Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 118.25

             (1)  A * capital gain or * capital loss you make from a * CGT asset is disregarded if, at the time of the * CGT event, the asset is:

                     (a)  your * trading stock; or

                     (b)  if you are a partner, trading stock of the partnership; or

                     (c)  if you are absolutely entitled to the asset as against the trustee of a trust (disregarding any legal disability), trading stock of the trustee.

             (2)  A * capital gain or * capital loss you make in these circumstances is disregarded:

                     (a)  you start holding as * trading stock a * CGT asset you already own but do not hold as trading stock; and

                     (b)  you elect under paragraph 70-30(1)(a) to be treated as having sold the asset for its cost (worked out under that section).

Note 1:       Paragraph 70-30(1)(a) allows you to elect the cost of the asset, or its market value, just before it became trading stock.

Note 2:       You may make a capital gain or loss if you elect its market value: see CGT event K4.