Subdivision 138-E—Groups

Guide to Subdivision 138-E

138-350 What this Subdivision does

Grouping CGT assets provides a simplified method of applying this Division to 2 or more assets in relation to which CGT event A1 or B1 happens in the same income year.

Grouping may result in no reduction being required and in some cases it will result in a lesser reduction. You may also choose to group certain assets for administrative convenience.

This Subdivision shows you how to group assets and sets out the rules for allocating assets to particular groups.

Table of sections

Operative provisions

138-355 Choosing to allocate assets to a group

138-360 3 different groups

138-365 Conditions for allocating assets to a group

138-370 Conditions for applying this Division to a group

138-375 Shares or loans created after CGT event

[This is the end of the Guide.]

Operative provisions

138-355 Choosing to allocate assets to a group

You can choose to allocate *CGT assets to a group so that this Division applies once to all the CGT assets in the group.

Note 1: Sections 138-110, 138-180 and 138-300 show you how to make adjustments for CGT events happening to grouped assets.

Note 2: Section 103-25 tells you when you have to make the choice.

138-360 3 different groups

There are 3 different groups to which *CGT assets may be allocated:

• a depreciable *plant group;

• a pre-common ownership group;

• a post-common ownership group.

138-365 Conditions for allocating assets to a group

(1) There are some common conditions that apply to any allocation of a *CGT asset to a group.

(2) These are:

(a) the asset must be the first one allocated to the group, or *CGT event A1 or B1 must have happened to the asset (involving the first and second companies) in the same income year of the originating company that CGT event A1 or B1 (involving those companies) happened to each other asset in the group; and

(b) the expenditure incurred by the originating company on its last *acquisition of the asset must have been less than $1,000,000; and

(c) the asset must not be land, a building or a structure.

The expenditure can include giving property: see section 103-5.

(3) An additional condition for allocating a *CGT asset to a depreciable *plant group is that the asset must be *plant for which the originating company has deducted or can deduct an amount for depreciation.

(4) There are some additional conditions that apply to allocating a *CGT asset to a pre-common ownership group or a post-common ownership group. These are set out in this table.

 

Additional conditions

Item

Pre-common ownership groups

Post-common ownership groups

1

The *CGT asset must have been *acquired by the originating company before the time when it and the recipient company last came under common ownership

The *CGT asset must have been *acquired by the originating company at or after the time when it and the recipient company last came under common ownership

2

  

The *CGT asset must have been last *acquired by the originating company on or after 20 September 1985

138-370 Conditions for applying this Division to a group

(1) There are some conditions that must be satisfied before you can apply this Division to a group.

(2) For a depreciable *plant group:

(a) the sum of the *capital proceeds from the *CGT events happening in relation to the assets in the group must be less than the sum of the residual values (see subsection 138-85(2)) of the assets; and

(b) the sum of the market values of the assets in the group must not be more than 110% of the sum of those residual values.

(3) For a pre-common ownership group, the sum of the *capital proceeds from the *CGT events happening in relation to the assets in the group must be less than the sum of the *indexed common ownership market values of those assets.

(4) For a post-common ownership group, the sum of the *capital proceeds from the *CGT events happening in relation to the assets in the group must be less than the sum, for each asset in the group, of the amount that is the lesser of its *cost base and its market value at that time.

138-375 Shares or loans created after CGT event

(1) Subsection (2) applies if:

(a) *CGT event A1 or B1 happened (involving the first and second companies) to a *CGT asset of the originating company in the same income year of the originating company that CGT event A1 or B1 (involving those companies) happened to one or more other CGT assets of the originating company; and

(b) you allocate those assets to the same group; and

(c) a share in (except a share issued to replace a share that is cancelled), or loan to, the originating company came into existence after the time of the first of those CGT events and before the time of the last of them.

(2) Sections 138-110, 138-180 and 138-300 have effect as if:

(a) the share or loan had been in existence just before the time of the first *CGT event; and

(b) it had all the same attributes just before that time as it had when it came into existence.

Note: Those sections show you how to make adjustments for CGT events happening to grouped assets.

 

Income Tax Assessment Act| Apprentice Tax Practitioner Program