Income Tax Assessment Act| Apprentice Tax Practitioner Program
Subdivision 149-B—When asset of non-public entity stops being a pre-CGT asset
Table of sections
149-25 Which entities are affected
149-30 Effects if asset no longer has same majority underlying ownership
149-35 Cost base elements of asset that stops being a pre-CGT asset
149-25 Which entities are affected
This Subdivision provides for when a
*CGT asset of an entity stops being a *pre-CGT asset (unless the entity is covered by section 149-50).Note: Subdivision 149-C deals with when an asset of such an entity stops being a pre-CGT asset.
149-30 Effects if asset no longer has same majority underlying ownership
(1) The asset stops being a
*pre-CGT asset at the earliest time when *majority underlying interests in the asset were not had by *ultimate owners who had *majority underlying interests in the asset immediately before 20 September 1985. Also, Part 3-1 and this Part (except this Division) apply to the asset as if the entity had acquired it at that earliest time.(2) If the Commissioner is satisfied, or thinks it reasonable to assume, that at all times on and after 20 September 1985 and before a particular time
*majority underlying interests in the asset were had by *ultimate owners who had *majority underlying interests in the asset immediately before that day, subsection (1) applies as if that were in fact the case.New owner standing in shoes of former owner
(3) Subsection (4) affects how the
*majority underlying interests in the asset are worked out if an *ultimate owner (the new owner) has acquired a percentage (the acquired percentage) of the *underlying interests in the asset because of an event described in column 2 of an item in the table. The former owner is the entity described in column 3 of that item.
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Events leading to new owner standing in for former owner |
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Item |
For this kind of event: |
The former owner is: |
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1 |
* CGT event A1 or B1 if there is a roll-over under Subdivision 126-A (about marriage break-downs) for the event |
the entity that, immediately before the event happened, owned the *CGT asset to which the event relates |
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2 |
the death of a person |
that person |
(4) This section applies as if the new owner had (in addition to any other
*underlying interests), at any time when the former owner had a percentage (the former owner’s percentage) of the underlying interests in the asset, a percentage of the underlying interests in the asset equal to the acquired percentage, or the former owner’s percentage at that time, whichever is the less.149-35 Cost base elements of asset that stops being a pre-CGT asset
(1) This section affects the
*cost base and *reduced cost base of the asset if it stops being a *pre-CGT asset.(2) The first element of each is the asset’s market value at the time referred to in subsection 149-30(2).
(3) The other elements do not include any expenditure before the time when the entity is taken to have acquired the asset.
Subdivision 149-C—When asset of public entity stops being a pre-CGT asset
Table of sections
149-50 Which entities are affected
149-55 Entity to determine periodically whether asset still has same majority underlying ownership
149-60 What the determination must show
149-65 Effects of not making the determination
149-70 Effects if asset no longer has same majority underlying ownership
149-75 Cost base elements of asset that stops being a pre-CGT asset
149-80 No further determination needed after asset stops being a pre-CGT asset
149-50 Which entities are affected
(1) This Subdivision provides for when a
*CGT asset of an entity of any of these kinds stops being a *pre-CGT asset:(a) a company
(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
(iii) a
*mutual affiliate company;(iv) a
*publicly traded unit trust;(f) a *100% subsidiary of a company covered by paragraph (e).
(2) A publicly traded unit trust is a unit trust the units in which:
(a) are listed for quotation in the official list of an *approved stock exchange; or
(b) are ordinarily available for subscription or purchase by the public.
(3) This Division applies as if what is done or not done by the trustee of a *publicly traded unit trust had been done or not done by the trust.
149-55 Entity to determine periodically whether asset still has same majority underlying ownership
(1) Within 6 months after each
*test day, the entity must examine its records to make a determination about the *majority underlying interests in the asset at the end of that day. (The Commissioner can extend the period for making the determination.)Test days
(2) Each of these days is a test day:
(a) a day that is 5 years (or a multiple of 5 years) after 20 January 1997 (but see subsection (3));
(b) if the entity is covered by paragraph 149-50(1)(a), (e) or (f)—a day on which there is
(c) if the entity is a
*publicly traded unit trust—a day on which there is *abnormal trading in units in the trust;(d) if the entity is a company all the
*shares in which are beneficially owned:(i) by a company
(ii) by a
*publicly traded unit trust;a day on which there is
*abnormal trading in *shares in the other company or in units in that unit trust;(e) if the entity is a 100% subsidiary of a company of the kind first mentioned in paragraph (d)—a day on which there is
*abnormal trading in *shares in the company referred to in subparagraph (d)(i) or in units in that unit trust.Note: Subsections (6) and (7) change the normal rules about abnormal trading.
(3) If a day (the fifth anniversary) that would otherwise be a
*test day because of paragraph (2)(a) is:(a) a Saturday; or
(b) a Sunday; or
(c) a day that is a public holiday or a bank holiday in the place where the records of ownership of shares or other interests in the entity are kept;
the next day that is not covered by a paragraph of this subsection is a test day instead of the fifth anniversary.
Determining the end of a day
(4) For the purposes of this section, the end of a day is determined according to legal time in the place where the records of ownership of shares or other interests in the entity are kept.
Special rules about abnormal trading
(5) Subsections (6) and (7) change how Subdivision 960-H applies for the purposes of determining under this section whether there is
*abnormal trading in *shares in a company or in units in a unit trust.(6) An issue, redemption or transfer, or any other dealing, is a trading if, and only if, it changes the respective proportions in which
*ultimate owners have *underlying interests in *CGT assets of the company or trust.(7) Section 960-235 (about suspected transactions involving 5% or more of
*shares in the company or units in the trust) is disregarded.149-60 What the determination must show
(1) The determination must show whether, at the end of the
*test day, *majority underlying interests in the asset were had by *ultimate owners who also had *majority underlying interests in the asset at the end of the starting day. The starting day is:(a) a day the entity chooses under subsection (2); or
(b) if no day is so chosen—19 September 1985.
(2) The day chosen:
(a) must be no earlier than 1 July 1985 and no later than 30 June 1986; and
(b) must be one the choice of which will result in a determination that gives a reasonable approximation of the
How unidentified owners are treated
(3) So far as the entity cannot identify from examining its records who had
*underlying interests in the asset at the end of the *starting day, it must make the determination on the basis that those interests were then had by *ultimate owners who did not have *underlying interests in the asset at the end of the *test day.New owner standing in the shoes of former owner
(4) Subsection (5) affects how the entity must make the determination if an
*ultimate owner (the new owner) has acquired a percentage (the acquired percentage) of the *underlying interests in the asset because of an event described in column 2 of an item in the table. The former owner is the entity described in column 3 of that item.
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Events leading to new owner standing in for former owner |
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Item |
For this kind of event: |
The former owner is: |
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1 |
* CGT event A1 or B1 if there is a roll-over under Subdivision 126-A (about marriage break-downs) for the event |
the entity that, immediately before the event happened, owned the *CGT asset to which the event relates |
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2 |
the death of a person |
that person |
(5) The entity must make the determination on the basis that the new owner had (in addition to any other
*underlying interests), at any time when the former owner had a percentage (the former owner’s percentage) of the *underlying interests in the asset, a percentage of the underlying interests in the asset equal to the acquired percentage, or the former owner’s percentage at that time, whichever is the less.Determining the end of a day
(6) For the purposes of this section, the end of a day is determined according to legal time in the place where the records of ownership of shares or other interests in the entity are kept.
149-65 Effects of not making the determination
(1) The asset stops being a
*pre-CGT asset if the entity fails to make the determination as required by this Division.(2) Also, Part 3-1 and this Part (except this Division) apply to the asset as if the entity had acquired it at the end (as determined under subsection 149-55(4)) of the last
*test day before the one for which the determination was required to be made.(3) However, if the
*test day is the first one after the entity began to be covered by section 149-50 (which lists the entities affected by this Division), Part 3-1 and this Part (except this Division) apply to the asset as if the entity had acquired it when the entity began to be covered by that section.149-70 Effects if asset no longer has same majority underlying ownership
(1) The asset stops being a
*pre-CGT asset if the determination shows that at the end of the *test day *majority underlying interests in the asset were not had by *ultimate owners who had *majority underlying interests in the asset at the end of the *starting day.(2) Also, Part 3-1 and this Part (except this Division) apply to the asset as if the entity had acquired it at the end of the
*test day (as determined under subsection 149-55(4)).(3) However, disregard subsections (1) and (2) if the Commissioner is satisfied, or thinks it reasonable to assume, that at the end of the
*test day *majority underlying interests in the asset were had by *ultimate owners who had *majority underlying interests in the asset at the end of the *starting day.149-75 Cost base elements of asset that stops being a pre-CGT asset
(1) This section affects the
*cost base and *reduced cost base of the asset if it stops being a *pre-CGT asset.(2) The first element of each is the asset’s market value at the time referred to in subsection 149-65(2) or (3) or 149-70(2), as appropriate.
(3) The other elements do not include any expenditure before the time when the entity is taken to have acquired the asset.
149-80 No further determination needed after asset stops being a pre-CGT asset
After the asset stops being a
*pre-CGT asset, the entity need not make a further determination about it under section 149-55.
Income Tax Assessment Act| Apprentice Tax Practitioner Program