Commonwealth Numbered Acts

TAXATION LAWS AMENDMENT ACT (NO. 1) 2004 NO. 101, 2004 - SCHEDULE 9

Part 1—Amendments

Income Tax Assessment Act 1997

1 Section 108-50 (note)

Omit "and section 124-725 (about a roll-over for a prospecting or mining entitlement)", insert ", section 124-725 (about a roll-over for a prospecting or mining entitlement) and sections 124-895, 124-915 and 124-920 (about roll-overs for FSR transitions)".

2 Subsection 108-75(2) (cell at table item 3, column headed "Roll-over is obtained under this provision:")

Repeal the cell, substitute:

3 Section 109-55 (after table item 6)

Insert:

4 Section 109-55 (after table item 7)

Insert:

5 Section 112-115 (after table item 14B)

Insert:

6 Subsection 124-5(1)

Omit "124-N", substitute "124-O".

7 Subsection 124-5(1) (note)

Omit "Note", substitute "Note 1".

8 At the end of subsection 124-5(1)

Add:

Note 2: Subdivision 124-O (about FSR transitions) also provides for roll-overs in situations where a replacement CGT asset is acquired by a new owner.

9 Subsection 124-5(2) (at the end of the note)

Add "The consequences of the new owner roll-overs in Subdivision 124-O (about FSR transitions) are set out in that Subdivision.".

10 Subsection 124-10(3) (note 1)

Omit all the words after "(about statutory licences)", substitute ", Subdivision 124-D (about strata title conversion) and Subdivision 124-O (about FSR transitions).".

11 Subsection 124-10(3) (note 2)

Omit all the words after "(about Crown leases)", substitute ", Subdivision 124-L (about prospecting and mining) and Subdivision 124-O (about FSR transitions).".

12 At the end of subsection 124-15(5) (after the example)

Add:

Note: Subdivision 124-O provides a different rule for FSR transitions.

13 At the end of Division 124

Add:

Subdivision 124-O—FSR (financial services reform) transitions

Table of sections

Same owner roll-overs

124-880 Old licence roll-over (same owner)
124-885 Qualified licence roll-over (same owner)
124-890 Rights roll-over (same owner)
124-895 Consequences of a same owner roll-over

New owner roll-overs

124-900 Old licence roll-over (new owner)
124-905 Qualified licence roll-over (new owner)
124-910 Rights roll-over (new owner)
124-915 Consequences of a new owner roll-over (where one CGT asset comes to an end)
124-920 Consequences of a new owner roll-over (where more than one CGT asset comes to an end)

Extension of FSR transition period

124-925 Special extension of the 10 March 2004 cut-off date (same owner roll-overs)
124-930 Special extension of the 10 March 2004 cut-off date (new owner roll-overs)

Same owner roll-overs
124-880 Old licence roll-over (same owner)

There is a roll-over if:

(a) you apply for an ^* Australian financial services licence during the period beginning on 11 March 2002 and ending on 10 March 2004; and
(b) at the time you make the application, you hold one or more licences, registrations, approvals, authorities or other similar things (the old licence or licences ) that give you the status of a regulated principal within the meaning of section 1430 of the Corporations Act 2001 ; and
(c) you are granted an Australian financial services licence as a result of the application; and
(d) that licence covers some or all of the activities that the old licence or licences authorised you to carry on; and
(e) the old licence or licences cease to have effect (whether wholly or partly):
(i) when the Australian financial services licence is granted to you; or
(ii) if the Australian financial services licence is granted to you after 10 March 2004—on 10 March 2004.

Note: The period in paragraph (a) may be extended in special circumstances: see section 124-925. If it is extended, the day in subparagraph (e)(ii) changes too.

124-885 Qualified licence roll-over (same owner)

There is a roll-over if:

(a) you apply for an ^* Australian financial services licence during the period beginning on 11 March 2002 and ending on 10 March 2004; and
(b) at the time you make the application, you hold an Australian financial services licence to which section 1434 of the Corporations Act 2001 applies (the qualified licence ); and
(c) you are granted an Australian financial services licence as a result of the application (the new licence ); and
(d) if the new licence is granted on or before 10 March 2004—the qualified licence is revoked as a result of the new licence being granted to you; and
(e) if the new licence is granted after 10 March 2004:
(i) the qualified licence ceases to have effect on 10 March 2004; and
(ii) if the new licence had been granted on or before 10 March 2004, the qualified licence would have been revoked as a result of the new licence being granted.

Note: The period in paragraph (a) may be extended in special circumstances: see section 124-925. If it is extended, the day in paragraphs (d) and (e) changes too.

124-890 Rights roll-over (same owner)

There is a roll-over if:

(a) one or more intangible ^* CGT assets owned by you cease to exist during the period beginning on 11 March 2002 and ending on 10 March 2004; and
(b) the asset or assets cease to exist because of the termination of one or more contracts; and
(c) the termination is directly connected with Chapter 7 of the Corporations Act 2001 (as amended by the Financial Services Reform Act 2001 ) beginning to apply to you; and
(d) you acquire one or more intangible CGT assets by entering into one or more contracts in substitution (whether wholly or partly) for the contract or contracts that were terminated.

Note: The period in paragraph (a) may be extended in special circumstances: see section 124-925.

124-895 Consequences of a same owner roll-over

(1)

In each situation covered by section 124-880, 124-885 or 124-890, where:

(a) your ownership of one or more ^* CGT assets (the original asset or assets ) comes to an end; and
(b) you acquire one or more CGT assets (the replacement asset or assets );

the consequences of that section applying are the consequences specified in Subdivision 124-A, with the modifications set out below.

(2)

The first element of the ^* cost base and ^* reduced cost base of each replacement asset includes any amount you paid to get the replacement asset (which can include giving property: see section 103-5). This subsection does not apply if subsection (3) applies.

Note: If subsection (3) applies, any amount you paid to get the replacement asset is included in the cost base and reduced cost base by subsection (5).

(3)

In a situation where subsection 124-15(5) would otherwise apply (where you ^* acquired some original assets before 20 September 1985 and some on or after that date), use subsections (4) to (7) of this section instead of subsections 124-15(5) and (6).

(4)

Each replacement asset, or part of a replacement asset, to the extent that it relates to one or more original assets that were ^* acquired before 20 September 1985, is taken to be:

(a) a separate asset; and
(b) acquired before 20 September 1985.

(5)

The first element of the ^* cost base of each replacement asset that you are not taken to have ^* acquired before 20 September 1985 is the sum of:

(a) the amount worked out under the formula in subsection (6); and
(b) either:
(i) any amount you paid to get the replacement asset (which can include giving property: see section 103-5); or
(ii) for a replacement asset, part of which is treated as a separate asset under subsection (4)—such part of any amount you paid to get the asset (which can include giving property: see section 103-5) as is reasonably attributable to the part of the asset that you are not taken to have acquired before 20 September 1985.

(6)

The formula is:

Note: If an original asset is an old licence that ceases to have effect only partly, subsection (8) modifies this formula.

(7)

The first element of each replacement asset's ^* reduced cost base is worked out similarly.

(8)

If, in a situation covered by section 124-880, an old licence mentioned in that section ceases to have effect only partly, then:

(a) a reference in Subdivision 124-A to the original asset's ^* cost base; and
(b) the reference in subsection (6) of this section to the total of the ^* cost bases of the original assets;

is taken to be a reference to such part of the cost base of the old licence as is reasonably attributable to the part of the old licence that ceases to have effect.

New owner roll-overs
124-900 Old licence roll-over (new owner)

(1)

There is a roll-over if:

(a) a person (the new owner ) applies for an ^* Australian financial services licence during the period beginning on 11 March 2002 and ending on 10 March 2004; and
(b) at the time the application is made, another person (the original owner ) holds one or more licences, registrations, approvals, authorities or other similar things (the old licence or licences ) that give the original owner the status of a regulated principal within the meaning of section 1430 of the Corporations Act 2001 ; and
(c) the new owner is granted an Australian financial services licence as a result of the application; and
(d) if the Australian financial services licence is granted on or before 10 March 2004—the old licence or licences cease to have effect (whether wholly or partly) because, as a result of the Australian financial services licence being granted to the new owner, the original owner starts to be covered by an exemption under subsection 911A(2) of the Corporations Act 2001 (or would be so covered by an exemption if that subsection applied) in respect of the original owner's regulated activities (within the meaning of section 1430 of the Corporations Act 2001 ); and
(e) if the Australian financial services licence is granted after 10 March 2004:
(i) the old licence or licences cease to have effect (whether wholly or partly) on 10 March 2004; and
(ii) if the Australian financial services licence had been granted before 10 March 2004, the old licence or licences would have ceased to have effect (whether wholly or partly) for the reason mentioned in paragraph (d); and
(f) subsection (2) or (3) applies.

Note: The period in paragraph (1)(a) may be extended in special circumstances: see section 124-930. If it is extended, the day in paragraphs (d) and (e) changes too.

(2)

This subsection applies if the new owner and the original owner are members of the same ^* consolidatable group at the time that the new owner ^* acquires the ^* Australian financial services licence.

(3)

This subsection applies if:

(a) at the time that the new owner ^* acquires the ^* Australian financial services licence, all of the following apply:
(i) the new owner is a company or a trust;
(ii) if the new owner is a trust— ^* CGT event E4 is capable of applying to all of the units and interests in the trust;
(iii) all of the ^* membership interests in the new owner are owned by the original owner; and
(b) the original owner is an individual who, at the same time as, or just after, the new owner acquires the Australian financial services licence:
(i) becomes an authorised representative (within the meaning of section 761A of the Corporations Act 2001 ) of the new owner; or
(ii) becomes an employee of the new owner; or
(iii) becomes a director (within the meaning of the Corporations Act 2001 ) of the new owner.
124-905 Qualified licence roll-over (new owner)

(1)

There is a roll-over if:

(a) a person (the new owner ) applies for an ^* Australian financial services licence during the period beginning on 11 March 2002 and ending on 10 March 2004; and
(b) at the time the application is made, another person (the original owner ) holds an Australian financial services licence to which section 1434 of the Corporations Act 2001 applies (the qualified licence ); and
(c) the new owner is granted an Australian financial services licence as a result of the application (the new licence ); and
(d) if the new licence is granted on or before 10 March 2004—the qualified licence is revoked as a result of the new licence being granted to the new owner; and
(e) if the new licence is granted after 10 March 2004:
(i) the qualified licence ceases to have effect on 10 March 2004; and
(ii) if the new licence had been granted on or before 10 March 2004, the qualified licence would have been revoked as a result of the new licence being granted; and
(f) subsection (2) or (3) applies.

Note: The period in paragraph (1)(a) may be extended in special circumstances: see section 124-930. If it is extended, the day in paragraphs (d) and (e) changes too.

(2)

This subsection applies if the new owner and the original owner are members of the same ^* consolidatable group at the time that the new owner ^* acquires the new licence.

(3)

This subsection applies if:

(a) at the time that the new owner ^* acquires the new licence, all of the following apply:
(i) the new owner is a company or a trust;
(ii) if the new owner is a trust— ^* CGT event E4 is capable of applying to all of the units and interests in the trust;
(iii) all of the ^* membership interests in the new owner are owned by the original owner; and
(b) the original owner is an individual who, at the same time as, or just after, the new owner acquires the new licence:
(i) becomes an authorised representative (within the meaning of section 761A of the Corporations Act 2001 ) of the new owner; or
(ii) becomes an employee of the new owner; or
(iii) becomes a director (within the meaning of the Corporations Act 2001 ) of the new owner.
124-910 Rights roll-over (new owner)

(1)

There is a roll-over if:

(a) one or more intangible ^* CGT assets owned by a person (the original owner ) cease to exist during the period beginning on 11 March 2002 and ending on 10 March 2004; and
(b) the asset or assets cease to exist because of the termination of one or more contracts; and
(c) the termination is directly connected with the original owner choosing that another person (the new owner ) will conduct, in place of the original owner, the business of the original owner in relation to which Chapter 7 of the Corporations Act 2001 (as amended by the Financial Services Reform Act 2001 ) is to apply; and
(d) the new owner acquires one or more intangible CGT assets by entering into one or more contracts in substitution (whether wholly or partly) for the contract or contracts that were terminated; and
(e) subsection (2) or (3) applies.

Note: The period in paragraph (1)(a) may be extended in special circumstances: see section 124-930.

(2)

This subsection applies if the new owner and the original owner are members of the same ^* consolidatable group at the time that the new owner ^* acquires the ^* CGT asset or assets mentioned in paragraph (1)(d).

(3)

This subsection applies if:

(a) at the time that the new owner ^* acquires the ^* CGT asset or assets mentioned in paragraph (1)(d), all of the following apply:
(i) the new owner is a company or a trust;
(ii) if the new owner is a trust— ^* CGT event E4 is capable of applying to all of the units and interests in the trust;
(iii) all of the ^* membership interests in the new owner are owned by the original owner; and
(b) the original owner is an individual who, at the same time as, or just after, the new owner acquires the Australian financial services licence:
(i) becomes an authorised representative (within the meaning of section 761A of the Corporations Act 2001 ) of the new owner; or
(ii) becomes an employee of the new owner; or
(iii) becomes a director (within the meaning of the Corporations Act 2001 ) of the new owner.
124-915 Consequences of a new owner roll-over (where one CGT asset comes to an end)

(1)

In each situation covered by section 124-900, 124-905 or 124-910, where:

(a) a person's (the original owner's ) ownership of one ^* CGT asset (the original asset ) comes to an end; and
(b) another person (the new owner ) acquires one or more ^* CGT assets (the replacement asset or assets );

the consequences of that section applying are the consequences specified in this section.

(2)

A ^* capital gain or a ^* capital loss that the original owner makes from a ^* CGT event happening to the original asset is disregarded.

(3)

If the original owner ^* acquired the original asset on or after 20 September 1985, the first element of each replacement asset's ^* cost base is the sum of:

(a) the amount worked out under the formula in subsection (4); and
(b) any amount the new owner paid to get the replacement asset (which can include giving property: see section 103-5).

(4)

The formula is:

Note: If the original asset is an old licence that ceases to have effect only partly, subsection (7) modifies this formula.

(5)

The first element of each replacement asset's ^* reduced cost base is worked out similarly.

(6)

If the original owner ^* acquired the original asset before 20 September 1985, the new owner is taken to have acquired each replacement asset before that day.

(7)

If, in a situation covered by section 124-900, an old licence mentioned in that section ceases to have effect only partly, then the reference in subsection (4) of this section to the original asset's ^* cost base is taken to be a reference to such part of the cost base of the old licence as is reasonably attributable to the part of the old licence that ceases to have effect.

124-920 Consequences of a new owner roll-over (where more than one CGT asset comes to an end)

(1)

In each situation covered by section 124-900, 124-905 or 124-910, where:

(a) a person's (the original owner's ) ownership of more than one ^* CGT asset (the original asset or assets ) comes to an end; and
(b) another person (the new owner ) acquires one or more ^* CGT assets (the replacement asset or assets );

the consequences of that section applying are the consequences set out in this section.

(2)

A ^* capital gain or a ^* capital loss that the original owner makes from a ^* CGT event happening to any of the original assets is disregarded.

(3)

If the original owner ^* acquired all the original assets on or after 20 September 1985, the first element of each replacement asset's ^* cost base is the sum of:

(a) the amount worked out under the formula in subsection (4); and
(b) any amount the new owner paid to get the replacement asset (which can include giving property: see section 103-5).

(4)

The formula is:

Note: If an original asset is an old licence that ceases to have effect only partly, subsection (11) modifies this formula.

(5)

The first element of each replacement asset's ^* reduced cost base is worked out similarly.

(6)

If the original owner ^* acquired all the original assets before 20 September 1985, the new owner is taken to have acquired each replacement asset before that day.

(7)

If the original owner ^* acquired some of the original assets before 20 September 1985, each replacement asset, or part of a replacement asset, to the extent that it relates to one or more original assets that were ^* acquired before 20 September 1985, is taken to be:

(a) a separate asset; and
(b) acquired before 20 September 1985.

(8)

If subsection (7) applies, the first element of the ^* cost base of each replacement asset that is not taken to have been ^* acquired before 20 September 1985 is the sum of:

(a) the amount worked out under the formula in subsection (9); and
(b) either:
(i) any amount the new owner paid to get the replacement asset (which can include giving property: see section 103-5); or
(ii) for a replacement asset, part of which is treated as a separate asset under subsection (7)—such part of any amount the new owner paid to get the asset (which can include giving property: see section 103-5) as is reasonably attributable to the part of the asset that is not taken to have been acquired before 20 September 1985.

(9)

The formula is:

Note: If an original asset is an old licence that ceases to have effect only partly, subsection (11) modifies this formula.

(10)

The first element of each replacement asset's ^* reduced cost base is worked out similarly.

(11)

If, in a situation covered by section 124-900, an old licence mentioned in that section ceases to have effect only partly, then a reference in subsection (4) or (9) of this section to the original asset's ^* cost base is taken to be a reference to such part of the cost base of the old licence as is reasonably attributable to the part of the old licence that ceases to have effect.

Extension of FSR transition period
124-925 Special extension of the 10 March 2004 cut-off date (same owner roll-overs)

If the Australian Securities and Investments Commission makes a declaration that provides for the relevant old legislation (within the meaning of section 1430 of the Corporations Act 2001 ) to continue to apply to you until the end of the period declared by the Commission, then:

(a) the period mentioned in paragraphs 124-880(a), 124-885(a) and 124-890(a) is modified in its application to you so that it ends on the last day of the period declared by the Commission; and
(b) subparagraph 124-880(e)(ii) and paragraphs 124-885(d) and (e) are modified in their application to you so that the day mentioned in those subparagraphs is the last day of the period declared by the Commission.
124-930 Special extension of the 10 March 2004 cut-off date (new owner roll-overs)

If the Australian Securities and Investments Commission makes a declaration that provides for the relevant old legislation (within the meaning of section 1430 of the Corporations Act 2001 ) to continue to apply to a person who is an original owner mentioned in section 124-900, 124-905 or 124-910 until the end of the period declared by the Commission, then:

(a) the period mentioned in paragraphs 124-900(1)(a), 124-905(1)(a) and 124-910(1)(a) is modified in its application to that person so that it ends on the last day of the period declared by the Commission; and
(b) paragraphs 124-900(1)(d) and (e) and 124-905(1)(d) and (e) are modified in their application to that person so that the day mentioned in those subparagraphs is the last day of the period declared by the Commission.
14 After subsection 152-45(1)

Insert:

Assets replaced during FSR transition (same owner roll-overs)

(1A)

If a ^* CGT asset is an asset (the new asset ) you acquired in a situation covered by section 124-880, 124-885 or 124-890, then the active asset test in section 152-35 applies as if:

(a) you had acquired the new asset when you acquired the original 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-O provides a roll-over for certain CGT assets that come to an end as a result of an FSR transition.

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.

Assets replaced during FSR transition (new owner roll-overs)

(1B)

If a ^* CGT asset is an asset (the new asset ) acquired in a situation covered by section 124-900, 124-905 or 124-910, then the active asset test in section 152-35 applies as if:

(a) the new owner had acquired the new asset when the original owner acquired the original asset; and
(b) the new asset had been the ^* active asset of the new owner at all times when the original asset was the original owner's active asset; and
(c) the new asset had not been the active asset of the new owner at all times when the original asset was not the original owner's active asset.

Note 1: Subdivision 124-O provides a roll-over for certain CGT assets that come to an end as a result of an FSR transition.

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.

15 After subsection 152-115(1)

Insert:

Assets replaced during FSR transition (same owner roll-overs)

(1A)

If a ^* CGT asset is an asset (the new asset ) you acquired in a situation covered by section 124-880, 124-885 or 124-890, 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-O provides a roll-over for certain CGT assets that come to an end as a result of an FSR transition.

Asset replaced during FSR transition (new owner roll-overs)

(1B)

If a ^* CGT asset is an asset (the new asset ) acquired in a situation covered by section 124-900, 124-905 or 124-910, then paragraphs 152-105(b) and 152-110(1)(b) and (c) (the 15-year and controlling individual rules) apply as if the new owner had acquired the new asset when the original owner acquired the original asset.

Note: Subdivision 124-O provides a roll-over for certain CGT assets that come to an end as a result of an FSR transition.

16 Subsection 995-1(1) (the Dictionary)

Insert: