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INCOME TAX ASSESSMENT ACT 1997 - SECT 116.10 Modifications to general rules

INCOME TAX ASSESSMENT ACT 1997 - SECT 116.10

Modifications to general rules

  (1)   There are 6 modifications to the general rules that may be relevant. The table in section   116 - 25 lists which ones may be relevant to each CGT event listed in the table.

Explanation of modifications

  (2)   The first is a market value substitution rule. It is relevant if:

    you receive no capital proceeds from a CGT event; or

    some or all of the capital proceeds cannot be valued; or

    you did not deal at arm's length with another entity in connection with the event.

  (3)   The second is an apportionment rule. It is relevant if a payment you receive in connection with a transaction relates in part only to a CGT event.

Example:   You sell 3 CGT assets for a total of $100,000. The $100,000 needs to be apportioned between the 3 assets.

  (4)   The third is a non - receipt rule. It is relevant if you do not receive, or are not likely to receive, some or all of the capital proceeds from a CGT event.

  (5)   The fourth is a repaid rule. It is relevant if you are required to repay some or all of the capital proceeds from a CGT event.

  (6)   The fifth is relevant only if another entity assumes a liability in connection with a CGT event.

  (7)   The sixth relates to misappropriation by an employee or agent. It is relevant if your employee or agent misappropriates all or part of the capital proceeds from a CGT event.

Note 1:   Also, these provisions of the Income Tax Assessment Act 1936 modify capital proceeds:

(a)   section   23B (undistributed FIF attribution income on disposal of an interest in a FIF);

(b)   sections   159GZZZF and 159GZZZG (cancellation of shares in a holding company);

(c)   sections   159GZZZQ and 159GZZZS (buy - backs of shares);

(d)   sections   401, 422, 423 and 461 (CFCs).

Note 2:   Section   230 - 505 of this Act (Division   230 financial arrangement as consideration for provision or acquisition of a thing) also modifies capital proceeds.

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