements to all
of the income and capital of the trust.
(3) The total value of the assets of a company or trust is the total value
of its assets (both current and non-current) as shown in:
(a) the last audited accounts prepared for the company or trust for the
purposes of the Corporations Law that relates to a period ending less than 18
months before the acquisition time; or
(b) if there are no such audited accounts—a statement audited by the
company’s or trust’s auditor showing that value as at a time no
longer than 12 months before the acquisition time.
(1) An entity (except a partner in a partnership) is a venture
capital entity if:
(a) it is not an Australian resident; and
(b) it is a *foreign superannuation fund;
and
(c) it is not a *prescribed dual
resident; and
(d) it is a resident of:
(i) Canada; or
(ii) France; or
(iii) Germany; or
(iv) Japan; or
(v) the United Kingdom; or
(vi) the United States of America; or
(vii) some other foreign country prescribed by the regulations;
and
(e) its income is exempt, or effectively exempt, from taxation in its
country of residence.
(2) A partner in a partnership is a venture capital entity
if:
(a) all of the partners in it are entities that are
*venture capital entities under subsection (1);
or
(b) the partnership is a *limited
partnership and:
(i) all of the partners in it (except its general partner or managing
partner) are venture capital entities under subsection (1); and
(ii) its general partner or managing partner has interests in less than
10% of the total value of the assets of the partnership.
(1) A fund is a foreign superannuation fund at a time
if:
(a) at that time, it is:
(i) an indefinitely continuing fund; and
(ii) a provident, benefit, superannuation or retirement fund;
and
(b) it was established in a foreign country; and
(c) it was established, and is maintained at that time, only to provide
benefits for individuals who are not Australian residents or residents of a
Territory; and
(d) at that time, its central management and control is carried on outside
Australia by entities none of whom is an Australian resident or a resident of a
Territory.
(2) However, a fund is not a foreign superannuation fund
if:
(a) an amount paid to the fund or set aside for the fund has been or can
be deducted under this Act; or
(b) a *tax offset has been allowed or is
allowable for such an amount.
(1) A *CGT asset is venture capital
equity for a *venture capital entity if
it is a *share in a company or an interest in a
trust where:
(a) the company or trust is a *resident
investment vehicle; and
(b) the share or interest was issued or allotted to the entity by the
company or trust; and
(c) the entity was at risk in owning the share or interest in that it had
no *arrangement (either before or after the
share or interest was issued or allotted) as to:
(i) the maintenance of the value of the share or interest; or
(ii) any earnings or other return that might be made from owning it;
or
(iii) protection from commercial loss because of owning it.
Example: A company borrows money to purchase some shares.
The terms of the loan include a term that, if the value of the shares falls
below the amount of the loan, the company can repay the loan by transferring the
shares to the lender.
The company’s ownership of the shares is not at risk,
because there is no possibility that it can lose money under the
transaction.
(2) However, *shares or interests in the
*resident investment vehicle issued or allotted
to a *venture capital entity are not
venture capital equity for the entity if:
(a) one or more of these events happens:
(i) a share or interest in the resident investment vehicle that was
*acquired by some other entity before that
issue or allotment is cancelled or redeemed; or
(ii) there is a return of some of the capital of the resident investment
vehicle that was acquired before that issue or allotment; or
(iii) value is shifted out of a share or interest in that vehicle that was
acquired before that issue or allotment; and
(b) it is reasonable to conclude that the happening of the event referred
to in paragraph (a) is connected to that issue or allotment, or to some
*arrangement between the entities
concerned.
Example: The capital of an Australian company is 100,000
shares, with a market value of $1 per share. The shares have full voting and
dividend rights.
The Australian company issues another 100,000 shares to a
foreign company. The new shares are issued at one cent each, but have very
limited voting and dividend rights.
The Australian company then changes the rights attaching to
its shares so that the new shares have full voting and dividend rights, and the
original shares have none.
Value has been shifted out of the original shares,
effectively converting “old equity” to “new
equity”.
(3) In deciding whether it is reasonable to reach the conclusion referred
to in paragraph (2)(b), these matters are relevant:
(a) whether the amount of the decrease in the
*net value of the
*resident investment vehicle because of the
happening of the event referred to in paragraph (2)(a) is the same as, or is
calculated by reference to, the value of the issue or allotment of
*shares or interests to the
*venture capital entity; and
(b) the time lapse between the happening of that event and that issue or
allotment.
Pooled
Development Funds Act 1992
5 Subsection 4(1) (at the end of the definition
of reviewable decision)
Add:
; or (i) under section 52A to refuse to register an entity under Part 7A;
or
(j) under section 52D to revoke such a registration.
6 Subsection 4(1)
Insert:
resident investment vehicle has the same meaning as in the
Income Tax Assessment Act 1997.
7 Subsection 4(1)
Insert:
venture capital entity has the same meaning as in the
Income Tax Assessment Act 1997.
8 Subsection 4(1)
Insert:
venture capital equity has the same meaning as in the
Income Tax Assessment Act 1997.
9 At the end of section 6
Add:
(2) The Board also has the function of registering venture capital
entities under Part 7A.
10 After subsection 43(1)
Insert:
(1A) The Board may, for the purposes of this Act, require a resident
investment vehicle, a venture capital entity or a present or former officer or
investment manager of a resident investment vehicle or a venture capital
entity:
(a) to provide the Board with information relating to the resident
investment vehicle or the venture capital entity; or
(b) to produce to the Board documents that so relate.
11 Subsection 52(1)
After “registration application”, insert “or an
application for registration under Part 7A”.
12 Subsection 52(2)
After “section 41”, insert “or 52C”.
13 After Part 7
Insert:
(1) A venture capital entity may apply to the Board for registration under
this Part.
(2) An application must be given to the Board within 30 days after the
venture capital entity makes its first investment in venture capital
equity.
(3) An application must be in writing, and must include the following
information:
(a) the
entity’s current residency status;
(b) details of the entity’s tax exempt status in its country of
residence;
(c) details of the facts that qualify the entity as a foreign
superannuation fund;
(d) the address of the entity’s registered office;
(e) the name and address of the first resident investment vehicle in which
it has invested or proposes to invest and the industry in which it
operates;
(f) the amount of the investment and the date on which it was or is to be
made;
(g) the total value of the assets of the resident investment vehicle
(worked out as mentioned in subsection 118-510(3) of the Income Tax
Assessment Act 1997) before the investment;
(h) details of other investments that do not constitute venture capital
equity the entity holds in the resident investment vehicle;
(i) if the entity is the general partner or managing partner of a limited
partnership referred to in subparagraph 118-515(2)(b)(ii) of the Income Tax
Assessment Act 1997—details of the partner’s interests in the
assets of the partnership.
(4) The Board must decide to register the entity under this Part if the
Board is satisfied that the information has been provided.
(5) If
the Board registers an applicant under this Part, the Board must notify the
applicant within 45 days of the application being made.
(1) Subject to this section, the Board must decide an application for
registration under this Part within 45 days after receiving it.
(2) If the Board thinks that it will take longer to decide the
application, the Board may extend, by up to 45 days, the period for deciding
it.
(3) An extension must be made by written notice given to the applicant
within 45 days after the Board receives the application.
(4) If the Board makes an extension, the Board must decide the application
within the extended period.
(1) A registered venture capital entity must, within 3 months after the
end of each financial year (30 June), give the Board a written return that
includes the following information:
(a) the entity’s current residency status;
(b) details of the entity’s tax exempt status in its country of
residence;
(c) details of the facts that qualify it as a foreign superannuation
fund;
(d) details of:
(i) investments the entity made during that year in resident investment
vehicles; and
(ii) investments in resident investment vehicles that the entity disposed
of during that year; and
(iii) investments the entity holds at the end of that year in resident
investment vehicles;
(e) the industries in which those vehicles operate;
(f) if the entity is the general partner or managing partner of a limited
partnership referred to in subparagraph 118-515(2)(b)(ii) of the Income Tax
Assessment Act 1997—details of the partner’s interests in the
assets of the partnership.
(2) Information about a matter that a return must include because of
paragraph (1)(a) or (b) is information about that matter as at the time when the
return is given to the Board.
(1) Subject to this section, the Board may revoke an entity’s
registration under this Part if the Board is satisfied that the entity has
failed to comply with section 52C.
(2) As soon as practicable after revoking an entity’s registration
under this Part, the Board must give the entity a notice that advises of the
revocation and sets out the Board’s reasons for deciding to
revoke.
(3) The Board must not revoke a registration unless the Board:
(a) by notice in writing given to the entity, allows the entity at least
14 days after the notice is given in which to make written submissions to the
Board about the matters specified in the notice that, in the opinion of the
Board, may constitute grounds for the revocation; and
(b) considers any such submissions.
14 Subsection 72(1)
Repeal the subsection, substitute:
(1) The Board may, by resolution, delegate to a member all or any of the
Board’s functions and powers under this Act, other than:
(a) for PDFs—the Board’s powers to make and revoke
registration declarations; and
(b) the Board’s powers to register entities or revoke registration
under Part 7A.
15 Subsection 73(1)
Repeal the subsection, substitute:
(1) The Board may, by resolution, delegate to a committee of 2 or more of
its members all or any of the Board’s functions and powers under this Act,
other than:
(a) for PDFs—the Board’s powers to make and revoke
registration declarations; and
(b) the Board’s powers to register entities or revoke registration
under Part 7A.
16 Subsection 74(2)
Repeal the subsection, substitute:
(2) Subsection (1) does not apply to:
(a) for PDFs—making or revoking a registration declaration;
or
(b) registering an entity or revoking registration under Part
7A.
17 After subsection 75(2)
Insert:
(2A) The Board must also include in the report:
(a) a list of the entities registered under Part 7A as at the end of the
financial year; and
(b) a list of the entities that became registered under that Part during
the financial year; and
(c) a list of the entities whose registration under that Part was revoked
during the financial year.
18 Application of
amendments
The amendments made by this Schedule apply to the issue or allotment of
venture capital equity in a resident investment vehicle on or after the day on
which this Act receives the Royal Assent.
Income
Tax Assessment Act 1997
1 Subsection 995-1(1) (definition of active
asset)
Omit “section 123-80”, substitute “section
152-40”.
2 Subsection 995-1(1) (definition of business
exemption threshold)
Repeal the definition.
3 Subsection 995-1(1)
Insert:
CGT concession stakeholder has the meaning given by
subsection 152-60.
4 Subsection 995-1(1) (definition of CGT
exempt amount)
Omit “section 118-425”, substitute “section
152-315”.
5 Subsection 995-1(1) (definition of CGT
retirement exemption limit)
Omit “section 118-435”, substitute “section
152-320”.
6 Subsection 995-1(1) (definition of
connected with)
Omit “section 123-60”, substitute “section
152-30”.
7 Subsection 995-1(1) (definition of
controlling individual)
Repeal the definition, substitute:
controlling individual has the meaning given by section
152-55.
8 Subsection 995-1(1)
Insert:
fixed entitlement: a beneficiary of a trust has a fixed
entitlement to a share of the income or capital of the trust in the
circumstances set out in section 272-5 of Schedule 2F to the Income Tax
Assessment Act 1936.
9 Subsection 995-1(1)
Insert:
foreign superannuation fund has the meaning given by section
118-520.
10 Subsection 995-1(1)
Insert:
limited partnership has the meaning given by section 94B of
the Income Tax Assessment Act 1936.
11 Subsection 995-1(1) (definition of net
value)
Repeal the definition, substitute:
net value of an entity means the amount by which the sum of
the market values of the assets of the entity exceeds the sum of its
liabilities.
12 Subsection 995-1(1) (definition of net
value of the CGT assets)
Omit “section 123-50”, substitute “section
152-20”.
13 Subsection 995-1(1) (definition of related
business)
Repeal the definition.
14 Subsection 995-1(1)
Insert:
resident investment vehicle has the meaning given by section
118-510.
15 Subsection 995-1(1) (definition of small
business CGT affiliate)
Omit “section 123-55”, substitute “section
152-25”.
16 Subsection 995-1(1)
Insert:
trust voting interest has the meaning given by section
124-805.
17 Subsection 995-1(1)
Insert:
venture capital entity has the meaning given by section
118-515.
18 Subsection 995-1(1)
Insert:
venture capital equity has the meaning given by section
118-525.