Income Tax Assessment Act 1997

s 124-860 — Requirements for roll ‑ over

(1) All of the * CGT assets owned by the transferor must be disposed of to the transferee during the * trust restructuring period. However, ignore any CGT assets retained by the transferor to pay existing or expected debts of the transferor. (2) The trust restructuring period for a trust restructure: (a) starts just before the first * CGT asset is * disposed of to the transferee under the trust restructure, which must happen on or after 11 November 1999; and (b) ends when the last CGT asset of the transferor is disposed of to the transferee. (3) The transferee must not be an * exempt entity. (4) The transferee must be a company that: (a) has never carried on commercial activities; and (b) has no * CGT assets, other than any or all of the following: (i) small amounts of cash or debt; (ii) its rights under an * arrangement, if (collectively) those rights only facilitate the transfer of assets to the transferee from the transferor; and (c) has no losses of any kind. Example: It could be a shelf company. (5) Subsection (4) does not apply to a transferee that is the trustee of the transferor. (6) Just after the end of the * trust restructuring period: (a) each entity that owned interests in a transferor just before the start of the trust restructuring period must own replacement interests in the transferee in the same proportion as it owned those interests in that transferor; and (b) the * market value of the replacement interests each of those entities owns in the transferee must be at least substantially the same as the market value of the interests it owned in the transferor or transferors just before the start of the trust restructuring period. Note 1: Any assets in the company just before the start of the trust restructuring period may affect the ability of owners of units or interests to comply with paragraph (6)(b). Note 2: See section 124 ‑ 20 if an entity uses an interest sale facility. (7) For the purposes of subsection (6), ignore any * shares in the transferee that: (a) just before the start of the * trust restructuring period, were owned by entities who together owned no more than 5 shares; and (b) just after the end of that period, represented such a low percentage of the total * market value of all the shares that it is reasonable to treat other entities as if they owned all the shares in the transferee. Example: To continue the example in subsection 124 ‑ 855(2), assume that Jonathon Pty Ltd was a shelf company organised for Matthew and Jaclyn by their solicitor, Indira. Indira owned the 2 shares in Jonathon Pty Ltd before the trust restructuring period. The company issues Matthew and Jaclyn 5,000 shares each. In these circumstances, it is reasonable to treat Matthew and Jaclyn as if they owned all the shares in Jonathon Pty Ltd.

Amendment history: Inserted by No 53 of 2002, effective Schedules 3 and 4: 1 July 2002 Remainder: Royal Assent | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29) | Amended by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2)

s 124-865 — Entities both choose the roll ‑ over

A roll ‑ over is only available for the transferor and transferee if both the transferor and transferee choose to obtain it. Note 1: If they do so, the consequences for the transferor and transferee are set out in section 124 ‑ 875. Note 2: An entity that owns a unit or interest in the transferor can also choose to obtain a roll ‑ over: see section 124 ‑ 870.

Amendment history: Inserted by No 53 of 2002, effective Schedules 3 and 4: 1 July 2002 Remainder: Royal Assent

s 124-870 — Roll ‑ over for owner of units or interests in a trust

(1) You can choose to obtain a roll ‑ over (whether or not the transferor and transferee choose to obtain a roll ‑ over, and even if * CGT event J4 applies) if: (a) you own units or interests in the transferor (your original interests ); and (b) the ownership of all your units or interests ends under a trust restructure in exchange for * shares in the transferee (your replacement interests ). Note 1: The roll ‑ over consequences are set out in Subdivision 124 ‑ A. The original assets are your units and interests in the transferor. The new assets are your shares in the transferee. Note 2: The effect of the roll ‑ over may be reversed if the transferor does not cease to exist within 6 months: see section 104 ‑ 195. (2) You must make the choice for each of your original interests. (3) An entity that is a foreign resident cannot choose a roll ‑ over under this section unless the replacement interests the entity * acquires in the transferee are * taxable Australian property just after their acquisition. (4) If you choose a roll ‑ over, you cannot make a * capital loss from a * CGT event that happens to your original interests during the * trust restructuring period. Note: The rule in subsection (4) prevents a capital loss arising on your units or interests after the trust assets have been disposed of to the company but before your shares are issued to you. Exception: trading stock (5) This section does not apply to your ownership of an original interest ending if: (a) the interest was an item of your * trading stock and the corresponding replacement interest becomes an item of your trading stock when you * acquire it; or (b) the interest was not an item of your trading stock but the corresponding replacement interest becomes an item of your trading stock when you acquire it.

Amendment history: Inserted by No 53 of 2002, effective Schedules 3 and 4: 1 July 2002 Remainder: Royal Assent | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent

s 124-875 — Effect on the transferor and transferee

Capital gains and losses disregarded (1) Any * capital gain or * capital loss from * CGT event A1 happening to the transferor under the trust restructure is disregarded (even if * CGT event J4 applies). Note: The effect of the roll ‑ over may be reversed if the transferor does not cease to exist within 6 months: see section 104 ‑ 195. Cost base is transferred (2) The first element of the * cost base and * reduced cost base (for the transferee) of each * CGT asset that the transferee * acquires under the trust restructure is the same as the cost base and reduced cost base of that asset (for the transferor) just before that acquisition. Note: For the cost base and reduced cost base of interests in the transferee: see Subdivision 124 ‑ A. Pre ‑ CGT assets retain their status (3) If the transferor * acquired any of the * CGT assets * disposed of to the transferee under the trust restructure before 20 September 1985, the transferee is taken to have acquired it before that day. (4) However, subsection (3) is taken never to have applied to such an asset of the transferee if subsection 104 ‑ 195(4) (CGT event J4) applies to the transferee in relation to the asset. Exception: trading stock (5) This section does not apply to a * CGT asset if: (a) the asset was an item of * trading stock of the transferor and becomes an item of trading stock of the transferee; or (b) the asset was not an item of trading stock of the transferor but becomes an item of trading stock of the transferee when the transferee * acquires it. Exception: asset must be taxable Australian property for foreign resident transferee (6) For a transferee that is a foreign resident, this section only applies to a * CGT asset that is * taxable Australian property just after the transferee * acquires it under the trust restructure.

Amendment history: Inserted by No 53 of 2002, effective Schedules 3 and 4: 1 July 2002 Remainder: Royal Assent | Amended by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent

s 124-975 — What this Subdivision is about

You can choose a roll ‑ over if you exchange your interest as a member of an MDO for an interest as a member of another MDO. You can only choose the roll ‑ over if you would have made a capital gain from the exchange. Table of sections Operative provisions 124 ‑ 980 Exchange of membership interests in an MDO 124 ‑ 985 What the roll ‑ over is for post ‑ CGT interests 124 ‑ 990 Partial roll ‑ over 124 ‑ 995 Pre ‑ CGT interests

Amendment history: Inserted by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6)

s 124-980 — Exchange of membership interests in an MDO

(1) There is a roll ‑ over if: (a) an entity exchanges: (i) an interest (the original interest ) in an * MDO (the original MDO ) as a member of the original MDO; for (ii) a similar interest (the replacement interest ) in another MDO (the new MDO ) as a member of the new MDO; and (b) both the original MDO and the new MDO are companies limited by guarantee; and (c) the exchange is in consequence of a single * arrangement that satisfies subsection (3); and (d) apart from the roll ‑ over, the entity would make a * capital gain from a * CGT event happening in relation to its original interest; and (e) the entity chooses to obtain the roll ‑ over; and (f) the entity acquired the original interest on or after 20 September 1985. Note: The entity can obtain only a partial roll ‑ over if the capital proceeds for its original interest include something other than its replacement interest: see section 124 ‑ 990. (2) In working out whether an original interest is exchanged for a similar interest, disregard a difference that consists only of a right to receive distributions of income or capital. Conditions for arrangement (3) The * arrangement must: (a) result in the new * MDO becoming the sole * member of the original MDO; and (b) be one in which participation was available on substantially the same terms for all of the holders of interests as members of the original MDO of a particular type.

Amendment history: Inserted by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6)

s 124-985 — What the roll ‑ over is for post ‑ CGT interests

(1) A * capital gain the entity makes from an original interest * acquired on or after 20 September 1985 is disregarded. (2) The entity works out the first element of the * cost base of each replacement interest the entity received as a result of the exchange by reasonably attributing to it the cost base (or the part of it) of the entity’s original interest for which it was exchanged and for which the entity obtained the roll ‑ over. (3) In applying subsection (2), the entity reduces (but not below zero) the * cost base of the original interest (just before stopping owning it) by so much of that cost base as is attributable to an ineligible part (see section 124 ‑ 990). (4) The first element of the * reduced cost base of a replacement interest is worked out similarly.

Amendment history: Inserted by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6)

s 124-990 — Partial roll ‑ over

(1) The entity can obtain only a partial roll ‑ over if its * capital proceeds for its original interest include something (the ineligible proceeds ) other than its replacement interest. There is no roll ‑ over for that part (the ineligible part ) of its original interest for which it received ineligible proceeds. (2) The * cost base of the ineligible part is that part of the cost base of the original interest as is reasonably attributable to it.

Amendment history: Inserted by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6)

s 124-995 — Pre ‑ CGT interests

If the entity exchanges an original interest that the entity * acquired before 20 September 1985 for its replacement interest, the first element of the * cost base and * reduced cost base of the replacement interest is zero.

Amendment history: Inserted by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6)

s 124-1040 — What this Subdivision is about

There is a roll ‑ over if you own ownership interests that are stapled and, as a result of a reorganisation, you stop owning those interests and you acquire or own ownership interests in an interposed unit trust. Table of sections Operative provisions 124 ‑ 1045 Exchange of stapled securities 124 ‑ 1050 Conditions 124 ‑ 1055 Consequences of the roll ‑ over for exchanging members 124 ‑ 1060 Consequences of the roll ‑ over for interposed trust

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 124-1045 — Exchange of stapled securities

(1) There is a roll ‑ over if: (a) you own * ownership interests in 2 or more trusts, or in one or more companies and one or more trusts, and those interests are stapled together to form stapled securities; and (b) at least one of the trusts is a trust whose trustee is not assessed and liable to pay tax under Division 6C of Part III of the Income Tax Assessment Act 1936 ; and (c) if no company is involved—at least one of the trusts is a trust whose trustee is assessed and liable to pay tax under Division 6C of Part III of that Act; and (d) under a * scheme for reorganising the affairs of the relevant * stapled entities, you and the other entities that own the ownership interests in the stapled entities (together the exchanging members ): (i) stop being the owner of those ownership interests and acquire ownership interests in a new unit trust (the interposed trust ) and nothing else (a new trust case ); or (ii) retain their ownership interests in one of those trusts (also the interposed trust ), stop being the owner of the remaining ownership interests that form the stapled securities and receive nothing other than ownership interests in the interposed trust, or an increase in value of their existing ownership interests in the interposed trust, or both (an existing trust case ); and Note: See section 124 ‑ 20 if an exchanging member uses an interest sale facility. (e) under the scheme, the interposed trust becomes the owner of: (i) for a new trust case—all of the ownership interests in the stapled entities; or (ii) for an existing trust case—all of the ownership interests in the other stapled entities; and (f) the conditions in section 124 ‑ 1050 are satisfied. Note: Division 6C of Part III of the Income Tax Assessment Act 1936 deals with taxing public trading trusts in the same way as companies. (2) An entity is a stapled entity in relation to stapled securities if * ownership interests in the entity form part of the stapled securities. (3) Ignore for the purposes of subsection (1) * ownership interests held by one * stapled entity in another stapled entity as at the start of the day on which the Bill for this Act was introduced into the Parliament.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29) | Amended by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4)

s 124-1050 — Conditions

(1) Just after the * scheme is completed (the completion time ), each exchanging member must own a percentage of the * ownership interests in the interposed trust that reasonably equates to the percentage of the ownership interests that the member owned in the * stapled entities. Example: Public Company A, Unit Trust No. 1 and Unit Trust No. 2 are stapled entities. Each stapled entity has 4,000 ownership interests on issue. There are no ownership interests in any of the stapled entities other than shares in the company and units in the trusts. Under a scheme for reorganising the stapled entities, Unit Trust No. 3 is interposed between the stapled entities and the owners of the interests in those entities. Unit Trust No. 3 (the interposed trust) becomes the owner of all of the interests in each of the three stapled entities. Exchanging members receive one unit in the interposed trust for each stapled security they owned. All units in the interposed trust are of the same class. Naomi owned 200 shares in Public Company A, 200 units in Unit Trust No. 1 and 200 units in Unit Trust No. 2. Naomi therefore owned 5% of the ownership interests in each of the stapled entities. Under the scheme, Naomi receives 100 units in Unit Trust No. 3 (out of a total of 2,000 units) in exchange for her ownership interests in the stapled entities. Naomi now owns 5% of the ownership interests in the interposed trust and meets the condition in subsection (1). (2) Just after the completion time, each exchanging member must have the same, or as nearly as practicable the same, proportionate * market value of * ownership interests in the interposed trust as the member had in the * stapled entities just before that time. (3) In working out whether an exchanging member complies with subsection (2), an anticipated reasonable approximation of the * market value of * ownership interests just after the completion time is sufficient. Note: An anticipated reasonable approximation of market values of ownership interests may include valuations provided to exchanging members in scheme documents. (4) You must be an Australian resident at the completion time or, if you are a foreign resident at that time: (a) some or all of your * ownership interests in the * stapled entities must have been * taxable Australian property just before that time; and (b) your ownership interests in the interposed trust must be taxable Australian property just after that time.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 124-1055 — Consequences of the roll ‑ over for exchanging members

(1) A * capital gain or * capital loss you make as a result of the * scheme from each of your * ownership interests is disregarded. (2) If you * acquired all of your * ownership interests in the * stapled entities on or after 20 September 1985, the first element of the * cost base and * reduced cost base of each of your ownership interests in the interposed trust is such amount as is reasonable having regard to: (a) the total of the * cost bases of all of your ownership interests in the * stapled entities; and (b) the number, * market value and character of your ownership interests in the interposed trust. Example: Naomi had a cost base of $2.00 for each of her 200 Public Company A shares, $1.50 for each of her 200 Unit Trust No. 1 units and $0.50 for each of her 200 Unit Trust No. 2 units. The total of the cost bases of all of her membership interests is $800.00. It is reasonable to allocate $8.00 to each of the 100 units in the interposed trust that she receives under the reorganisation. (3) If you * acquired all of your * ownership interests in the * stapled entities before 20 September 1985, you are taken to have acquired all of your ownership interests in the interposed trust before that day. (4) If you * acquired some of your * ownership interests in the * stapled entities before 20 September 1985, you are taken to have acquired so many of your ownership interests in the interposed trust as is reasonable before that day having regard to: (a) the number, * market value and character of your ownership interests in the stapled entities; and (b) the number, market value and character of your ownership interests in the interposed trust. Note: Generally, a capital gain or capital loss from a CGT asset acquired before 20 September 1985 can be disregarded: see Division 104. (5) The first element of the * cost base and * reduced cost base of each of your * ownership interests in the interposed trust that is not taken by subsection (4) to have been * acquired before 20 September 1985 (your post ‑ CGT interests ) is such amount as is reasonable having regard to: (a) the total of the cost bases of your ownership interests in the * stapled entities that you acquired on or after 20 September 1985; and (b) the number, * market value and character of your post ‑ CGT interests.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 124-1060 — Consequences of the roll ‑ over for interposed trust

(1) Apply this section separately for the interposed trust in relation to the * ownership interests in each * stapled entity that the trustee of the interposed trust * acquires under the * scheme. (2) A whole number of * ownership interests in a * stapled entity that the trustee * acquires under the * scheme are taken to have been acquired before 20 September 1985 if any of the stapled entity’s assets as at the completion time were acquired by it before that day. Note: Generally, a capital gain or capital loss from a CGT asset acquired before 20 September 1985 can be disregarded: see Division 104. (3) The number (worked out as at the completion time) is the greatest possible that (when expressed as a percentage of all the * ownership interests in the * stapled entity * acquired by the trustee) does not exceed: (a) the * market value of the stapled entity’s assets that it acquired before 20 September 1985; less (b) its liabilities (if any) in respect of those assets; expressed as a percentage of the market value of all the stapled entity’s assets less all of its liabilities. The amounts in paragraphs (a) and (b) are to be worked out as at the completion time. (4) The first element of the * cost base and * reduced cost base of each of the trustee’s * ownership interests in that * stapled entity that are not taken by subsection (3) to have been * acquired before 20 September 1985 is such proportion as is reasonable of the total of the cost bases (as at the completion time) of that stapled entity’s assets that it acquired on or after that day less its liabilities (if any) in respect of those assets. (5) In applying this section: (a) a liability of a * stapled entity that is not a liability in respect of a specific asset or assets of the stapled entity is a liability in respect of all the assets of the stapled entity; and (b) if a liability is in respect of 2 or more assets, the proportion of the liability that is in respect of any one of those assets is such amount as is reasonable having regard to the * market values of each of those assets.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9)

s 124-1100 — What this Subdivision is about

There is a roll ‑ over if a CGT event happens to you because of something occurring in relation to one or more water entitlements. You do not need to own water entitlements for the event to happen to you. Table of sections Replacement case 124 ‑ 1105 Replacement water entitlements roll ‑ over 124 ‑ 1110 Roll ‑ over consequences—capital gain or loss disregarded 124 ‑ 1115 Roll ‑ over consequences—partial roll ‑ over 124 ‑ 1120 Roll ‑ over consequences—all original entitlements post ‑ CGT 124 ‑ 1125 Roll ‑ over consequences—all original entitlements pre ‑ CGT 124 ‑ 1130 Roll ‑ over consequences—some original entitlements pre ‑ CGT, others post ‑ CGT Reduction case 124 ‑ 1135 Reduction in water entitlements roll ‑ over 124 ‑ 1140 Roll ‑ over consequences—capital gain or loss disregarded 124 ‑ 1145 Roll ‑ over consequences—all original entitlements post ‑ CGT 124 ‑ 1150 Roll ‑ over consequences—some original entitlements pre ‑ CGT, others post ‑ CGT Variation to CGT asset case 124 ‑ 1155 Roll ‑ over for variation to CGT asset 124 ‑ 1160 Roll ‑ over consequences 124 ‑ 1165 Roll ‑ over consequences—partial roll ‑ over

Amendment history: Inserted by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13)

s 124-1105 — Replacement water entitlements roll ‑ over

Automatic roll ‑ over for single water entitlements (1) There is a roll ‑ over if: (a) your ownership of a * water entitlement (the original entitlement ) ends, resulting in a * CGT event happening; and (b) as a result of your ownership of the original entitlement ending, you * acquire one or more water entitlements (each of which is a new entitlement ); and (c) if you are a foreign resident just before your ownership of the original entitlement ends, or you are the trustee of a trust that is a * foreign trust for CGT purposes for the income year in which your ownership of the original entitlement ends: (i) the original entitlement was * taxable Australian property just before you stopped owning it; and (ii) if there is only one new entitlement—the new entitlement is taxable Australian property just after you acquire it; and (iii) if there is more than one new entitlement—each new entitlement is taxable Australian property just after you acquire it; and (d) you have not chosen a roll ‑ over in relation to the original entitlement under subsection (2). Elective roll ‑ over for bundled water entitlements (2) There is a roll ‑ over if: (a) your ownership of more than one * water entitlement (each of which is an original entitlement ) ends, resulting in a * CGT event happening; and (b) as a result of your ownership of the original entitlements ending, you * acquire one or more water entitlements (each of which is a new entitlement ); and (c) if you are a foreign resident just before your ownership of the original entitlements ends, or you are the trustee of a trust that is a * foreign trust for CGT purposes for the income year in which your ownership of the original entitlements ends: (i) each original entitlement was * taxable Australian property just before you stopped owning it; and (ii) if there is only one new entitlement—the new entitlement is taxable Australian property just after you acquire it; and (iii) if there is more than one new entitlement—each new entitlement is taxable Australian property just after you acquire it; and (d) you choose to obtain the roll ‑ over. Note: Section 103 ‑ 25 tells you when the choice must be made. No roll ‑ over if Subdivision 124 ‑ C applies (3) However, there is no roll ‑ over in relation to a * water entitlement under this section if there is a roll ‑ over in relation to the water entitlement under Subdivision 124 ‑ C (statutory licences). Meaning of water entitlement (4) A water entitlement is a legal or equitable right that an entity owns that relates to water, including a right to: (a) receive water; or (b) take water from a water resource; or (c) have water delivered; or (d) deliver water; and includes a right that must be owned by the entity in order to own a right covered by paragraph (a), (b), (c) or (d). Example: Philip owns a share in Big Pump Irrigation Ltd. The share provides Philip with the right to receive dividends, to participate in the running of the company and to have a separate contractual agreement with Big Pump Irrigation Ltd for the delivery of 1 megalitre of water. Philip has such an agreement. Philip’s agreement is a water entitlement . Philip’s share is also a water entitlement because he must own the share in order to have a contractual arrangement with Big Pump Irrigation Ltd for the delivery of water.

Amendment history: Inserted by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13)

s 124-1110 — Roll ‑ over consequences—capital gain or loss disregarded

Disregard a * capital gain or * capital loss you make from each original entitlement that qualifies for a roll ‑ over.

Amendment history: Inserted by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13)

s 124-1115 — Roll ‑ over consequences—partial roll ‑ over

(1) You can obtain only a partial roll ‑ over in relation to an original entitlement if the * capital proceeds for that entitlement includes something (the ineligible proceeds ) other than a new entitlement or new entitlements. There is no roll ‑ over for that part (the ineligible part ) of the entitlement for which you received the ineligible proceeds. Note: If the roll ‑ over is under subsection 124 ‑ 1105(2), some or all of the original entitlements may each have an ineligible part. (2) The * cost base of the ineligible part is that part of the cost base of the original entitlement as is reasonably attributable to the ineligible part. (3) The * reduced cost base of the ineligible part is worked out similarly. (4) In working out what is reasonably attributable to the ineligible part for the purposes of subsections (2) and (3), have regard to the * market value of the new entitlement relative to the market value of the ineligible proceeds. (5) If the roll ‑ over is under subsection 124 ‑ 1105(2), for the purposes of sections 124 ‑ 1120 and 124 ‑ 1130, for each original entitlement that has an ineligible part: (a) reduce the * cost base of that entitlement (just before you stopped owning it) by so much of that cost base as is attributable to that ineligible part; and (b) reduce the * reduced cost base of that entitlement similarly.

Amendment history: Inserted by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13)

s 124-1120 — Roll ‑ over consequences—all original entitlements post ‑ CGT

(1) In a situation covered by subsection 124 ‑ 1105(1), if you * acquired the original entitlement on or after 20 September 1985, the first element of the * cost base of the new entitlement (or of each of the new entitlements) is such amount as is reasonable having regard to: (a) the cost base and * market value of the original entitlement; and (b) the number and market value of the new entitlements; and (c) any amount you paid to get the new entitlement (which can include giving property: see section 103 ‑ 5). (2) In a situation covered by subsection 124 ‑ 1105(2), if you * acquired the original entitlements on or after 20 September 1985, the first element of the * cost base of the new entitlement (or of each of the new entitlements) is such amount as is reasonable having regard to: (a) the total of the cost bases of all the original entitlements; and (b) the number and * market value of the original entitlements; and (c) the number and market value of the new entitlements; and (d) any amount you paid to get the new entitlements (which can include giving property: see section 103 ‑ 5). (3) In the situation covered by subsection 124 ‑ 1105(1) or (2), the first element of the * reduced cost base of the new entitlement (or of each of the new entitlements) is worked out similarly. (4) For the purposes of paragraphs (1)(b) and (2)(c), the * market value of the new entitlements is their market value at the time you * acquired them.

Amendment history: Inserted by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13)

s 124-1125 — Roll ‑ over consequences—all original entitlements pre ‑ CGT

(1) In the situation covered by subsection 124 ‑ 1105(1), if you * acquired the original entitlement before 20 September 1985, you are taken to have acquired the new entitlement (or all of the new entitlements) before that day. (2) In the situation covered by subsection 124 ‑ 1105(2), if you * acquired the original entitlements before 20 September 1985, you are taken to have acquired the new entitlement (or all of the new entitlements) before that day.

Amendment history: Inserted by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13)

s 124-1130 — Roll ‑ over consequences—some original entitlements pre ‑ CGT, others post ‑ CGT

(1) This section applies if: (a) the roll ‑ over is under subsection 124 ‑ 1105(2); and (b) you * acquired one or more of the original entitlements before 20 September 1985; and (c) you acquired one or more of the original entitlements on or after that day. (2) You are taken to have * acquired so many of your new entitlements before 20 September 1985 as is reasonable, having regard to: (a) the number and * market value of your original entitlements; and (b) the number and market value of your new entitlements. (3) The first element of the * cost base of each of your new entitlements that are not taken by subsection (2) to have been * acquired before 20 September 1985 (your post ‑ CGT entitlements ) is such amount as is reasonable having regard to: (a) the total of the cost bases of the original entitlements you acquired on or after 20 September 1985; and (b) the number and * market value of your post ‑ CGT entitlements; and (c) any amount you paid to get the new entitlements (which can include giving property: see section 103 ‑ 5). (4) The reduced cost base of each of your post ‑ CGT entitlements is worked out similarly.

Amendment history: Inserted by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13)

s 124-1135 — Reduction in water entitlements roll ‑ over

There is a roll ‑ over if: (a) you own more than one * water entitlement; and (b) under an * arrangement: (i) your ownership of one or more of the water entitlements (each of which is an original entitlement ) ends, resulting in a * CGT event happening; and (ii) you do not receive anything for the original entitlement or entitlements; and (iii) you retain one or more of your original entitlements (the retained entitlements ); and (c) the total of the * market values of all of the retained entitlements immediately after the CGT event happens is substantially the same as the total of the market values of all of the original entitlements immediately before the CGT event happened.

Amendment history: Inserted by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13)

s 124-1140 — Roll ‑ over consequences—capital gain or loss disregarded

A * capital gain or * capital loss you make from your ownership of the original entitlements ending is disregarded.

Amendment history: Inserted by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13)

s 124-1145 — Roll ‑ over consequences—all original entitlements post ‑ CGT

(1) This section applies if you * acquired the original entitlement (or all of the original entitlements) on or after 20 September 1985. (2) The first element of the * cost base of the retained entitlement (or of each of the retained entitlements) is such amount as is reasonable having regard to: (a) the total of the cost bases of all the original entitlements; and (b) the number and * market value of the original entitlements; and (c) the number and market value of the retained entitlements. (3) The first element of the * reduced cost base of the retained entitlements is worked out similarly. (4) For the purposes of paragraph (2)(c), the * market value of the retained entitlements is their market value just after the * CGT event referred to in section 124 ‑ 1135 happens.

Amendment history: Inserted by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13)

s 124-1150 — Roll ‑ over consequences—some original entitlements pre ‑ CGT, others post ‑ CGT

(1) This section applies if: (a) you * acquired one or more of the original entitlements before 20 September 1985; and (b) you acquired one or more of the original entitlements on or after that day. (2) You are taken to have * acquired so many of your retained entitlements before 20 September 1985 as is reasonable, having regard to: (a) the number and * market value of your original entitlements; and (b) the number and market value of your retained entitlements. (3) The first element of the * cost base of each of your retained entitlements that are not taken by subsection (2) to have been * acquired before 20 September 1985 (your post ‑ CGT entitlements ) is such amount as is reasonable having regard to: (a) the total of the cost bases of the original entitlements you acquired on or after 20 September 1985; and (b) the number and * market value of the your post ‑ CGT entitlements. (4) The reduced cost base of each of your post ‑ CGT entitlements is worked out similarly.

Amendment history: Inserted by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13)

s 124-1155 — Roll ‑ over for variation to CGT asset

There is a roll ‑ over if: (a) a * CGT event happens to a * CGT asset that you own; and (b) the CGT event happens as a direct result of the circumstances that gave rise to a roll ‑ over under section 124 ‑ 1105; and (c) you continue to be the owner of the asset (the retained asset ) immediately after the CGT event has happened.

Amendment history: Inserted by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13)

s 124-1160 — Roll ‑ over consequences

A * capital gain or * capital loss you make from the * CGT event is disregarded.

Amendment history: Inserted by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13)

s 124-1165 — Roll ‑ over consequences—partial roll ‑ over

(1) You can obtain only a partial roll ‑ over in relation to a * CGT asset if the * capital proceeds for that asset includes something (the ineligible proceeds ) other than your retained asset. There is no roll ‑ over for that part (the ineligible part ) of the asset for which you received the ineligible proceeds. (2) The * cost base of the ineligible part is that part of the cost base of the * CGT asset as is reasonably attributable to the ineligible part. (3) The * reduced cost base of the ineligible part is worked out similarly. (4) In working out what is reasonably attributable to the ineligible part for the purposes of subsections (2) and (3), have regard to the * market value of the retained asset relative to the market value of the ineligible proceeds.

Amendment history: Inserted by No 136 of 2010, effective s. 4, Schedule 2, Schedule 3 (items 95, 135–149), Schedule 4, Schedule 6 (items 2–4, 6, 7) and Schedule 7 (items 1, 2, 4): Royal Assent Sch 3 (items 3–94, 96–130): 26 Mar 2009 (s 2(1) items 3, 5) Sch 3 (item 131): 1 July 2010 (s 2(1) item 6) Sch 6 (items 1, 5): 1 Apr 2010 (s 2(1) items 11, 13)

s 124-1220 — What this Subdivision is about

There is roll ‑ over relief if an interest in a mining, quarrying or prospecting right is disposed of under an interest realignment arrangement. Table of sections Operative provisions 124 ‑ 1225 Disposals of interests under interest realignment arrangements 124 ‑ 1230 Roll ‑ over consequences—partial roll ‑ over 124 ‑ 1235 Roll ‑ over consequences—all original interests were post ‑ CGT and pre ‑ UCA 124 ‑ 1240 Roll ‑ over consequences—all original interests were pre ‑ CGT 124 ‑ 1245 Roll ‑ over consequences—original interests were of mixed CGT status, all were pre ‑ UCA 124 ‑ 1250 Roll ‑ over consequences—some original interests were pre ‑ UCA

Amendment history: Inserted by No 130 of 2015, effective s 4, Sch 1 (items 1–3, 5–21) and Sch 3 (items 1–5): 16 Sept 2015 (s 2(1) items 1, 2, 4) Sch 2: 1 July 2015 (s 2(1) item 3) Sch 4 (items 1–52, 54–58): 17 Sept 2015 (s 2(1) item 5)

s 124-1225 — Disposals of interests under interest realignment arrangements

(1) There is a roll ‑ over if: (a) * CGT event A1 happens because you * dispose of one or more assets each of which: (i) is an interest (an original interest ) in a * mining, quarrying or prospecting right; and (ii) is an interest that you started to * hold before 1 July 2001; and (b) the disposal occurs under an * interest realignment arrangement. (2) The first element of the * cost base and * reduced cost base of an interest (a new interest ) in a * mining, quarrying or prospecting right that you acquire under the * interest realignment arrangement includes any amount you paid to acquire the new interest. Note 1: The rest of the first element is worked out under Subdivision 124 ‑ A. Note 2: Under subsections 124 ‑ 10(2) and 124 ‑ 15(2), a capital gain or capital loss you make from the original interest is disregarded. (3) The amount can include giving property: see section 103 ‑ 5. However, it does not include a * mining, quarrying or prospecting right that you dispose of under the * interest realignment arrangement.

Amendment history: Inserted by No 130 of 2015, effective s 4, Sch 1 (items 1–3, 5–21) and Sch 3 (items 1–5): 16 Sept 2015 (s 2(1) items 1, 2, 4) Sch 2: 1 July 2015 (s 2(1) item 3) Sch 4 (items 1–52, 54–58): 17 Sept 2015 (s 2(1) item 5)

s 124-1230 — Roll ‑ over consequences—partial roll ‑ over

(1) You can obtain only a partial roll ‑ over in relation to an original interest if the * capital proceeds for that interest includes something (the ineligible proceeds ) other than a new interest or new interests. There is no roll ‑ over for that part (the ineligible part ) of the interest for which you received the ineligible proceeds. Note: If there is more than one original interest, some or all of those original interests may each have an ineligible part. (2) The * cost base of the ineligible part is that part of the cost base of the original interest as is reasonably attributable to the ineligible part. (3) The * reduced cost base of the ineligible part is that part of the reduced cost base of the original interest as is reasonably attributable to the ineligible part. (4) For the purposes of sections 124 ‑ 1235 and 124 ‑ 1245, for each original interest that has an ineligible part: (a) reduce the * cost base of that interest (just before the * CGT event that happened in relation to it) by so much of that cost base as is attributable to that ineligible part; and (b) reduce the * reduced cost base of that interest (just before the CGT event that happened in relation to it) by so much of that reduced cost base as is attributable to that ineligible part.

Amendment history: Inserted by No 130 of 2015, effective s 4, Sch 1 (items 1–3, 5–21) and Sch 3 (items 1–5): 16 Sept 2015 (s 2(1) items 1, 2, 4) Sch 2: 1 July 2015 (s 2(1) item 3) Sch 4 (items 1–52, 54–58): 17 Sept 2015 (s 2(1) item 5)

s 124-1235 — Roll ‑ over consequences—all original interests were post ‑ CGT and pre ‑ UCA

(1) If you acquire the new interest in exchange for: (a) one original interest that you started to * hold on or after 20 September 1985 and before 1 July 2001; or (b) 2 or more original interests, each of which you started to hold on or after 20 September 1985 and before 1 July 2001; you are taken to have started to hold the new interest (or all of the new interests) on or after 20 September 1985 and before 1 July 2001. (2) The first element of the * cost base of the new interest (or of each of the new interests) is such amount as is reasonable having regard to: (a) the total of the cost bases of all the original interests; and (b) the number, * market value and character of the original interests; and (c) the number, market value and character of the new interests. (3) The first element of the * reduced cost base of the new interest (or of each of the new interests) is such amount as is reasonable having regard to: (a) the total of the reduced cost bases of all the original interests; and (b) the number, * market value and character of the original interests; and (c) the number, market value and character of the new interests.

Amendment history: Inserted by No 130 of 2015, effective s 4, Sch 1 (items 1–3, 5–21) and Sch 3 (items 1–5): 16 Sept 2015 (s 2(1) items 1, 2, 4) Sch 2: 1 July 2015 (s 2(1) item 3) Sch 4 (items 1–52, 54–58): 17 Sept 2015 (s 2(1) item 5)

s 124-1240 — Roll ‑ over consequences—all original interests were pre ‑ CGT

If you acquire the new interest in exchange for: (a) one original interest that you started to * hold before 20 September 1985; or (b) 2 or more original interests, each of which you started to hold before 20 September 1985; you are taken to have started to hold the new interest (or all of the new interests) before that day.

Amendment history: Inserted by No 130 of 2015, effective s 4, Sch 1 (items 1–3, 5–21) and Sch 3 (items 1–5): 16 Sept 2015 (s 2(1) items 1, 2, 4) Sch 2: 1 July 2015 (s 2(1) item 3) Sch 4 (items 1–52, 54–58): 17 Sept 2015 (s 2(1) item 5)

s 124-1245 — Roll ‑ over consequences—original interests were of mixed CGT status, all were pre ‑ UCA

(1) This section applies if: (a) you acquire the new interest in exchange for more than one original interest; and (b) you started to * hold one or more of the original interests before 20 September 1985; and (c) you started to hold one or more of the original interests on or after that day; and (d) you did not start to hold any of the original interests on or after 1 July 2001. (2) Each new interest is taken to be 2 separate * CGT assets that are both new interests: (a) one (which you are taken to have started to * hold on or after 20 September 1985 and before 1 July 2001) representing the extent to which you started to hold the original interests on or after 20 September 1985 and before 1 July 2001; and (b) another (which you are taken to have started to hold before 20 September 1985) representing the extent to which you started to hold the original interests before that day. (3) The first element of the * cost base and * reduced cost base of the * CGT asset mentioned in paragraph (2)(a) in relation to a new interest is worked out under the formula: where: market value of all new interests is the total of the * market values of all of the new interests. market value of new interest is the * market value of the new interest to which the * CGT asset mentioned in paragraph (2)(a) relates. total post ‑ CGT cost base is the total of the * cost bases of all the original interests that you started to * hold on or after 20 September 1985.

Amendment history: Inserted by No 130 of 2015, effective s 4, Sch 1 (items 1–3, 5–21) and Sch 3 (items 1–5): 16 Sept 2015 (s 2(1) items 1, 2, 4) Sch 2: 1 July 2015 (s 2(1) item 3) Sch 4 (items 1–52, 54–58): 17 Sept 2015 (s 2(1) item 5)

s 124-1250 — Roll ‑ over consequences—some original interests were pre ‑ UCA

(1) This section applies if: (a) you acquire the new interest in exchange for more than one original interest; and (b) you started to * hold one or more of the original interests ( pre ‑ UCA interests ) before 1 July 2001; and (c) you started to hold one or more of the original interests ( post ‑ UCA interests ) on or after that day. (2) If you started to * hold all of the pre ‑ UCA interests on or after 20 September 1985, each new interest is taken to be 2 separate assets that are both new interests: (a) one (which you are taken to have started to hold on or after that day and before 1 July 2001) representing the extent to which the original interests are pre ‑ UCA interests; and (b) another (which you are taken to have started to hold on or after 1 July 2001) representing the extent to which the original interests are post ‑ UCA interests. Apply section 124 ‑ 1235 to the interest referred to in paragraph (a) as if the pre ‑ UCA interests were the only original interests. Apply Division 40 to the interests referred to in paragraph (b). (3) If you started to * hold all of the pre ‑ UCA interests before 20 September 1985, each new interest is taken to be 2 separate assets that are both new interests: (a) one (which you are taken to have started to hold before that day) representing the extent to which the original interests are pre ‑ UCA interests; and (b) another (which you are taken to have started to hold on or after 1 July 2001) representing the extent to which the original interests are post ‑ UCA interests. Apply section 124 ‑ 1240 to the new interest referred to in paragraph (a) as if the pre ‑ UCA interests were the only original interests. Apply Division 40 to the new interest referred to in paragraph (b). (4) If you started to * hold one or more of the pre ‑ UCA interests before 20 September 1985 and one or more of the pre ‑ UCA interests on or after that day, each new interest is taken to be 3 separate assets that are all new interests: (a) one (which you are taken to have started to hold on or after 20 September 1985 and before 1 July 2001) representing the extent to which the original interests that you started to hold on or after 20 September 1985 are pre ‑ UCA interests; and (b) another (which you are taken to have started to hold before 20 September 1985) representing the extent to which the original interests that you started to hold before 20 September 1985 are pre ‑ UCA interests; and (c) another (which you are taken to have started to hold on or after 1 July 2001) representing the extent to which the original interests are post ‑ UCA interests. Apply section 124 ‑ 1245 to the new interests referred to in paragraphs (a) and (b) as if the pre ‑ UCA interests were the only original interests. Apply Division 40 to the new interest referred to in paragraph (c).

Amendment history: Inserted by No 130 of 2015, effective s 4, Sch 1 (items 1–3, 5–21) and Sch 3 (items 1–5): 16 Sept 2015 (s 2(1) items 1, 2, 4) Sch 2: 1 July 2015 (s 2(1) item 3) Sch 4 (items 1–52, 54–58): 17 Sept 2015 (s 2(1) item 5)

s 125-1 — What this Division is about

Entities can obtain CGT relief for a demerger. Owners of ownership interests in the head entity of a demerger group can obtain a roll ‑ over to defer CGT consequences for the CGT events that happen to their interests under the demerger (see Subdivision 125 ‑ B). Capital gains and capital losses made by members of the demerger group from certain CGT events that happen under the demerger are disregarded (see Subdivision 125 ‑ C). Note: Dividend relief is also available: see section 44 of the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 125-5 — Object of this Division

The object of this Division is to facilitate the demerging of entities by ensuring that capital gains tax considerations are not an impediment to restructuring a * business.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 125-50 — Guide to Subdivision 125 ‑ B

You can choose to obtain a roll ‑ over if a CGT event happens to your interests in a company or trust because of a demerger of an entity from the group of which the company or trust is the head entity. There are cost base adjustments if you receive new interests under a demerger and no CGT event happens to your original interests. Table of sections Operative provisions 125 ‑ 55 When a roll ‑ over is available for a demerger 125 ‑ 60 Meaning of ownership interest and related terms 125 ‑ 65 Meanings of demerger group , head entity and demerger subsidiary 125 ‑ 70 Meanings of demerger , demerged entity and demerging entity 125 ‑ 75 Exceptions to subsection 125 ‑ 70(2) 125 ‑ 80 What is the roll ‑ over? 125 ‑ 85 Cost base adjustments where CGT event happens but no roll ‑ over chosen 125 ‑ 90 Cost base adjustments where no CGT event 125 ‑ 95 No other cost base adjustment after demerger 125 ‑ 100 No further demerger relief in some cases

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 125-55 — When a roll ‑ over is available for a demerger

(1) You can choose to obtain a roll ‑ over if: (a) you own an * ownership interest in a company or trust (your original interest ); and (b) the company or trust is the * head entity of a * demerger group; and (c) a * demerger happens to the demerger group; and (d) under the demerger, a * CGT event happens to your original interest and you * acquire a new or replacement interest (your new interest ) in the * demerged entity. Note 1: Section 125 ‑ 80 sets out what the roll ‑ over is. Note 2: You have to make cost base adjustments even if there is no CGT event: see section 125 ‑ 90. Example: Peter owns shares (his original interests) in Company A, a public company. Company B is a wholly owned subsidiary of Company A. Company A announces a demerger utilising a proportionate capital reduction and the disposal of all its shares in Company B to its 320,000 shareholders. Following the demerger all of the shareholders in Company A, including Peter, will own all of the shares in Company B (their new interests). (2) You cannot choose to obtain a roll ‑ over under this Subdivision for an original interest if: (a) you are a foreign resident; and (b) the new interest you * acquire under the * demerger in exchange for that original interest is not * taxable Australian property just after you acquire it. Note: For taxable Australian property , see section 855 ‑ 15.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent

s 125-60 — Meaning of ownership interest and related terms

(1) An ownership interest in a company or trust is: (a) for a company, a * share in the company or an option, right or similar interest issued by the company that gives the owner an entitlement to * acquire a share in the company; and (b) for a trust, a unit or other interest in the trust or an option, right or similar interest issued by the trustee that gives the owner an entitlement to acquire a unit or other interest in the trust. (2) However, this Subdivision applies to a * dual listed company voting share in a company that is the * head entity of a * demerger group as if it were not an ownership interest if there are not more than 5 of those * shares in the company. (3) A dual listed company voting share is a * share in a company: (a) issued: (ii) as part of a * dual listed company arrangement; and (iii) mainly for the purpose of ensuring that shareholders of both companies involved in the arrangement vote as a single decision ‑ making body on matters affecting them; and (b) that does not carry rights to financial entitlements (except the return of the amount paid up on the share and a dividend that is the equivalent of a dividend paid on an ordinary share). (4) A dual listed company arrangement is an * arrangement under which 2 publicly listed companies, while maintaining their separate legal entity status, shareholdings and listings, align their strategic directions and the economic interests of their respective shareholders through: (a) the appointment of common (or almost identical) boards of directors, except where the effect of the relevant regulatory requirements prevents this; and (b) management of the operations of the 2 companies on a unified basis; and (c) the shareholders of both companies voting in effect as a single decision ‑ making body on substantial issues affecting their combined interests; and (d) equalised distributions to shareholders in accordance with an equalisation ratio applying between the 2 companies, both generally and in the event of a winding up of one or both of the companies; and (e) cross ‑ guarantees as to, or similar financial support for, each other’s substantial obligations or operations, except where the effect of the relevant regulatory requirements prevents those guarantees or that financial support. (5) However, an arrangement is not a dual listed company arrangement unless one but not both of the companies is an Australian resident.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 147 of 2005, effective Schedule 1 (items 4–168, 169(2), 170–176), Schedule 2 (items 1, 12–24, 26–28), Schedule 3, Schedule 4 (items 4–12), Schedule 5 (items 13, 14, 20), Schedule 6 (items 1, 2, 10(1)) and Schedule 7 (items 14–16, 20): Royal Assent | Amended by No 13 of 2010, effective Schedule 1 (items 1, 2): Royal Assent

s 125-65 — Meanings of demerger group , head entity and demerger subsidiary

(1) A demerger group comprises the * head entity of the group and one or more * demerger subsidiaries. Note: An entity may be a member of one or more demerger groups. (2) A trust cannot be a member of a demerger group unless * CGT event E4 is capable of applying to all of the units and interests in the trust. Note: A discretionary trust cannot be a member of a demerger group. (2A) Neither a corporation sole nor a * complying superannuation entity is a member of a * demerger group. (3) A company or trust is the head entity of a * demerger group if no other member of the group owns * ownership interests in the company or trust. (4) If apart from this subsection, a company or trust would be the * head entity of a * demerger group and the company or trust, and all of its * demerger subsidiaries, are also demerger subsidiaries of another company or trust in another demerger group, the first ‑ mentioned company or trust is not the head entity of a demerger group. (5) A company or trust (the first company or trust ) that would, apart from this subsection, be a member of a demerger group is not a member of the demerger group if: (a) the first company or trust owns, either alone or together with another company or trust that would, apart from this subsection, be a member of the * demerger group, more than 20% but less than 80% of the * ownership interests in a * listed public company or * listed widely held trust; and (b) the listed public company or listed widely held trust chooses that the first company or trust not be a member of the demerger group. (6) A company is a demerger subsidiary of another company or a trust that is a member of a * demerger group if the other company or the trust, either alone or together with other members of the group, owns, or has the right to * acquire, * ownership interests in the company that carry between them: (a) the right to receive more than 20% of any distribution of income or capital by the company; or (b) the right to exercise, or control the exercise of, more than 20% of the voting power of the company. (7) A trust is a demerger subsidiary of another trust or a company that is a member of a * demerger group if the other trust or the company, either alone or together with other members of the group, owns, or has the right to * acquire, * ownership interests in the trust that carry between them the right to receive more than 20% of any distribution of income or capital by the trustee.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29)

s 125-70 — Meanings of demerger , demerged entity and demerging entity

(1) A demerger happens to a * demerger group if: (a) there is a restructuring of the demerger group; and (b) under the restructuring: (i) members of the demerger group * dispose of at least 80% of their total * ownership interests in another member of the demerger group to owners of original interests in the * head entity of the demerger group; or (ii) at least 80% of the total ownership interests of members of the demerger group in another member of the demerger group end and new interests are issued to owners of original interests in the head entity; or (iii) the demerged entity issues sufficient new ownership interests in itself with the result that owners of original interests in the head entity own at least 80% of the total ownership interests in the demerged entity; or (iv) some combination of the processes referred to in subparagraphs (i), (ii) and (iii) happens with the effect that members of the demerger group stop owning at least 80% of the total ownership interests owned by members of the demerger group in another member of the group; and Note: CGT event C2 and CGT event C3 are the only relevant CGT events in a subparagraph (ii) case. (c) under the restructuring: (i) a * CGT event happens to an original interest owned by an entity in the head entity of the group and the entity * acquires a new interest and nothing else; or (ii) no CGT event happens to an original interest owned by an entity in the head entity of the group and the entity acquires a new interest and nothing else; and (d) the acquisition by entities of new interests happens only because those entities own or owned original interests; and (e) the new interests acquired are: (i) if the head entity is a company—ownership interests in a company; or (ii) if the head entity is a trust—ownership interests in a trust; and (g) neither the original interests nor the new interests are in a trust that is a * non ‑ complying superannuation fund; and (h) the requirements of subsection (2) are met. Example: To continue the example from subsection 125 ‑ 55(1), Peter owns 400 post ‑ CGT shares in Company A. Companies A and B are both members of a demerger group. Company A is the head entity of the demerger group and Company B is a demerger subsidiary. Company A proceeds to demerge 100% of its shares in Company B to its shareholders. Company A enters into a proportionate capital reduction, returning 40 cents per share to its ordinary shareholders. Peter is entitled to $160 (40c times 400 shares) under the capital reduction. For Peter, the capital reduction amount of $160 is compulsorily applied to acquire Company A’s shares in Company B, at $6.75 (a discount of 10% to current market value). Company A rounds up the fractional amounts in calculating the number of whole shares to be distributed to each shareholder. This gives Peter 24 shares in Company B (160 divided by 6.75, rounded up to the nearest whole number). Note: Acquiring new interests by an owner of original interests may include the allocation of the owner’s entitlement to new interests to a nominee: • to sell on the owner’s behalf; or • to hold pending the owner being located. (2) Each owner (an original owner ) of original interests in the * head entity of the * demerger group must: (a) * acquire, under the * demerger, the same proportion, or as nearly as practicable the same proportion, of new interests in the * demerged entity as the original owner owned in the head entity just before the demerger; and (b) just after the demerger, have the same proportionate total * market value of * ownership interests in the head entity and demerged entity as the original owner owned in the head entity just before the demerger. Note 1: There is an exception: see section 125 ‑ 75. Note 2: Dual listed company voting shares are not treated as ownership interests: see section 125 ‑ 60. Note 3: Fractional interests will generally not affect your ability to choose a roll ‑ over. Example: To continue the example from subsection (1), Company A concludes, given the circumstances of the demerger, that the market values of Peter’s and the other shareholders’ shares in A and B are expected to be in proportion with their original interests in Company A, and advises the shareholders of this position. (3) In working out whether an original owner complies with subsection (2): (a) disregard * ownership interests that are original interests the owner owns in the * demerged entity; and (b) an anticipated reasonable approximation of the * market value of ownership interests is sufficient. Example: An anticipated reasonable approximation of market values of ownership interests may include: • valuations provided to shareholders in scheme documents; • the price selected for use under a sale facility; and may be made by reference to long ‑ term value. Exception: off ‑ market buy ‑ backs (4) A buy ‑ back of * shares that is an off ‑ market purchase for the purposes of Division 16K of Part III of the Income Tax Assessment Act 1936 is not a * demerger. Exception: roll ‑ over available under another provision (5) Circumstances where an owner of original interests can obtain a roll ‑ over under a provision of this Act outside this Division for all of the CGT events that happened to the owner’s original interests under the circumstances cannot be a demerger . Note: An owner might be able to obtain a roll ‑ over for the CGT events under Subdivision 124 ‑ E, or 124 ‑ M or Division 615. Meaning of demerged entity (6) An entity that is a former member of a * demerger group is a demerged entity if, under a * demerger that happens to the group, * ownership interests in the entity are acquired by: (a) shareholders in the * head entity of the group; or (b) unitholders or holders of interests in the head entity of the group. Meaning of demerging entity (7) An entity that is a member of a * demerger group just before the * CGT event referred to in section 125 ‑ 155 happens is a demerging entity if, under a * demerger that happens to the group: (a) the entity (either alone or together with other members of the demerger group) * dispose of at least 80% of their total * ownership interests in another member of the demerger group to owners of original interests in the * head entity of the demerger group; or (b) at least 80% of the total ownership interests of that entity and of other members of the demerger group in another member of the demerger group end and new interests are issued to owners of original interests in the head entity; or Note: CGT event C2 and CGT event C3 are the only relevant CGT events. (c) the demerged entity issues sufficient new ownership interests in itself with the result that owners of original interests in the head entity own at least 80% of the total ownership interests in the demerged entity; or (d) some combination of the processes referred to in paragraphs (a), (b) and (c) happens with the effect that members of the demerger group stop owning at least 80% of the total ownership interests owned by members of the demerger group in another member of the group.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29) | Amended by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2)

s 125-75 — Exceptions to subsection 125 ‑ 70(2)

Employee share schemes (1) In working out whether the requirements in subsection 125 ‑ 70(2) are met, disregard each of the * ownership interests described in subsections (2) and (3) if, just before the * demerger, those interests (taking into account either or both of their number and value) represented not more than 3% of the total * ownership interests in the entity. (2) An * ownership interest, in a company, that is owned by an entity is disregarded under subsection (1) if: (a) the entity acquired a beneficial interest in the ownership interest under an * employee share scheme; and (b) these provisions apply to the beneficial interest: (i) Subdivision 83A ‑ B and the provisions referred to in paragraphs 83A ‑ 33(1)(a) to (c); or (ii) Subdivision 83A ‑ B and the provisions referred to in paragraphs 83A ‑ 35(1)(a) and (b); or (iii) Subdivision 83A ‑ C; and (c) the ownership interest is not a fully ‑ paid ordinary * share. (3) An * ownership interest, in a trust, that is owned by an entity is disregarded under subsection (1) if: (a) both of the following would apply if Division 83A (about employee share schemes) applied to ownership interests in trusts in the same way as it applies to * shares: (i) the entity acquired a beneficial interest in the ownership interest under an * employee share scheme; (ii) the provisions referred to in subparagraph (2)(b)(i), (ii) or (iii) apply to the beneficial interest; and (b) the ownership interest is not a fully ‑ paid unit. Adjusting instruments (4) In working out whether the requirements in subsection 125 ‑ 70(2) are met, disregard each of the * ownership interests described in subsection (5) ( adjusting instruments ) if, just before the * demerger, those interests represented not more than 10%, or such greater percentage (not exceeding 17%) as is prescribed, of the ownership interests in the entity. (5) An * ownership interest in a * listed public company or a * listed widely held trust that is the * head entity of a * demerger group is disregarded under subsection (4) if: (a) the adjusting instrument was issued on terms that ensure that its value is not adversely affected by an * arrangement undertaken by the company or trust in relation to other ownership interests in the company or trust; and (b) if the adjusting instrument can be converted into an ordinary * share in the company or an ordinary unit in the trust, any conversion will occur on a basis: (i) that is set out in the terms of the issue of the instrument; and (ii) that is adjusted to take into account a capital reduction or a capital reconstruction; and (c) before conversion, the owner of the adjusting instrument does not have a right to participate in distributions of profit or capital except as set out in the terms of the issue of the instrument; and (d) the adjusting instrument deals with the effect of a * demerger that happens to the demerger group on the value of the instrument. Example: Some examples of adjusting instruments are: • convertible preference shares, including reset preference shares; • convertible notes; • partly paid shares where the paid ‑ up amount is adjusted to reflect a capital reduction. Additional exceptions (6) The regulations may provide that, in working out whether the requirements in subsection 125 ‑ 70(2) are met, other * ownership interests of a kind specified in the regulations are to be disregarded if, just before the * demerger, those interests represented not more than a prescribed percentage of the ownership interests in the entity. (7) However, the total percentage of * ownership interests to be disregarded under this section must not exceed 20% of the ownership interests in the entity.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 56 of 2007, effective 12 Apr 2007 | Amended by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent | Amended by No 105 of 2015, effective Sch 1 (items 2–41, 44–51): 1 July 2015 (s 2)

s 125-80 — What is the roll ‑ over?

(1) If you choose the roll ‑ over, a * capital gain or * capital loss you make from a * CGT event happening under the * demerger to an original interest you own is disregarded. (2) If you choose the roll ‑ over, the first element of the * cost base and * reduced cost base of: (a) each new interest that you are not taken to have * acquired before 20 September 1985; and (b) if not all of your original interests ended under the * demerger—each of your remaining original interests that you acquired on or after 20 September 1985; is such proportion of the sum of the cost bases of all your original interests that you acquired on or after 20 September 1985 (worked out just before the demerger) as is reasonable having regard to the matters specified in subsection (3). Note 1: These rules replace the cost base and reduced cost base adjustments in CGT event E4 and CGT event G1. Note 2: The head entity or the demerging entity may advise you of the proportions. (3) The matters are: (a) the * market values of your remaining original interests just after the * demerger, or an anticipated reasonable approximation of those market values; and (b) the market values of your new interests just after the demerger, or an anticipated reasonable approximation of those market values. Example: To continue the example from subsection 125 ‑ 70(2), Company A advises its shareholders that Company B at that time represents 5% of the market value of the group as a whole. Peter’s cost base for each of his shares in A is $4.60, and Peter recalculates his cost base as follows: to be spread over 400 shares in A and 24 shares in B. Pre ‑ CGT interests (4) The following subsections apply if you choose the roll ‑ over and you * acquired some or all of your original interests before 20 September 1985. (5) If you * acquired all of your original interests before 20 September 1985, you are taken to have acquired all of your new interests before that day. (6) If you * acquired some of your original interests before 20 September 1985, you are taken to have acquired a reasonable whole number of your new interests before that day having regard to: (a) the * market values of your original interests and your remaining original interests just after the * demerger, or an anticipated reasonable approximation of those market values; and (b) the market values of your new interests just after the demerger, or an anticipated reasonable approximation of those market values. (7) If a proportion, but not all, of your original interests ends under the * demerger and you * acquired some of your original interests before 20 September 1985, that same proportion of those interests you acquired before that day ends. Note: CGT event K6 may be relevant if you later dispose of your interests that are treated as being pre ‑ CGT. Example: Bert owned 100 shares in a company of which 50 were acquired pre ‑ CGT. Under a demerger 20 of Bert’s 100 shares were cancelled in exchange for new interests. As 20% of his shares were cancelled, 10 of his pre ‑ CGT shares are taken to have been cancelled. Partial roll ‑ over (8) If you choose a roll ‑ over for some but not all of your original interests, you apply the rules in this section as if your original interests for which you chose the roll ‑ over were your only original interests.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5)

s 125-85 — Cost base adjustments where CGT event happens but no roll ‑ over chosen

(1) You must adjust the * cost base and * reduced cost base of an * ownership interest you own in a company or trust if: (a) a * demerger happens to a * demerger group of which the company or trust is a member; and (b) you owned an original interest in the * head entity of the demerger group just before the demerger; and (c) a * CGT event happens to the original interest and you * acquire a new interest under the demerger; and (d) you do not choose a roll ‑ over under this Subdivision for the original interest. (2) The adjustments you must make are the same as the adjustments you would have to make under section 125 ‑ 80 for the * cost bases and * reduced cost bases of the remaining original interests and new interests just after the * CGT event if you could have chosen a roll ‑ over under this Subdivision for the * demerger and you had done so.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 125-90 — Cost base adjustments where no CGT event

(1) You must adjust the * cost base and * reduced cost base of an * ownership interest you own in a company or trust if: (a) a * demerger happens to a * demerger group of which the company or trust is a member; and (b) you owned an original interest in the * head entity of the demerger group just before the demerger; and (c) no * CGT event happens to the original interest, but you * acquire a new interest under the demerger. (2) The adjustments you must make are the same as the adjustments you would have to make under section 125 ‑ 80 if you could have chosen a roll ‑ over under this Subdivision for the * demerger and you had done so.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 125-95 — No other cost base adjustment after demerger

If you have to make adjustments to the * cost base and * reduced cost base of your * ownership interests under section 125 ‑ 80, 125 ‑ 85 or 125 ‑ 90 because of a * demerger, no other adjustment can be made under this Act to those cost bases and reduced cost bases because of something that happens under the demerger. Note: Those sections deal with any value shift that might occur under the demerger and avoid the need for the general value shifting regime to apply.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 125-100 — No further demerger relief in some cases

This Division does not apply to the remaining * ownership interests in a * demerged entity if one or more members of the * demerger group * disposed of or cancelled less than 100% of the total ownership interests of that group in the demerged entity. Note: After the demerger, a former member of the demerger group can undertake a further demerger to which this Division can apply.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 125-150 — Guide to Subdivision 125 ‑ C

Certain capital gains and capital losses that members of a demerger group make under a demerger are disregarded. Certain capital losses made under a demerger are reduced where the demerger results in a value shift. Table of sections Operative provisions 125 ‑ 155 Certain capital gains or losses disregarded for demerging entity 125 ‑ 160 No CGT event J1 125 ‑ 165 Adjusted capital loss for value shift under a demerger 125 ‑ 170 Reduced cost base reduction if demerger asset subject to roll ‑ over

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 125-155 — Certain capital gains or losses disregarded for demerging entity

Any * capital gain or * capital loss a * demerging entity makes from * CGT event A1, * CGT event C2, * CGT event C3 or * CGT event K6 happening to its * ownership interests in a * demerged entity under a * demerger is disregarded. Note 1: The full list of CGT events is in section 104 ‑ 5. Note 2: This section will not apply if section 125 ‑ 100 applies.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 125-160 — No CGT event J1

* CGT event J1 does not happen to a * demerged entity or a member of a * demerger group under a * demerger.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 125-165 — Adjusted capital loss for value shift under a demerger

A * capital loss made by an entity that was a member of a * demerger group from a * CGT event happening to a * CGT asset under a * demerger or after a demerger is reduced to the extent that the capital loss is reasonably attributable to a reduction in the * market value of the asset because of the demerger. Example: The market value of equity or loan interests in the demerging entity may be reduced by the disposal, for inadequate value, of ownership interests of another member of the demerger group to owners of original interests in the head entity of the group.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 125-170 — Reduced cost base reduction if demerger asset subject to roll ‑ over

(1) The * reduced cost base of a * CGT asset is reduced if: (a) the * market value of the asset is reduced because of a * demerger; and (b) after the demerger the asset is * acquired by an entity from another entity (the transferor ) in a situation where the transferor obtained a roll ‑ over for the disposal; and (c) the reduction occurred when the transferor owned the asset. (2) The * reduced cost base of the asset as determined under the roll ‑ over is reduced just after the roll ‑ over to the extent of the reduction in * market value caused by the * demerger. Note: The rules in section 125 ‑ 165 and this section deal with any value shift that might occur under the demerger and avoid the need for the general value shifting regime to apply. (3) If the * reduced cost base of a * CGT asset is reduced under this section because of a * demerger, no other adjustment can be made under this Act to that reduced cost base because of something that happens under the demerger.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 125-225 — Guide to Subdivision 125 ‑ D

This Division applies to corporate unit trusts and public trading trusts as if they were companies. Table of sections Operative provisions 125 ‑ 230 Application of Division to public trading trusts

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 125-230 — Application of Division to public trading trusts

This Division applies to a trust to which section 102S of the Income Tax Assessment Act 1936 applies for an income year in which a * demerger happens as if: (a) the trust were a company; and (b) * ownership interests in it were interests in a company.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4)

s 125-235 — Share and interest sale facilities

Share and interest sale facilities (1) An entity (the investor ) is treated as owning an * ownership interest (the roll ‑ over interest ) in a * demerged entity at a time (the deeming time ), if: (a) the investor owned an ownership interest in a company or trust that was the * head entity of a * demerger group; and (b) a * demerger happens to the demerger group; and (c) because: (i) a * foreign law impedes the ability of a member of the demerger group to issue or transfer the roll ‑ over interest to the investor; or (ii) it would be impractical or unreasonably onerous to determine whether a foreign law impedes the ability of a member of the demerger group to issue or transfer the roll ‑ over interest to the investor; it is * arranged that the member will issue or transfer the roll ‑ over interest to another entity (the facility ) under the demerger instead of to the investor; and (d) in accordance with that arrangement and as a result of the demerger, the facility: (i) becomes the owner of the roll ‑ over interest (which is a new or replacement interest in the demerged entity); and (ii) owns the roll ‑ over interest at the deeming time; and (e) under the arrangement, the investor is entitled to receive from the facility: (i) an amount equivalent to the * capital proceeds of any * CGT event that happens in relation to the roll ‑ over interest (less expenses); or (ii) if a CGT event happens in relation to the roll ‑ over interest together with CGT events happening in relation to other ownership interests—an amount equivalent to the investor’s proportion of the total capital proceeds of the CGT events (less expenses). (2) The facility is treated as not owning the roll ‑ over interest at the deeming time. (3) This section applies for the purposes of: (a) applying this Division in relation to the demerger; and (b) item 2 of the table in subsection 115 ‑ 30(1), to the extent that it relates to a roll ‑ over under this Division that involves the demerger.

Amendment history: Inserted by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29)

s 126-1 — What this Division is about

A same ‑ asset roll ‑ over allows a capital gain or loss an entity makes from disposing of a CGT asset to, or creating a CGT asset in, another entity to be disregarded. For a disposal, certain attributes of the asset are transferred to the receiving entity.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 126-5 — CGT event involving spouses

(1) There is a roll ‑ over if a * CGT event (the trigger event ) happens involving an individual (the transferor ) and his or her * spouse (the transferee ), or a former * spouse (also the transferee ), because of: (a) a court order under the Family Law Act 1975 or under a * State law, * Territory law or * foreign law relating to breakdowns of relationships between spouses; or (b) a maintenance agreement approved by a court under section 87 of the Family Law Act 1975 or a corresponding agreement approved by a court under a corresponding * foreign law; or (d) something done under: (i) a financial agreement made under Part VIIIA of the Family Law Act 1975 that is binding because of section 90G of that Act; or (ii) a corresponding written agreement that is binding because of a corresponding foreign law; or (da) something done under: (i) a Part VIIIAB financial agreement (within the meaning of the Family Law Act 1975 ) that is binding because of section 90UJ of that Act; or (ii) a corresponding written agreement that is binding because of a corresponding foreign law; or (e) something done under: (i) an award made in an arbitration referred to in section 13H of the Family Law Act 1975 ; or (ii) a corresponding award made in an arbitration under a corresponding State law, Territory law or foreign law; or (f) something done under a written agreement: (i) that is binding because of a State law, Territory law or foreign law relating to breakdowns of relationships between spouses; and (ii) that, because of such a law, prevents a court making an order about matters to which the agreement applies, or that is inconsistent with the terms of the agreement in relation to those matters, unless the agreement is varied or set aside. (2) Only these * CGT events are relevant: (a) CGT events A1 and B1 (a disposal case ); and (b) CGT events D1, D2, D3 and F1 (a creation case ). Note: The full list of CGT events is in section 104 ‑ 5. (3) However, there is no roll ‑ over if: (a) the * CGT asset involved is * trading stock of the transferor; or (b) for * CGT event B1—title in the CGT asset does not pass to the transferee at or before the end of the agreement. (3A) There is no roll ‑ over because of paragraph (1)(d), (da) or (f) unless the conditions set out in section 126 ‑ 25 are met. (4) A * capital gain or a * capital loss the transferor makes from the * CGT event is disregarded. Consequences for the transferee (disposal case) (5) For a disposal case where the transferor * acquired the asset on or after 20 September 1985: (a) the first element of the asset’s * cost base (in the hands of the transferee) is the asset’s cost base (in the hands of the transferor) at the time the transferee acquired it; and (b) the first element of the asset’s * reduced cost base (in the hands of the transferee) is worked out similarly. Example: Your spouse transfers land to you because of a court order under the Family Law Act 1975 . Any capital gain or loss your spouse makes is disregarded. If the land’s cost base at the time you acquired it is $10,000, the first element of the land’s cost base in your hands becomes $10,000. Note 1: There are special indexation rules for roll ‑ overs: see Division 114. Note 2: A roll ‑ over under this Subdivision may have an effect on the transferee’s main residence exemption: see sections 118 ‑ 178 and 118 ‑ 180. (6) For a disposal case where the transferor * acquired the asset before 20 September 1985, the transferee is taken to have acquired it before that day. Note: A capital gain or loss you make from a CGT asset you acquired before 20 September 1985 is generally disregarded: see Division 104. This exemption is removed in some situations: see Division 149. (7) For a disposal case where the transferor * disposed of a * collectable or * personal use asset, the transferee is taken to have * acquired one. Note 1: Capital losses from collectables can be subtracted only from capital gains from collectables: see section 108 ‑ 10. Note 2: Capital losses from personal use assets are disregarded: see section 108 ‑ 20. Consequences for the transferee (creation case) (8) For a creation case, the first element of the asset’s * cost base (in the hands of the transferee) is the amount applicable under this table. The first element of its * reduced cost base is worked out similarly. Creation case Event No. Applicable amount D1 the * incidental costs the transferor incurred that relate to the trigger event D2 the expenditure the transferor incurred to grant the option D3 the expenditure the transferor incurred to grant the right F1 the expenditure the transferor incurred on the grant, renewal or extension of the lease The expenditure can include giving property: see section 103 ‑ 5.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 114 of 2000, effective Schedule 4 (items 43, 44): 1 July 1998 Remainder: Royal Assent | Amended by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 115 of 2008, effective Sch 2 (items 34–41): 1 Mar 2009 (s 2(1) item 5) | Amended by No 144 of 2008, effective Schedule 14 (items 59–96): 10 Dec 2008

s 126-15 — CGT event involving company or trustee

(1) There are the roll ‑ over consequences in section 126 ‑ 5 if the trigger event involves a company (the transferor ) or a trustee (also the transferor ) and a * spouse or former spouse (the transferee ) of another individual because of: (a) a court order under the Family Law Act 1975 or under a * State law, * Territory law or * foreign law relating to breakdowns of relationships between spouses; or (b) a maintenance agreement approved by a court under section 87 of the Family Law Act 1975 or a corresponding agreement approved by a court under a corresponding * foreign law; or (d) something done under: (i) a financial agreement made under Part VIIIA of the Family Law Act 1975 that is binding because of section 90G of that Act; or (ii) a corresponding written agreement that is binding because of a corresponding foreign law; or (da) something done under: (i) a Part VIIIAB financial agreement (within the meaning of the Family Law Act 1975 ) that is binding because of section 90UJ of that Act; or (ii) a corresponding written agreement that is binding because of a corresponding foreign law; or (e) something done under: (i) an award made in an arbitration referred to in section 13H of the Family Law Act 1975 ; or (ii) a corresponding award made in an arbitration under a corresponding State law, Territory law or foreign law; or (f) something done under a written agreement: (i) that is binding because of a State law, Territory law or foreign law relating to breakdowns of relationships between spouses; and (ii) that, because of such a law, prevents a court making an order about matters to which the agreement applies, or that is inconsistent with the terms of the agreement in relation to those matters, unless the agreement is varied or set aside. (2) There are other consequences if: (a) just before the time of the trigger event, an entity (including the transferee) owned another * CGT asset of a kind covered by this table; and (b) the entity * acquired it on or after 20 September 1985; and (c) a * CGT event happens in relation to it. Relevant CGT assets Item For this transferor: The entity can own these assets: 1 Company (a) a * share in the company; or (b) a loan to the company; or (c) an indirect interest (through one or more interposed companies or trusts) in a * share in, or loan to, the company 2 Trustee (a) an interest or unit in the trust; or (b) a loan to the trustee; or (c) an indirect interest (through one or more interposed companies or trusts) in an interest or unit in the trust or in a loan to the trustee Example: An individual owns all the shares in a company. The company owns land. The individual’s marriage breaks down. A court orders that the company transfer the land it owns to the individual’s spouse. The individual later sells the shares. (3) The * cost base and * reduced cost base of the other asset are reduced by an amount that reasonably reflects the fall in its * market value because of the trigger event. The reduction occurs at the time of the trigger event. (4) If the entity owning the other asset is also the transferee, the * cost base and * reduced cost base of the other asset are then increased by any amount that is included in the entity’s assessable income for any income year because of the trigger event. Note: The reduced cost base may be modified for a roll ‑ over happening after a demerger: see section 125 ‑ 170. (5) There is no roll ‑ over because of paragraph (1)(d), (da) or (f) unless the conditions set out in section 126 ‑ 25 are met.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9)) | Amended by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5) | Amended by No 115 of 2008, effective Sch 2 (items 34–41): 1 Mar 2009 (s 2(1) item 5) | Amended by No 144 of 2008, effective Schedule 14 (items 59–96): 10 Dec 2008 | Amended by No 13 of 2021, effective Sch 2 (item 467): 1 Sept 2021 (s 2(1) item 5)

s 126-20 — Subsequent CGT event happening to roll ‑ over asset where transferor was a CFC or a non ‑ resident trust

(1) This section applies if: (a) there is a roll ‑ over for the trigger event under section 126 ‑ 15; and (b) the transferor was: (i) a * CFC; or (ii) a trustee of a trust that is a non ‑ resident trust estate within the meaning of section 102AAB of the Income Tax Assessment Act 1936 for the income year of the trigger event; and (c) section 126 ‑ 15 is relevant to: (i) the calculation of the * attributable income of the CFC under Division 7 of Part X of the Income Tax Assessment Act 1936 ; or (ii) the calculation of the attributable income of the trust under Subdivision D of Division 6AAA of Part III of that Act; because (ignoring the residency assumptions in that Division or Subdivision) the roll ‑ over asset was not * taxable Australian property; and (d) a subsequent * CGT event happens in relation to the roll ‑ over asset. (2) In working out the amount of any * capital gain or * capital loss the transferee (or a subsequent owner of the roll ‑ over asset if there is a series of roll ‑ overs until there is no roll ‑ over) makes when a subsequent * CGT event happens in relation to the asset, the modifications specified in Division 7 of Part X, or Subdivision D of Division 6AAA of Part III, of the Income Tax Assessment Act 1936 apply.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent

s 126-25 — Conditions for the purposes of subsections 126 ‑ 5(3A) and 126 ‑ 15(5)

(1) The conditions referred to in subsections 126 ‑ 5(3A) and 126 ‑ 15(5) are that: (a) at the time of the trigger event: (i) the * spouses, or former spouses, involved are separated; and (ii) there is no reasonable likelihood of cohabitation being resumed; and (b) the trigger event happened because of reasons directly connected with the breakdown of the relationship between the spouses or former spouses. (2) For the purposes of this section, the question whether * spouses or former spouses have separated is to be determined in the same way as it is for the purposes of section 48 of the Family Law Act 1975 (as affected by sections 49 and 50 of that Act).

Amendment history: Inserted by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent | Amended by No 144 of 2008, effective Schedule 14 (items 59–96): 10 Dec 2008

s 126-40 — What this Subdivision is about

A roll ‑ over may be available for the transfer of a CGT asset between 2 companies, or the creation of a CGT asset by one company in another, if: (a) both companies are members of the same wholly ‑ owned group; and (b) at least one of the companies is a foreign resident. Table of sections Operative provisions 126 ‑ 45 Roll ‑ over for members of wholly ‑ owned group 126 ‑ 50 Requirements for roll ‑ over 126 ‑ 55 When there is a roll ‑ over 126 ‑ 60 Consequences of roll ‑ over 126 ‑ 75 Originating company is a CFC 126 ‑ 85 Effect of roll ‑ over on certain liquidations

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Repealed and substituted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2)

s 126-45 — Roll ‑ over for members of wholly ‑ owned group

(1) There may be a roll ‑ over if a * CGT event (the trigger event ) happens involving a company (the originating company ) and another company (the recipient company ) in the circumstances set out in section 126 ‑ 50. (2) Only these * CGT events are relevant: (a) CGT events A1 and B1 (a disposal case ); and (b) CGT events D1, D2, D3 and F1 (a creation case ). Note: The full list of CGT events is in section 104 ‑ 5. (3) However, there is no roll ‑ over for * CGT event B1 if title in the * CGT asset does not pass to the transferee at or before the end of the agreement. Note: CGT event J1 can happen if the recipient company stops being a 100% subsidiary of a company in the relevant group: see section 104 ‑ 175.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 114 of 2000, effective Schedule 4 (items 43, 44): 1 July 1998 Remainder: Royal Assent

s 126-50 — Requirements for roll ‑ over

(1) The originating company and recipient company must be members of the same * wholly ‑ owned group at the time of the trigger event. Note: This requirement is taken to be satisfied in the case of the transfer of the life insurance business of a life insurance company: see section 121AS of the Income Tax Assessment Act 1936 . (2) The * CGT asset involved (the roll ‑ over asset ) must not be: (a) * trading stock of the recipient company just after the time of the trigger event; or (b) a * registered emissions unit * held by the recipient company just after the time of the trigger event. (3) If: (a) the roll ‑ over asset is a right or * convertible interest referred to in Division 130, or an option referred to in Division 134, or an * exchangeable interest; and (b) the recipient company * acquires another * CGT asset by exercising the right or option or by converting the convertible interest or in exchange for the disposal or redemption of the exchangeable interest; the other asset cannot become * trading stock of the recipient company just after the recipient company acquired it. (3A) If: (a) the roll ‑ over asset is an option referred to in Division 134; and (b) the recipient company * acquires another * CGT asset by exercising the option; the other asset cannot become a * registered emissions unit * held by the recipient company just after the recipient company acquired it. (4) The * ordinary income and * statutory income of the recipient company must not be exempt from income tax because it is an * exempt entity for the income year of the trigger event. (5) The requirements in one of the items in this table must be satisfied. Additional requirements Item At the time of the trigger event the originating company must be: At the time of the trigger event the recipient company must be: The roll ‑ over asset must be taxable Australian property: 1 Either: (a) a foreign resident; or (b) an Australian resident but not a * prescribed dual resident A foreign resident Either: (a) just before and just after the trigger event, for a disposal case; or (b) just after that event, for a creation case 2 A foreign resident An Australian resident but not a * prescribed dual resident Either: (a) just before the trigger event, for a disposal case; or (b) just after that event, for a creation case (6) If the originating company or the recipient company is an Australian resident at the time of the trigger event, that company must: (a) be a * member of a * consolidated group or * MEC group at that time; or (b) not be a member of a * consolidatable group at that time. (7) If the originating company is a foreign resident, it must not have * acquired the * CGT asset described in subsection (8) because of: (a) a single * CGT event giving rise to a roll ‑ over under a previous application of this Subdivision (as amended by the New Business Tax System (Consolidation) Act (No. 1) 2002 ) involving an Australian resident originating company other than the company that is the recipient company for the current application of this Subdivision; or (b) a series (whether or not it is the longest possible series) of consecutive CGT events giving rise to roll ‑ overs under previous applications of this Subdivision (as amended by the New Business Tax System (Consolidation) Act (No. 1) 2002 ), the earliest involving an Australian resident originating company other than the company that is the recipient company for the current application of this Subdivision. (8) Subsection (7) operates in relation to the * CGT asset: (a) that was involved in the trigger event in a disposal case; or (b) because of which the originating company was able to create the CGT asset that was involved in the trigger event in a creation case. (9) Subsection (7) does not apply if each of the following companies mentioned in that subsection: (a) the recipient company for the roll ‑ over under the current application of this Subdivision; (b) the Australian resident originating company for the roll ‑ over under: (i) for paragraph (7)(a)—the previous application of this Subdivision; or (ii) for paragraph (7)(b)—the earliest previous application of this Subdivision for that series of consecutive * CGT events; was, at the time of its roll ‑ over, the * head company of the same * MEC group.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 94 of 1999, effective 16 July 1999 (s 2(1)–(3)) | Amended by No 173 of 2000, effective s 4, Sch 1, Sch 3 (items 1–15, 17), Sch 4 (items 6–45, 47–49, 51–59, 65(1), (3)) and Sch 6: 21 Dec 2000 (s 2(1)) Sch 4 (items 46, 50): 1 July 1998 (s 2(3)) Sch 5: 31 May 2000 (s 2(4)) | Amended by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 133 of 2003, effective 17 Dec 2003 | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent | Amended by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1))

s 126-55 — When there is a roll ‑ over

Capital gain or no loss (1) There is a roll ‑ over if: (a) either: (i) the trigger event would have resulted in the originating company making a * capital gain, or making no * capital loss and not being entitled to a deduction; or (ii) the originating company * acquired the roll ‑ over asset before 20 September 1985; and (b) the originating company and recipient company both choose to obtain it. Note: Section 103 ‑ 25 sets out when the choice must be made.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 169 of 1999, effective Sch 5 (items 1–12): 22 Feb 1999 (s 2(2)) Sch 1 (items 1–13, 18), Sch 2 (items 1–3, 5), Sch 3 (items 1–4, 7), Sch 4 (items 1–15, 19), Sch 6, Sch 7 (item 11), Sch 8, Sch 9 (items 1–14, 23–33) and Sch 10: 10 Dec 1999 (s 2(1))

s 126-60 — Consequences of roll ‑ over

Consequences for the originating company in all cases (1) A * capital gain the originating company makes from the trigger event is disregarded. Consequences for the recipient company (disposal case) (2) For a disposal case, if the originating company * acquired the roll ‑ over asset on or after 20 September 1985: (a) the first element of the asset’s * cost base (in the hands of the recipient company) is the asset’s cost base (in the hands of the originating company) when the recipient company acquired it; and (b) the first element of the asset’s * reduced cost base (in the hands of the recipient company) is worked out similarly. Note 1: There are special indexation rules for roll ‑ overs: see Division 114. Note 2: The reduced cost base may be modified for a roll ‑ over happening after a demerger: see section 125 ‑ 170. (3) If the originating company * acquired the roll ‑ over asset before 20 September 1985, the recipient company is taken to have acquired it before that day. Note 1: A capital gain or loss you make from a CGT asset you acquired before 20 September 1985 is generally disregarded: see Division 104. This exemption is removed in some situations: see, for example, Division 149. Note 2: Under section 716 ‑ 855, where there have been certain roll ‑ overs, the cost base and reduced cost base of pre ‑ CGT assets for the purposes of Part 3 ‑ 90 (Consolidated groups) are worked out by applying subsection (2), rather than subsection (3), of this section. (4) If the trigger event involved a * personal use asset of the originating company, the recipient company is taken to have * acquired one. Consequences for the recipient company (creation case) (5) For a creation case, the first element of the asset’s * cost base (in the hands of the recipient company) is the amount applicable under this table. The first element of its * reduced cost base is worked out similarly. Creation case Event No. Applicable amount D1 the * incidental costs the originating company incurred that relate to the trigger event D2 the expenditure the originating company incurred to grant the option D3 the expenditure the originating company incurred to grant the right F1 the expenditure the originating company incurred on the grant, renewal or extension of the lease The expenditure can include giving property: see section 103 ‑ 5. Note: CGT event J1 may occur if the recipient company stops being a member of the wholly ‑ owned group while still owning the roll ‑ over asset: see section 104 ‑ 175.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 169 of 1999, effective Sch 5 (items 1–12): 22 Feb 1999 (s 2(2)) Sch 1 (items 1–13, 18), Sch 2 (items 1–3, 5), Sch 3 (items 1–4, 7), Sch 4 (items 1–15, 19), Sch 6, Sch 7 (item 11), Sch 8, Sch 9 (items 1–14, 23–33) and Sch 10: 10 Dec 1999 (s 2(1)) | Amended by No 173 of 2000, effective s 4, Sch 1, Sch 3 (items 1–15, 17), Sch 4 (items 6–45, 47–49, 51–59, 65(1), (3)) and Sch 6: 21 Dec 2000 (s 2(1)) Sch 4 (items 46, 50): 1 July 1998 (s 2(3)) Sch 5: 31 May 2000 (s 2(4)) | Amended by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 107 of 2003, effective Sch 6: 1 July 2003 (s 2(1) item 3) Sch 7 (items 6–8): 30 June 2003 (s 2(1) item 5) Sch 7 (item 15): 17 Dec 2003 (s 2(1) item 7) Remainder: 21 Oct 2003 (s 2(1) items 1, 2, 4, 6, 8) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5)

s 126-75 — Originating company is a CFC

(1) This section applies if: (a) there is a roll ‑ over for the trigger event under this Subdivision; and (b) the originating company was a * CFC at the time of the trigger event; and (c) this Subdivision is relevant to the calculation of the * attributable income of the originating company under Division 7 of Part X of the Income Tax Assessment Act 1936 because (ignoring the residency assumptions in that Division) the roll ‑ over asset was not * taxable Australian property for the originating company; and (d) a subsequent * CGT event happens in relation to the roll ‑ over asset. (2) In working out the amount of any * capital gain or * capital loss the recipient company (or a subsequent owner of the roll ‑ over asset if there is a series of roll ‑ overs until there is no roll ‑ over) makes when a subsequent * CGT event happens in relation to the asset, the modifications specified in Division 7 of Part X of the Income Tax Assessment Act 1936 apply.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent

s 126-85 — Effect of roll ‑ over on certain liquidations

(1) A * capital gain a company (the holding company ) makes because * shares in its * 100% subsidiary are cancelled (an example of * CGT event C2: see section 104 ‑ 25) on the liquidation of the subsidiary is reduced if the conditions in subsection (2) are satisfied. The reduction is worked out under subsection (3). (2) These conditions must be satisfied: (a) there must be a roll ‑ over under this Subdivision for at least one * CGT asset that the subsidiary * acquired on or after 20 September 1985 (the CGT roll ‑ over asset ) being * disposed of by the subsidiary to the holding company in the course of the liquidation of the subsidiary; (c) the disposals must either: (i) be part of the liquidator’s final distribution in the course of the liquidation; or (ii) have occurred within 18 months of the dissolution of the subsidiary if they are part of an interim distribution in the course of the liquidation; (d) the holding company must have beneficially owned all of the shares in the subsidiary for the whole period from the time of the disposal, or the first disposal, of a CGT roll ‑ over asset until the cancellation of the shares; (e) the * market value of the CGT roll ‑ over asset or assets must comprise at least part of the * capital proceeds for the cancellation of the shares in the subsidiary that are beneficially owned by the holding company; (f) one or more of the shares that were cancelled (the post ‑ CGT shares ) must have been acquired by the holding company on or after 20 September 1985. (3) The reduction of the * capital gain is worked out in this way. Method statement Step 1. Work out (disregarding this section) the sum of the * capital gains and the sum of the * capital losses the holding company would make on the cancellation of its shares in the subsidiary. Step 2. Work out (disregarding this Subdivision): (a) the sum of the * capital gains the subsidiary would make on the * disposal of its CGT roll ‑ over assets to the holding company; and (b) the sum of the * capital losses it would make except for Subdivision 170 ‑ D on the disposal of its * CGT assets to the holding company; in the course of the liquidation assuming the * capital proceeds were the assets’ * market values at the time of the disposal. Step 3. If, after subtracting the sum of the * capital losses from the sum of the * capital gains, there is an overall capital gain from step 1 and an overall capital gain from step 2, then continue. Otherwise there is no adjustment. Step 4. Express the number of post ‑ CGT shares as a fraction of the total number of shares the holding company owned in the subsidiary. Step 5. Multiply the overall * capital gain from Step 2 by the fraction from Step 4. Step 6. Reduce the overall * capital gain from Step 1 by the amount from Step 5. The result is the * capital gain the holding company makes from the cancellation of its shares in the subsidiary. Note: This Subdivision is modified in calculating the attributable income of a CFC: see section 419 of the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 94 of 1999, effective 16 July 1999 (s 2(1)–(3)) | Amended by No 169 of 1999, effective Sch 5 (items 1–12): 22 Feb 1999 (s 2(2)) Sch 1 (items 1–13, 18), Sch 2 (items 1–3, 5), Sch 3 (items 1–4, 7), Sch 4 (items 1–15, 19), Sch 6, Sch 7 (item 11), Sch 8, Sch 9 (items 1–14, 23–33) and Sch 10: 10 Dec 1999 (s 2(1)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9))

s 126-125 — What this Subdivision is about

This Subdivision sets out when there is a roll ‑ over for a CGT event that happens because of an amendment to or replacement of the trust deed of a complying approved deposit fund, a complying superannuation fund or a fund that accepts worker entitlement contributions. Table of sections 126 ‑ 130 Changes to trust deeds 126 ‑ 135 Consequences of roll ‑ over

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 66 of 2003, effective s 4, Sch 2 (items 1–5, 17), Sch 3 (items 49–70, 71–128, 129–131, 140, 141), Sch 4, Sch 6 (items 1, 3) and Sch 7 (items 6–9): 30 June 2003 (s 2(1) items 1, 3, 6–8, 8B–12, 12B, 14, 15, 17, 18) Sch 3 (items 70A, 128A): 2 Apr 2003 (s 2(1) items 8A, 12A)

s 126-130 — Changes to trust deeds

(1) There is a roll ‑ over if: (a) * CGT event E1 or E2 happens in relation to a * CGT asset because the trust deed of a * complying approved deposit fund or * complying superannuation fund is amended or replaced; and (b) the amendment or replacement is done for the purpose of: (i) complying with the Superannuation Industry (Supervision) Act 1993 ; or (ii) enabling a * complying approved deposit fund to become a * complying superannuation fund; and (c) the assets and members of the fund do not change as a consequence of the amendment or replacement. Note: The full list of CGT events is in section 104 ‑ 5. (2) There is a roll ‑ over if: (a) * CGT event E1 or E2 happens in relation to a * CGT asset because the trust deed of a fund is amended or replaced; and (b) the amendment or replacement is done for the purpose of having: (i) the fund endorsed as an approved worker entitlement fund under subsection 58PB(3) of the Fringe Benefits Tax Assessment Act 1986 ; or (ii) the entity that operates the fund endorsed for the operation of the fund as an approved worker entitlement fund under subsection 58PB(3A) of that Act. (c) the assets and members of the fund do not change as a consequence of the amendment or replacement. Note: The full list of CGT events is in section 104 ‑ 5.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 66 of 2003, effective s 4, Sch 2 (items 1–5, 17), Sch 3 (items 49–70, 71–128, 129–131, 140, 141), Sch 4, Sch 6 (items 1, 3) and Sch 7 (items 6–9): 30 June 2003 (s 2(1) items 1, 3, 6–8, 8B–12, 12B, 14, 15, 17, 18) Sch 3 (items 70A, 128A): 2 Apr 2003 (s 2(1) items 8A, 12A) | Amended by No 41 of 2011, effective Schedule 1 (items 1–3): 1 Jan 2011 Schedule 1 (items 4–6) and Schedule 5 (items 25–29, 33, 36–50, 74–78, 80–145, 148–167, 173–175, 383–396, 400, 414–418): Royal Assent Schedule 5 (items 9, 18–20): 28 June 2011 Schedule 5 (items 51–54): 1 July 2011

s 126-135 — Consequences of roll ‑ over

(1) A * capital gain or * capital loss made from the * CGT event is disregarded. (2) If the fund that owned the * CGT asset just before the time of the * CGT event * acquired it before 20 September 1985, the asset retains its status as a * pre ‑ CGT asset in the hands of the fund that owned it after the time of the event. (3) If the fund that owned the * CGT asset just before the time of the * CGT event * acquired it on or after 20 September 1985: (a) the first element of the asset’s * cost base (in the hands of the fund that owned the asset after the time of the event) is its cost base just before that time; and (b) the first element of the asset’s * reduced cost base asset is worked out similarly; and (c) the fund that owned the asset after the time of the event is taken to have acquired the asset at that time.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 126-140 — CGT event involving small superannuation funds

Payment splits under Family Law Act (1) There is a roll ‑ over if: (a) an interest in a * small superannuation fund is subject to a * payment split; and (b) the * non ‑ member spouse in relation to that interest serves a waiver notice under section 90XZA or 90YZQ of the Family Law Act 1975 in respect of that interest; and (c) as a result of serving the notice, the trustee (the transferor ) of the fund transfers a * CGT asset to the trustee (the transferee ) of another * complying superannuation fund for the benefit of the non ‑ member spouse. Note: CGT event E2 may apply to the transfer. Payment splits under the Superannuation Industry (Supervision) Regulations (2) There is also a roll ‑ over if: (a) an interest in a * small superannuation fund (the first fund ) is subject to a * payment split; and (b) as a result of the payment split, there is a transfer or roll over of benefits, for the benefit of the * non ‑ member spouse, from the first fund to another * complying superannuation fund; and (c) the transfer is under provisions of the Superannuation Industry (Supervision) Regulations 1994 dealing with superannuation interests that are subject to payment splits; and (d) in order to give effect to the payment split, the trustee (the transferor ) of the first fund transfers a * CGT asset to the trustee (the transferee ) of the other fund for the benefit of the non ‑ member spouse. Note: CGT event E2 may apply to the transfer. Transfer of own interest in a small superannuation fund (2A) There is also a roll ‑ over if: (a) an individual has an interest in a * small superannuation fund (the first fund ); and (b) the individual’s * spouse, or former spouse, also has an interest in the first fund; and (c) the trustee (the transferor ) of the first fund transfers a * CGT asset to the trustee (the transferee ) of another * complying superannuation fund for the benefit of the individual; and (d) the transfer is in accordance with an award, order or agreement mentioned in subsection (2B); and (e) if the transfer is part of a series of transfers in accordance with the award, order or agreement—the individual will no longer have an interest in the first fund when the series of transfers is complete; and (f) if the transfer is not part of a series of transfers in accordance with the award, order or agreement—as a result of the transfer, the individual no longer has an interest in the first fund; and (g) there has not been a roll ‑ over under subsection (1) or (2) or this subsection in relation to the transfer of another CGT asset from the first fund, where the transfer was: (i) made because of the award, order or agreement; and (ii) for the benefit of that spouse, or former spouse; and (h) if the transfer is in accordance with an agreement mentioned in paragraph (2B)(d), (da) or (e), the conditions in subsection (2C) are satisfied. Note: CGT event E2 may apply to the transfer. (2B) The awards, orders and agreements are: (a) an award made in an arbitration referred to in section 13H of the Family Law Act 1975 or a corresponding award made in an arbitration under a corresponding * State law, * Territory law or * foreign law; or (b) a court order made under section 79, subsection 90AE(2) or 90AF(2) or section 90SM or 90YX of the Family Law Act 1975 ; or (c) a court order made under a State law, Territory law or foreign law relating to breakdowns of relationships between * spouses that corresponds to an order made under subsection 90AE(2) or 90AF(2) or section 90SM of the Family Law Act 1975 ; or (d) a financial agreement made under Part VIIIA of the F amily Law Act 1975 that is binding because of section 90G of that Act or a corresponding written agreement that is binding because of a corresponding foreign law; or (da) a Part VIIIAB financial agreement (within the meaning of the Family Law Act 1975 ) that is binding because of section 90UJ of that Act; or (e) a written agreement: (i) that is binding under a State law, Territory law or foreign law relating to breakdowns of relationships between spouses; and (ii) that, because of such a law, prevents a court making an order about matters to which the agreement applies, or that is inconsistent with the terms of the agreement in relation to those matters, unless the agreement is varied or set aside. (2C) The conditions are that: (a) at the time of the transfer: (i) the * spouses, or former spouses, involved are separated; and (ii) there is no reasonable likelihood of cohabitation being resumed; and (b) the transfer happened because of reasons directly connected with the breakdown of the relationship between the spouses or former spouses. (2D) For the purposes of subsection (2C), the question whether * spouses, or former spouses, have separated is to be determined in the same way as it is for the purposes of section 48 of the Family Law Act 1975 (as affected by sections 49 and 50 of that Act). Roll ‑ over consequences (3) A * capital gain or * capital loss the transferor makes from the transfer of the asset is disregarded. (4) If the transferor * acquired the asset on or after 20 September 1985: (a) the first element of the asset’s * cost base (in the hands of the transferee) is the asset’s cost base (in the hands of the transferor) at the time the transferee acquired it; and (b) the first element of the asset’s * reduced cost base (in the hands of the transferee) is worked out similarly. (5) If the transferor * acquired the asset before 20 September 1985, the transferee is taken to have acquired it before that day. Note: A capital gain or loss you make from a CGT asset you acquired before 20 September 1985 is generally disregarded: see Division 104. This exemption is removed in some situations: see Division 149.

Amendment history: Inserted by No 114 of 2001, effective Sch 1 (items 16–19, 21–24): 28 Dec 2002 (s 2) | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 115 of 2008, effective Sch 2 (items 34–41): 1 Mar 2009 (s 2(1) item 5) | Amended by No 144 of 2008, effective Schedule 14 (items 59–96): 10 Dec 2008 | Amended by No 130 of 2018, effective Sch 6 (item 66): 22 Nov 2018 (s 2(1) item 10) | Amended by No 112 of 2020, effective Sch 3 (items 39–47): 28 Sept 2022 (s 2(1) item 1)

s 126-185 — What this Subdivision is about

This Subdivision sets out when there is a roll ‑ over for a CGT event that happens because a beneficiary becomes absolutely entitled to a share as against the trustee where the trustee obtained a roll ‑ over under Subdivision 124 ‑ M following a demutualisation. Table of sections Operative provisions 126 ‑ 190 When there is a roll ‑ over 126 ‑ 195 Consequences of roll ‑ over

Amendment history: Inserted by No 57 of 2002, effective Sch 2: 1 July 2002 (s 2(1) item 3) Sch 4 (items 3, 4): 1 July 2000 (s 2(1) item 5) Sch 4 (items 5–8), Sch 7, Sch 9 (items 9, 11, 12, 15–20, 22–40, 45), Sch 11 (items 2–5), Sch 12 (items 16–18, 20, 25, 26): 3 July 2002 (s 2(1) items 6, 7, 9, 11, 13, 15, 16, 18, 28, 30, 33) Sch 9 (items 10, 13, 14, 21) and Sch 12 (items 23, 24): 1 July 1997 (s 2(1) items 10, 12, 14, 32) Sch 12 (item 19): 30 June 1998 (s 2(1) item 29) Sch 12 (items 21, 22): 22 June 1998 (s 2(1) item 31) Sch 12 (items 27, 28): 16 Apr 1998 (s 2(1) item 34) Sch 12 (item 29): 19 Sept 1997 (s 2(1) item 35)

s 126-190 — When there is a roll ‑ over

There is a roll ‑ over if: (a) an insurance company demutualises; and (b) the trustee of a trust holds a * share issued under the demutualisation in trust for an entity to whom the share would have been issued if the entity could, and were in a position to, prove the entity’s entitlement to the share; and (c) the trustee obtains a roll ‑ over under Subdivision 124 ‑ M of this Act (Scrip for scrip roll ‑ over) for the share because the trustee exchanges the share for a share (the replacement share ) in another company (whether or not the trustee receives something in addition to the replacement share); and (d) a * CGT event happens in relation to the replacement share because the entity becomes absolutely entitled to the share as against the trustee. Note: This Subdivision does not apply to the demutualisation of a private health insurer: see section 315 ‑ 160.

Amendment history: Inserted by No 57 of 2002, effective Sch 2: 1 July 2002 (s 2(1) item 3) Sch 4 (items 3, 4): 1 July 2000 (s 2(1) item 5) Sch 4 (items 5–8), Sch 7, Sch 9 (items 9, 11, 12, 15–20, 22–40, 45), Sch 11 (items 2–5), Sch 12 (items 16–18, 20, 25, 26): 3 July 2002 (s 2(1) items 6, 7, 9, 11, 13, 15, 16, 18, 28, 30, 33) Sch 9 (items 10, 13, 14, 21) and Sch 12 (items 23, 24): 1 July 1997 (s 2(1) items 10, 12, 14, 32) Sch 12 (item 19): 30 June 1998 (s 2(1) item 29) Sch 12 (items 21, 22): 22 June 1998 (s 2(1) item 31) Sch 12 (items 27, 28): 16 Apr 1998 (s 2(1) item 34) Sch 12 (item 29): 19 Sept 1997 (s 2(1) item 35) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5)

s 126-195 — Consequences of roll ‑ over

(1) A * capital gain or * capital loss the trustee makes from the * CGT event is disregarded. (2) The first element of the * cost base of the replacement share for the entity is the cost base of the replacement share in the hands of the trustee just before the * CGT event happened. The first element of the * reduced cost base of the replacement share for the entity is worked out similarly. Example: The JB mutual insurance company demutualises, issuing shares in JB Limited to its policyholders. It is unable to locate some of its policyholders so it establishes a trust and issues shares to the trustee on behalf of those policyholders. Steve is one of those policyholders (being potentially entitled to 50 shares). JB Limited is taken over by PVDM Limited. Members of JB are issued with 2 shares in PVDM for each share they have in JB. The trustee obtains a roll ‑ over under Subdivision 124 ‑ M for the exchange. Each PVDM share held by the trustee has a cost base and reduced cost base of $15. Steve writes to the trustee and proves his entitlement to the shares held in trust for him. There is a roll ‑ over under this Subdivision so that any capital gain or loss made by the trustee is disregarded. The first element of the cost base and reduced cost base of each of Steve’s PVDM shares is $15.

Amendment history: Inserted by No 57 of 2002, effective Sch 2: 1 July 2002 (s 2(1) item 3) Sch 4 (items 3, 4): 1 July 2000 (s 2(1) item 5) Sch 4 (items 5–8), Sch 7, Sch 9 (items 9, 11, 12, 15–20, 22–40, 45), Sch 11 (items 2–5), Sch 12 (items 16–18, 20, 25, 26): 3 July 2002 (s 2(1) items 6, 7, 9, 11, 13, 15, 16, 18, 28, 30, 33) Sch 9 (items 10, 13, 14, 21) and Sch 12 (items 23, 24): 1 July 1997 (s 2(1) items 10, 12, 14, 32) Sch 12 (item 19): 30 June 1998 (s 2(1) item 29) Sch 12 (items 21, 22): 22 June 1998 (s 2(1) item 31) Sch 12 (items 27, 28): 16 Apr 1998 (s 2(1) item 34) Sch 12 (item 29): 19 Sept 1997 (s 2(1) item 35)

s 126-215 — What this Subdivision is about

Roll ‑ overs may be available when CGT assets are transferred between certain trusts. Table of sections Operative provisions 126 ‑ 220 Object of this Subdivision 126 ‑ 225 When a roll ‑ over may be chosen 126 ‑ 230 Beneficiaries’ entitlements not be discretionary etc. 126 ‑ 235 Exceptions for roll ‑ over 126 ‑ 240 Consequences for the trusts 126 ‑ 245 Consequences for beneficiaries—general approach for working out cost base etc. 126 ‑ 250 Consequences for beneficiaries—other approach for working out cost base etc. 126 ‑ 255 No other cost base etc. adjustment for beneficiaries 126 ‑ 260 Giving information to beneficiaries 126 ‑ 265 Interest sale facilities

Amendment history: Inserted by No 19 of 2010, effective Sch 1 (items 1–13, 16–20), Sch 3 (items 11, 12), Sch 4 (items 3–6) and Sch 5 (item 6): 24 Mar 2010 (s 2(1) items 2, 9, 11, 14) Sch 2 (items 1–11): 25 Mar 2010 (s 2(1) item 3) Sch 2 (items 12–26):repealed before commencing (s 2(1) item 4) Sch 3 (items 1, 2): 30 June 2000 (s 2(1) item 5) Sch 3 (items 4–8): 15 Mar 2007 (s 2(1) item 7) Sch 4 (items 1, 2): 4 June 2009 (s 2(1) item 10) Sch 5 (items 2, 3): 25 Feb 2009 (s 2(1) item 12) Sch 5 (items 4, 5): 1 July 2011 (s 2(1) item 13)

s 126-220 — Object of this Subdivision

The object of this Subdivision is to ensure that CGT considerations are not an impediment to the restructure of trusts, whilst ensuring that subsequent changes to the manner and extent to which beneficiaries can benefit from the trusts are subject to appropriate tax consequences.

Amendment history: Inserted by No 19 of 2010, effective Sch 1 (items 1–13, 16–20), Sch 3 (items 11, 12), Sch 4 (items 3–6) and Sch 5 (item 6): 24 Mar 2010 (s 2(1) items 2, 9, 11, 14) Sch 2 (items 1–11): 25 Mar 2010 (s 2(1) item 3) Sch 2 (items 12–26):repealed before commencing (s 2(1) item 4) Sch 3 (items 1, 2): 30 June 2000 (s 2(1) item 5) Sch 3 (items 4–8): 15 Mar 2007 (s 2(1) item 7) Sch 4 (items 1, 2): 4 June 2009 (s 2(1) item 10) Sch 5 (items 2, 3): 25 Feb 2009 (s 2(1) item 12) Sch 5 (items 4, 5): 1 July 2011 (s 2(1) item 13)

s 126-225 — When a roll ‑ over may be chosen

(1) A roll ‑ over may be chosen for a * CGT asset (the roll ‑ over asset ) if: (a) the trustee of a trust (the transferring trust ): (i) creates a trust (the receiving trust ), by declaration or settlement, over one or more CGT assets that include the roll ‑ over asset; or (ii) transfers the roll ‑ over asset to an existing trust (the receiving trust ); at a particular time (the transfer time ); and (b) if subparagraph (a)(ii) applies—the receiving trust has no CGT assets immediately before the transfer time, other than any or all of the following: (i) small amounts of cash or debt; (ii) its rights under an * arrangement, if (collectively) those rights only facilitate the transfer of assets to it from the transferring trust; and (c) just after the transfer time: (i) each of the trusts has the same beneficiaries; and (ii) the receiving trust has the same * classes of * membership interests that the transferring trust had just before, and has just after, the transfer time; and (iii) the sum of the * market values of each beneficiary’s membership interests of a particular class in both trusts is substantially the same as the sum of the market values, just before the transfer time, of the beneficiary’s membership interests of that class in both trusts; and (d) the requirement in section 126 ‑ 230 is met; and (e) the exceptions in section 126 ‑ 235 do not apply. Exception if other roll ‑ over assets already transferred (2) However, paragraph (1)(b) does not apply if: (a) the roll ‑ over asset is transferred to the receiving trust under an * arrangement; and (b) the roll ‑ over asset was an asset of the transferring trust just before the arrangement was made; and (c) at least one other asset of the receiving trust: (i) is an asset for which a roll ‑ over was obtained under this Subdivision for the trusts; and (ii) is an asset over which the receiving trust was created, or was transferred by the transferring trust to the receiving trust under the arrangement; and (d) the transfer time is in the income year for the transferring trust that includes the earliest transfer time (the start time ) for the assets covered by paragraph (c). Obtaining the roll ‑ over (3) The roll ‑ over only happens if both the trustee of the transferring trust and the trustee of the receiving trust choose to obtain it.

Amendment history: Inserted by No 19 of 2010, effective Sch 1 (items 1–13, 16–20), Sch 3 (items 11, 12), Sch 4 (items 3–6) and Sch 5 (item 6): 24 Mar 2010 (s 2(1) items 2, 9, 11, 14) Sch 2 (items 1–11): 25 Mar 2010 (s 2(1) item 3) Sch 2 (items 12–26):repealed before commencing (s 2(1) item 4) Sch 3 (items 1, 2): 30 June 2000 (s 2(1) item 5) Sch 3 (items 4–8): 15 Mar 2007 (s 2(1) item 7) Sch 4 (items 1, 2): 4 June 2009 (s 2(1) item 10) Sch 5 (items 2, 3): 25 Feb 2009 (s 2(1) item 12) Sch 5 (items 4, 5): 1 July 2011 (s 2(1) item 13) | Amended by No 133 of 2014, effective s 4, Sch 1 (items 1, 4–29, 37–40) and Sch 2 (items 1–3, 5): 12 Dec 2014 (s 2(1) items 1, 2)

s 126-230 — Beneficiaries’ entitlements not be discretionary etc.

(1) The conditions in subsections (2) and (3) must be met: (a) if subsection 126 ‑ 225(2) applies—at all times during the period: (i) starting at the start time; and (ii) ending at the transfer time; and (b) otherwise—at the transfer time. CGT event E4 is capable of happening (2) The first condition is met at a particular time if, at that time, * CGT event E4 is capable of happening to all of the * membership interests in each of the trusts. Note: A roll ‑ over cannot be chosen if either trust is a discretionary trust. Beneficiaries’ entitlements not discretionary (3) The second condition is met at a particular time if, at that time, the manner or extent to which each beneficiary of each trust can benefit from the trust is not capable of being significantly affected by the exercise, or non ‑ exercise, of a power. (4) However, if both trusts are * managed investment trusts, disregard a power if the power’s existence at that time does not significantly affect the * market value at that time of each * membership interest in each of the trusts.

Amendment history: Inserted by No 19 of 2010, effective Sch 1 (items 1–13, 16–20), Sch 3 (items 11, 12), Sch 4 (items 3–6) and Sch 5 (item 6): 24 Mar 2010 (s 2(1) items 2, 9, 11, 14) Sch 2 (items 1–11): 25 Mar 2010 (s 2(1) item 3) Sch 2 (items 12–26):repealed before commencing (s 2(1) item 4) Sch 3 (items 1, 2): 30 June 2000 (s 2(1) item 5) Sch 3 (items 4–8): 15 Mar 2007 (s 2(1) item 7) Sch 4 (items 1, 2): 4 June 2009 (s 2(1) item 10) Sch 5 (items 2, 3): 25 Feb 2009 (s 2(1) item 12) Sch 5 (items 4, 5): 1 July 2011 (s 2(1) item 13)

s 126-235 — Exceptions for roll ‑ over

Foreign trusts (1) An exception applies for a * CGT asset if: (a) the receiving trust is a * foreign trust for CGT purposes for the income year that includes the transfer time; and (b) the roll ‑ over asset is not * taxable Australian property just after the transfer time. Public trading trusts (2) Another exception applies if either trust is a trust to which section 102S of the Income Tax Assessment Act 1936 applies for the income year that includes the transfer time. Choices (3) Another exception applies if, just after the transfer time: (a) a choice (however described) under a provision of a * taxation law is in force for either of the trusts in relation to particular circumstances; and (b) the same choice (however described) under that provision for the other trust in relation to those circumstances (a mirror choice ) is not also in force; and (c) the absence of a mirror choice would or could have an ongoing effect on the calculation of an entity’s * net income, or taxable income, for: (i) the entity’s income year that includes the transfer time; or (ii) a later income year. (4) However, the exception in subsection (3) does not apply if: (a) the other trust makes a mirror choice before the first time after the transfer time when the absence of the mirror choice would affect the calculation of an entity’s * net income, or taxable income, for an income year; or (b) it would not be reasonable for subsection (3) to apply. Note: For paragraph (a), the other trust must still be able, under the relevant provision of the taxation law, to make the mirror choice. (5) If, just after the transfer time: (a) a choice (however described) referred to in paragraph (3)(a) is in force for either of the trusts (the first choice ); and (b) a provision of a * taxation law: (i) prevents the revocation or variation of that choice; or (ii) sets out a consequence for an entity if that choice is revoked or varied; that provision is taken to apply for a mirror choice, in force for the other trust at or after that time, in a way corresponding to the way in which it applies for the first choice. Note: For example, if the provision sets out consequences that flow from the revocation of the first choice, then those consequences will also flow if the mirror choice is revoked.

Amendment history: Inserted by No 19 of 2010, effective Sch 1 (items 1–13, 16–20), Sch 3 (items 11, 12), Sch 4 (items 3–6) and Sch 5 (item 6): 24 Mar 2010 (s 2(1) items 2, 9, 11, 14) Sch 2 (items 1–11): 25 Mar 2010 (s 2(1) item 3) Sch 2 (items 12–26):repealed before commencing (s 2(1) item 4) Sch 3 (items 1, 2): 30 June 2000 (s 2(1) item 5) Sch 3 (items 4–8): 15 Mar 2007 (s 2(1) item 7) Sch 4 (items 1, 2): 4 June 2009 (s 2(1) item 10) Sch 5 (items 2, 3): 25 Feb 2009 (s 2(1) item 12) Sch 5 (items 4, 5): 1 July 2011 (s 2(1) item 13) | Amended by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4)

s 126-240 — Consequences for the trusts

Disregard any capital gain or loss (1) If the roll ‑ over is chosen, disregard any * capital gain or * capital loss the trustee of the transferring trust makes from: (a) creating the receiving trust over the roll ‑ over asset; or (b) transferring the roll ‑ over asset to the receiving trust; at the transfer time. Adjust roll ‑ over asset’s cost base and reduced cost base (2) If the roll ‑ over is chosen: (a) the first element of the roll ‑ over asset’s * cost base, in the hands of the receiving trust, is its cost base just before the transfer time; and (b) the first element of the roll ‑ over asset’s * reduced cost base is worked out similarly. Any pre ‑ transfer losses of receiving trust cannot be utilised (3) If the roll ‑ over is chosen: (a) any * net capital loss of the receiving trust for an income year ending before the transfer time cannot be applied after the transfer time to reduce an amount of that trust’s * capital gains; and (b) the sum of the receiving trust’s * capital losses for the income year that includes the transfer time (the transfer year ) is reduced by an amount equal to any net capital loss that the trust would have had for that year had that year ended just before the transfer time; and (c) any * tax loss of the receiving trust for an income year ending before the transfer time cannot be deducted after the transfer time from an amount of that trust’s assessable income or * net exempt income; and (d) the sum of the receiving trust’s deductions for the transfer year is reduced by an amount equal to any tax loss that the trust would have had for that year had that year ended just before the transfer time. References in this subsection to the transfer time are to be read as references to the start time if subsection 126 ‑ 225(2) applies. Note: Subsection 126 ‑ 225(2) applies if the roll ‑ over asset is transferred to the receiving trust after an earlier roll ‑ over under this Subdivision, for another asset, was obtained for the trusts. Pre ‑ CGT assets (4) If: (a) the roll ‑ over is chosen; and (b) the transferring trust last * acquired the roll ‑ over asset before 20 September 1985; the receiving trust is taken to have acquired it before that day.

Amendment history: Inserted by No 19 of 2010, effective Sch 1 (items 1–13, 16–20), Sch 3 (items 11, 12), Sch 4 (items 3–6) and Sch 5 (item 6): 24 Mar 2010 (s 2(1) items 2, 9, 11, 14) Sch 2 (items 1–11): 25 Mar 2010 (s 2(1) item 3) Sch 2 (items 12–26):repealed before commencing (s 2(1) item 4) Sch 3 (items 1, 2): 30 June 2000 (s 2(1) item 5) Sch 3 (items 4–8): 15 Mar 2007 (s 2(1) item 7) Sch 4 (items 1, 2): 4 June 2009 (s 2(1) item 10) Sch 5 (items 2, 3): 25 Feb 2009 (s 2(1) item 12) Sch 5 (items 4, 5): 1 July 2011 (s 2(1) item 13)

s 126-245 — Consequences for beneficiaries—general approach for working out cost base etc.

(1) If the roll ‑ over is chosen, each of the following: (a) the * cost base and * reduced cost base of each of a beneficiary’s * membership interests in each trust; (b) the time each of the beneficiary’s membership interests in the receiving trust is treated as having been * acquired; is adjusted under this section for the transfer time unless the beneficiary has chosen for them to be adjusted under section 126 ‑ 250. Note: The beneficiary can choose for these things to be adjusted once for several consecutive transfer times (for multiple roll ‑ over assets) if the beneficiary owned the interests at all of those times (see section 126 ‑ 250). First element of cost base of interests in transferring trust (2) The first element of the * cost base, just after the transfer time, of each of the beneficiary’s * membership interests in the transferring trust is an amount equal to such proportion of the interest’s cost base just before the transfer time as is reasonable having regard to: (a) the * market value of the interest just after the transfer time, or a reasonable approximation of that market value; and (b) the market value of the interest just before the transfer time, or a reasonable approximation of that market value. First element of cost base of interests in receiving trust (3) The first element of the * cost base, just after the transfer time, of each of the beneficiary’s * membership interests in the receiving trust is such amount so that the sum of: (a) the cost base, just before the transfer time, of that membership interest in the receiving trust; and (b) if, just after the transfer time, that interest in the receiving trust corresponds to at least one of the beneficiary’s membership interests in the transferring trust—the cost base, just before the transfer time, of each of those corresponding membership interests in the transferring trust; and (c) if, just after the transfer time, that interest in the receiving trust corresponds to a proportion of one of the beneficiary’s membership interests in the transferring trust—that proportion of the cost base, just before the transfer time, of that corresponding membership interest in the transferring trust; reasonably approximates: (d) if paragraph (b) applies—the sum of the cost bases, just after the transfer time, of each of the interests referred to in paragraphs (a) and (b); and (e) if paragraph (c) applies—the sum of: (i) the cost base, just after the transfer time, of the interest referred to in paragraph (a); and (ii) the proportion of the cost base, just after the transfer time, of the interest referred to in paragraph (c). First element of reduced cost base of interests in each trust (4) The first element of the * reduced cost base, just after the transfer time, of each of the beneficiary’s * membership interests in each trust is worked out similarly. Time of acquisition for interests in the receiving trust (5) Each of the beneficiary’s * membership interests in the receiving trust is treated as having been * acquired just after the transfer time. Time of acquisition for pre ‑ CGT interests in the receiving trust (6) However, if one or more of the beneficiary’s * membership interests in the transferring trust were * pre ‑ CGT assets just before the transfer time, the beneficiary is treated as having * acquired before 20 September 1985 its interests in the receiving trust that correspond to those interests in the transferring trust.

Amendment history: Inserted by No 19 of 2010, effective Sch 1 (items 1–13, 16–20), Sch 3 (items 11, 12), Sch 4 (items 3–6) and Sch 5 (item 6): 24 Mar 2010 (s 2(1) items 2, 9, 11, 14) Sch 2 (items 1–11): 25 Mar 2010 (s 2(1) item 3) Sch 2 (items 12–26):repealed before commencing (s 2(1) item 4) Sch 3 (items 1, 2): 30 June 2000 (s 2(1) item 5) Sch 3 (items 4–8): 15 Mar 2007 (s 2(1) item 7) Sch 4 (items 1, 2): 4 June 2009 (s 2(1) item 10) Sch 5 (items 2, 3): 25 Feb 2009 (s 2(1) item 12) Sch 5 (items 4, 5): 1 July 2011 (s 2(1) item 13)

s 126-250 — Consequences for beneficiaries—other approach for working out cost base etc.

(1) This section applies if the beneficiary owns one or more * membership interests in the transferring trust at all times during the period: (a) starting just before this time (the starting time ): (i) the transfer time; or (ii) the transfer time for an asset referred to in paragraph 126 ‑ 225(2)(c) (assuming subsection 126 ‑ 225(2) applies); and (b) ending just after this time (the ending time ): (i) the transfer time (assuming this is not also the starting time); or (ii) a later time in the transfer year that is the transfer time for another asset for which a roll ‑ over is obtained under this Subdivision for the trusts. Note: Subsection 126 ‑ 225(2) applies if the roll ‑ over asset is transferred to the receiving trust after an earlier roll ‑ over under this Subdivision, for another asset, was obtained for the trusts. (2) The beneficiary may choose for each of the following: (a) the * cost base and * reduced cost base of each of those * membership interests and of the beneficiary’s corresponding membership interests in the receiving trust; (b) the time each of those corresponding interests in the receiving trust is treated as having been * acquired; to be adjusted under subsection (3) for the period. (3) For each of the interests referred to in subsection (2), subsections 126 ‑ 245(2), (3), (4), (5) and (6) apply as if: (a) references in those subsections to just before the transfer time were references to just before the starting time; and (b) references in those subsections to just after the transfer time were references to just after the ending time.

Amendment history: Inserted by No 19 of 2010, effective Sch 1 (items 1–13, 16–20), Sch 3 (items 11, 12), Sch 4 (items 3–6) and Sch 5 (item 6): 24 Mar 2010 (s 2(1) items 2, 9, 11, 14) Sch 2 (items 1–11): 25 Mar 2010 (s 2(1) item 3) Sch 2 (items 12–26):repealed before commencing (s 2(1) item 4) Sch 3 (items 1, 2): 30 June 2000 (s 2(1) item 5) Sch 3 (items 4–8): 15 Mar 2007 (s 2(1) item 7) Sch 4 (items 1, 2): 4 June 2009 (s 2(1) item 10) Sch 5 (items 2, 3): 25 Feb 2009 (s 2(1) item 12) Sch 5 (items 4, 5): 1 July 2011 (s 2(1) item 13)

s 126-255 — No other cost base etc. adjustment for beneficiaries

If a beneficiary of the trusts makes adjustments under section 126 ‑ 245 or 126 ‑ 250 to the * cost base and * reduced cost base of the beneficiary’s * membership interests in relation to the * CGT event that is: (a) the creation of the receiving trust over the roll ‑ over asset; or (b) the transfer of the roll ‑ over asset to the receiving trust; no other adjustment is to be made under this Act to those cost bases and reduced cost bases because of something that happens in relation to that event. Note: This section prevents the general value shifting regime from applying in relation to the event because sections 126 ‑ 245 and 126 ‑ 250 deal with any value shift that might occur.

Amendment history: Inserted by No 19 of 2010, effective Sch 1 (items 1–13, 16–20), Sch 3 (items 11, 12), Sch 4 (items 3–6) and Sch 5 (item 6): 24 Mar 2010 (s 2(1) items 2, 9, 11, 14) Sch 2 (items 1–11): 25 Mar 2010 (s 2(1) item 3) Sch 2 (items 12–26):repealed before commencing (s 2(1) item 4) Sch 3 (items 1, 2): 30 June 2000 (s 2(1) item 5) Sch 3 (items 4–8): 15 Mar 2007 (s 2(1) item 7) Sch 4 (items 1, 2): 4 June 2009 (s 2(1) item 10) Sch 5 (items 2, 3): 25 Feb 2009 (s 2(1) item 12) Sch 5 (items 4, 5): 1 July 2011 (s 2(1) item 13)

s 126-260 — Giving information to beneficiaries

Beneficiaries must be given particulars of the roll ‑ over (1) If the roll ‑ over is chosen, the trustee of the transferring trust must, within 3 months after the end of the transfer year, send written notice of the particulars set out in subsection (2) to each of the trust’s beneficiaries: (a) by post to the address most recently notified by the beneficiary as the beneficiary’s address; or (b) by any other means notified by the beneficiary for receiving correspondence from the trust. Note: The trustee may also notify beneficiaries of other details of the roll ‑ over. The particulars that must be given (2) The particulars are as follows: (a) the roll ‑ over asset’s transfer time; (b) sufficient information to enable a beneficiary to work out which of the beneficiary’s * membership interests in the receiving trust correspond to each of the beneficiary’s membership interests in the transferring trust; (c) the * market value of each of the membership interests held by the beneficiary in the transferring trust just after the roll ‑ over asset’s transfer time, or a reasonable approximation of that market value; (d) the market value of each of the membership interests held by the beneficiary in the transferring trust just before the roll ‑ over asset’s transfer time, or a reasonable approximation of that market value. Offence (3) A trustee commits an offence if the trustee contravenes subsection (1). Penalty: 30 penalty units. (4) An offence against subsection (3) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code . If the transferring trust has multiple trustees (5) If the transferring trust has 2 or more trustees, the obligation imposed by subsection (1) is imposed on each of the trustees, but may be discharged by any of the trustees. Note: Each of the trustees commits an offence against subsection (3) if none of them discharges the obligation imposed by subsection (1). (6) In a prosecution of a trustee for an offence against subsection (3) for an act or omission contravening subsection (1), it is a defence if the trustee proves that the trustee: (a) did not aid, abet, counsel or procure the act or omission; and (b) was not in any way knowingly concerned in, or party to, the act or omission (whether directly or indirectly and whether by any act or omission of the trustee). Note: A defendant bears a legal burden in relation to the matters in subsection (6): see section 13.4 of the Criminal Code . Obligations of beneficiary unaffected if not notified of roll ‑ over (7) A failure by a trustee to comply with subsection (1) does not affect the application of section 126 ‑ 245 to the beneficiary.

Amendment history: Inserted by No 19 of 2010, effective Sch 1 (items 1–13, 16–20), Sch 3 (items 11, 12), Sch 4 (items 3–6) and Sch 5 (item 6): 24 Mar 2010 (s 2(1) items 2, 9, 11, 14) Sch 2 (items 1–11): 25 Mar 2010 (s 2(1) item 3) Sch 2 (items 12–26):repealed before commencing (s 2(1) item 4) Sch 3 (items 1, 2): 30 June 2000 (s 2(1) item 5) Sch 3 (items 4–8): 15 Mar 2007 (s 2(1) item 7) Sch 4 (items 1, 2): 4 June 2009 (s 2(1) item 10) Sch 5 (items 2, 3): 25 Feb 2009 (s 2(1) item 12) Sch 5 (items 4, 5): 1 July 2011 (s 2(1) item 13)

s 126-265 — Interest sale facilities

Interest sale facilities (1) For the purposes of this Subdivision, an entity (the investor ) is treated as owning a * membership interest (the roll ‑ over interest ) in the receiving trust at a time (the deeming time ), if: (a) the investor owned a membership interest in the transferring trust; and (b) a trust is created, or a transfer happens, (the transaction ) as mentioned in paragraph 126 ‑ 225(1)(a) in relation to * CGT assets of the transferring trust; and (c) because: (i) a * foreign law impedes the ability of the receiving trust to issue or transfer the roll ‑ over interest to the investor; or (ii) it would be impractical or unreasonably onerous to determine whether a foreign law impedes the ability of the receiving trust to issue or transfer the roll ‑ over interest to the investor; it is * arranged that the receiving trust will issue or transfer the roll ‑ over interest to another entity (the facility ) under the transaction instead of to the investor; and (d) in accordance with that arrangement and as a result of the transaction, the facility: (i) becomes the owner of the roll ‑ over interest; and (ii) owns the roll ‑ over interest at the deeming time; and (e) under the arrangement, the investor is entitled to receive from the facility: (i) an amount equivalent to the * capital proceeds of any * CGT event that happens in relation to the roll ‑ over interest (less expenses); or (ii) if a CGT event happens in relation to the roll ‑ over interest together with CGT events happening in relation to other membership interests—an amount equivalent to the investor’s proportion of the total capital proceeds of the CGT events (less expenses). (2) The facility is treated as not owning the roll ‑ over interest at the deeming time.

Amendment history: Inserted by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29)

s 128-1 — What this Division is about

This Division sets out what happens when you die and a CGT asset you owned just before dying devolves to your legal personal representative or passes to a beneficiary in your estate. It also contains rules about what happens when a joint tenant dies. General rules 128 ‑ 10 Capital gain or loss when you die is disregarded 128 ‑ 15 Effect on the legal personal representative or beneficiary 128 ‑ 20 When does an asset pass to a beneficiary? 128 ‑ 25 The beneficiary is a trustee of a superannuation fund etc. Special rules for joint tenants 128 ‑ 50 Joint tenants

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 128-10 — Capital gain or loss when you die is disregarded

When you die, a * capital gain or * capital loss from a * CGT event that results for a * CGT asset you owned just before dying is disregarded. Note 1: Section 104 ‑ 215 sets out an exception to this rule if the CGT asset passes to a beneficiary in your estate who is: • an exempt entity; or • the trustee of a complying superannuation entity; or • a foreign resident. Note 2: There is a special indexation rule for deceased estates: see section 114 ‑ 10.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 169 of 1999, effective Sch 5 (items 1–12): 22 Feb 1999 (s 2(2)) Sch 1 (items 1–13, 18), Sch 2 (items 1–3, 5), Sch 3 (items 1–4, 7), Sch 4 (items 1–15, 19), Sch 6, Sch 7 (item 11), Sch 8, Sch 9 (items 1–14, 23–33) and Sch 10: 10 Dec 1999 (s 2(1)) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16)

s 128-15 — Effect on the legal personal representative or beneficiary

(1) This section sets out what happens if a * CGT asset you owned just before dying: (a) devolves to your * legal personal representative; or (b) * passes to a beneficiary in your estate. Note 1: Section 128 ‑ 25 has different rules if the asset passes to a beneficiary in your estate who is the trustee of a complying superannuation entity. Note 2: If the beneficiary is an exempt entity, Division 57 in Schedule 2D to the Income Tax Assessment Act 1936 has rules about exempt entities that become taxable. It sets out what the entity is taken to have purchased its assets for when it becomes taxable. Note 3: If the beneficiary is a foreign resident, Subdivision 855 ‑ B sets out what happens if the beneficiary becomes an Australian resident. The beneficiary is taken to have acquired each asset owned just before becoming an Australian resident for the market value of the asset at that time. (2) The * legal personal representative, or beneficiary, is taken to have * acquired the asset on the day you died. Special rule for legal personal representative (3) Any * capital gain or * capital loss the * legal personal representative makes if the asset * passes to a beneficiary in your estate is disregarded. Cost base rules for both (4) This table sets out the modifications to the * cost base and * reduced cost base of the * CGT asset in the hands of the * legal personal representative or beneficiary. Modifications to cost base and reduced cost base Item For this kind of CGT asset: The first element of the asset’s cost base is: The first element of the asset’s reduced cost base is: 1 One you * acquired on or after 20 September 1985, except one covered by item 2, 3, 3A or 3B the * cost base of the asset on the day you died the * reduced cost base of the asset on the day you died 2 One that was * trading stock in your hands just before you died the amount worked out under section 70 ‑ 105 the amount worked out under section 70 ‑ 105 3 A * dwelling that was your main residence just before you died if: (a) the dwelling was not then being used for the * purpose of producing assessable income; and (b) you were not then an * excluded foreign resident the * market value of the * dwelling on the day you died the market value of the * dwelling on the day you died 3A If you were a foreign resident just before you died—an asset that was not * taxable Australian property just before you died, except one covered by item 2 the * market value of the asset on the day you died the market value of the asset on the day you died 3B One that * passes to a trustee of a * special disability trust the * market value of the asset on the day you died the market value of the asset on the day you died 4 One you * acquired before 20 September 1985 the * market value of the asset on the day you died the market value of the asset on the day you died Note 1: Section 70 ‑ 105 has a general rule that the person on whom the trading stock devolves is taken to have bought it for its market value. There are some exceptions though. Note 2: Subdivision 118 ‑ B contains other rules about dwellings acquired through deceased estates. Note 3: The rule in item 3 in the table does not apply to a dwelling that devolved to your legal personal representative, or passed to a beneficiary in your estate, on or before 7.30 pm on 20 August 1996: see section 128 ‑ 15 of the Income Tax (Transitional Provisions) Act 1997 . Further rule for a beneficiary (5) A beneficiary can include in the * cost base or * reduced cost base of the asset any expenditure that the * legal personal representative would have been able to include at the time the asset * passes to the beneficiary. The beneficiary can include the expenditure on the day the representative incurred it. Example: You die on 1 May 1995 owning land. On 15 June 1995 your legal personal representative pays $500 council rates for the land. On 31 July 1995 your representative transfers it to a beneficiary in your estate, who is taken to have acquired it on 1 May 1995. The beneficiary can include the $500 in the third element of the cost base of the land. It is included on 15 June 1995. Collectables and personal use assets (6) The * legal personal representative or beneficiary is taken to have * acquired a * collectable or a * personal use asset if: (a) you acquired it on or after 20 September 1985; and (b) it was a * collectable or a * personal use asset (as appropriate) in your hands when you died. Note 1: Capital losses from collectables can be used only to reduce capital gains from collectables: see section 108 ‑ 10. Note 2: Capital losses from personal use assets are disregarded: see section 108 ‑ 20.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 169 of 1999, effective Sch 5 (items 1–12): 22 Feb 1999 (s 2(2)) Sch 1 (items 1–13, 18), Sch 2 (items 1–3, 5), Sch 3 (items 1–4, 7), Sch 4 (items 1–15, 19), Sch 6, Sch 7 (item 11), Sch 8, Sch 9 (items 1–14, 23–33) and Sch 10: 10 Dec 1999 (s 2(1)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9)) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5) | Amended by No 41 of 2011, effective Schedule 1 (items 1–3): 1 Jan 2011 Schedule 1 (items 4–6) and Schedule 5 (items 25–29, 33, 36–50, 74–78, 80–145, 148–167, 173–175, 383–396, 400, 414–418): Royal Assent Schedule 5 (items 9, 18–20): 28 June 2011 Schedule 5 (items 51–54): 1 July 2011 | Amended by No 147 of 2011, effective s. 4, Schedule 1, Schedule 5 (items 1–9, 16–20), Schedule 6 (items 1, 6) and Schedule 9: Royal Assent Schedule 8 (items 2–9, 37, 38, 41): 1 Jan 2012 | Amended by No 129 of 2019, effective Sch 1 (items 1–31, 33–36) and Sch 2: 1 Jan 2020 (s 2(1) item 2)

s 128-20 — When does an asset pass to a beneficiary?

(1) A * CGT asset passes to a beneficiary in your estate if the beneficiary becomes the owner of the asset: (a) under your will, or that will as varied by a court order; or (b) by operation of an intestacy law, or such a law as varied by a court order; or (c) because it is appropriated to the beneficiary by your legal personal representative in satisfaction of a pecuniary legacy or some other interest or share in your estate; or (d) under a deed of arrangement if: (i) the beneficiary entered into the deed to settle a claim to participate in the distribution of your estate; and (ii) any consideration given by the beneficiary for the asset consisted only of the variation or waiver of a claim to one or more other * CGT assets that formed part of your estate. (It does not matter whether the asset is transmitted directly to the beneficiary or is transferred to the beneficiary by your * legal personal representative.) (2) A * CGT asset does not pass to a beneficiary in your estate if the beneficiary becomes the owner of the asset because your * legal personal representative transfers it under a power of sale.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))

s 128-25 — The beneficiary is a trustee of a superannuation fund etc.

(1) This section has rules about * cost base and * reduced cost base that are relevant if you die and a * CGT asset you owned just before dying * passes to a beneficiary in your estate who (when the asset passes) is the trustee of a * complying superannuation entity. Note: A capital gain or loss is also made: see section 104 ‑ 215. (2) The beneficiary is taken to have * acquired the asset on the day you died. The first element of the * cost base and * reduced cost base of the asset is its * market value on that day. (3) The beneficiary can include in the * cost base or * reduced cost base of the asset any expenditure that your * legal personal representative would have been able to include at the time the asset * passes to the beneficiary. The beneficiary can include the expenditure on the day the representative incurred it.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 169 of 1999, effective Sch 5 (items 1–12): 22 Feb 1999 (s 2(2)) Sch 1 (items 1–13, 18), Sch 2 (items 1–3, 5), Sch 3 (items 1–4, 7), Sch 4 (items 1–15, 19), Sch 6, Sch 7 (item 11), Sch 8, Sch 9 (items 1–14, 23–33) and Sch 10: 10 Dec 1999 (s 2(1)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9)) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 168 of 2006, effective Schedule 3 (items 3–5): 13 Dec 2005 Remainder: Royal Assent | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5)

s 128-50 — Joint tenants

(1) This section has rules that are relevant if a * CGT asset is owned by joint tenants and one of them dies. (2) The survivor is taken to have * acquired (on the day the individual died) the individual’s interest in the asset. If there are 2 or more survivors, they are taken to have acquired that interest in equal shares. Note: Joint tenants are treated as owning a CGT asset in equal shares: see section 108 ‑ 7. (3) If the individual who died * acquired his or her interest in the asset on or after 20 September 1985, the first element of the * cost base of the interest each survivor is taken to have acquired is: The first element of the * reduced cost base of the interest each survivor is taken to have * acquired is worked out similarly. Example: In 1999 2 individuals buy land for $50,000 as joint tenants. Each one is taken to have a 50% interest in it. On 1 May 2001 one of them dies. The survivor is taken to have acquired the interest of the individual who died on 1 May 2001. If the cost base of that interest on that day is $27,000, the survivor is taken to have acquired that interest for that amount. (4) If the individual who died * acquired his or her interest in the asset before 20 September 1985, the first element of the * cost base and * reduced cost base of the interest each survivor is taken to have acquired is: Note: There is a special indexation rule for surviving joint tenants: see section 114 ‑ 10.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 176 of 1999, effective Sch 3: 1 July 2000 (s 2(9))

s 130-1 — What this Division is about

This Division sets out the rules for these kinds of investments: • bonus shares and units; and • rights; and • convertible interests; and • shares acquired under an employee share scheme; and • exchangeable interests; and • exploration investments. Most are about modifying the cost base and reduced cost base of a CGT asset.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Repealed and substituted by No 133 of 2003, effective 17 Dec 2003 | Amended by No 15 of 2018, effective Sch 1 (items 1–6A, 11–26, 65–67): 1 Apr 2018 (s 2(1) items 2, 4) Sch 1 (items 42–52, 68–73): repealed before commencing (s 2(1) items 3, 5)

s 130-20 — Issue of bonus shares or units

(1) This section sets out what happens if: (a) you own * shares in a company or units in a unit trust (the original equities ); and (b) the company issues other shares, or the trustee issues other units, (the bonus equities ) to you in relation to the original equities. (2) The first element of your * cost base and * reduced cost base for the bonus equities includes: (a) for * shares—any part of the shares that are a * dividend (or taken to be a dividend under subsection 45(2) or 45C(1) of the Income Tax Assessment Act 1936 ); and (b) for units—any part of the other units that are or will be included in your assessable income. You are taken to have * acquired the bonus equities when they were issued. Note 1: There are special indexation rules for cost base modifications: see Division 114. Note 2: The amounts of calls you pay on partly ‑ paid equities will also form part of the first element of their cost base and reduced cost base. Note 3: There is a special rule for shares issued on or before 30 June 1987: see subsection 130 ‑ 20(2) of the Income Tax (Transitional Provisions) Act 1997 . Note 4: Certain capital distributions are taken to be dividends under subsections 45(2) and 45C(1) if a company has entered into a capital streaming or dividend substitution arrangement. (3) This table sets out what happens if: (a) none of the shares are a * dividend (or taken to be a dividend under subsection 45(2) or 45C(1) of the Income Tax Assessment Act 1936 ); or (b) none of the other units are or will be included in your assessable income. Note: Certain capital distributions are taken to be dividends under subsections 45(2) and 45C(1) if a company has entered into a capital streaming or dividend substitution arrangement. Modifications where neither a dividend nor assessable Item In this situation: You are taken to have * acquired the bonus equities when: There is this effect: 1 You * acquire the original equities on or after 20 September 1985 You * acquired the original equities You apportion the first element of your * cost base and * reduced cost base for the original equities in a reasonable way over both the original and bonus equities 2 You * acquire the original equities before 20 September 1985 and an amount has been paid for the bonus equities that you were required to pay The liability to pay the amount arose The first element of your * cost base and * reduced cost base for the bonus equities includes their * market value just before that time 3 You * acquire the original equities before 20 September 1985 and the bonus equities are fully paid You * acquired the original equities Any * capital gain or * capital loss you make from the bonus equities is disregarded 4 You * acquire the original equities before 20 September 1985 and the bonus equities are partly paid but no amount has been paid since the issue of the bonus equities You * acquired the original equities Any * capital gain or * capital loss you make from the bonus equities is disregarded The amount paid or payable can include giving property: see section 103 ‑ 5. Note 1: The amounts of calls you pay on partly ‑ paid equities will also form part of the first element of their cost base and reduced cost base. Note 2: There is a special rule for bonus equities issued on or before 1 pm on 10 December 1986 that affects item 2 of the table: see subsection 130 ‑ 20(3) of the Income Tax (Transitional Provisions) Act 1997 . (3A) If only a part of a capital benefit that is bonus equities is a * dividend, or is taken to be a dividend under subsection 45(2) or 45C(1) of the Income Tax Assessment Act 1936 , you apportion the first element of your * cost base and * reduced cost base for the original equities in a reasonable way over both the original equities and the bonus equities. (4) The modifications in this section are not made if, for the income year in which the bonus equities are issued, the unit trust is a public trading trust within the meaning of section 102R of the Income Tax Assessment Act 1936 . Note: Subsection 26BC(9E) of the Income Tax Assessment Act 1936 (about securities lending arrangements) modifies the operation of this section.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 63 of 1998, effective Sch 6: 1 July 1998 (s 2(3)(a)) | Amended by No 94 of 1999, effective 16 July 1999 (s 2(1)–(3)) | Amended by No 173 of 2000, effective s 4, Sch 1, Sch 3 (items 1–15, 17), Sch 4 (items 6–45, 47–49, 51–59, 65(1), (3)) and Sch 6: 21 Dec 2000 (s 2(1)) Sch 4 (items 46, 50): 1 July 1998 (s 2(3)) Sch 5: 31 May 2000 (s 2(4)) | Amended by No 57 of 2002, effective Sch 2: 1 July 2002 (s 2(1) item 3) Sch 4 (items 3, 4): 1 July 2000 (s 2(1) item 5) Sch 4 (items 5–8), Sch 7, Sch 9 (items 9, 11, 12, 15–20, 22–40, 45), Sch 11 (items 2–5), Sch 12 (items 16–18, 20, 25, 26): 3 July 2002 (s 2(1) items 6, 7, 9, 11, 13, 15, 16, 18, 28, 30, 33) Sch 9 (items 10, 13, 14, 21) and Sch 12 (items 23, 24): 1 July 1997 (s 2(1) items 10, 12, 14, 32) Sch 12 (item 19): 30 June 1998 (s 2(1) item 29) Sch 12 (items 21, 22): 22 June 1998 (s 2(1) item 31) Sch 12 (items 27, 28): 16 Apr 1998 (s 2(1) item 34) Sch 12 (item 29): 19 Sept 1997 (s 2(1) item 35) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4)

s 130-40 — Exercise of rights

(1) The table in this section sets out the modifications to the rules about * cost base and * reduced cost base that happen if you exercise rights to * acquire: (a) * shares, or options to acquire shares, in a company; or (b) units, or options to acquire units, in a unit trust. Note: For rights acquired under employee share schemes, see Division 83A, Subdivision 130 ‑ D and Division 134. (2) The modifications happen only if: (a) you did not pay for the rights and the condition in subsection (3) is satisfied; or (b) the condition in subsection (4) is satisfied. The payment can include giving property: see section 103 ‑ 5. (3) When you were issued the rights, you must: (a) already own shares in, or * convertible interests issued by, the company or a company that is a member of the same * wholly ‑ owned group (the original shares or interests ); or (b) already own units in, or convertible interests issued by the trustee of, the unit trust (the original units or interests ). (4) You must have * acquired the rights from an entity that already owned shares, units or convertible interests of the kind referred to in subsection (3). (5) The company that is a member of the same * wholly ‑ owned group mentioned in paragraph (3)(a) includes a company that would cease to be a member of that group by the exercise of the rights. (6) The rights to * acquire units or to acquire an option to acquire units in a unit trust must have been issued by the trustee after 28 January 1988. Modifications on exercise of rights Item In this situation: The modification is... 1 You exercise rights issued to you to * acquire the * shares, units or options. The first element of your * cost base for the shares, units or options is the sum of: (a) the cost base of the rights at the time of exercise; and (b) any amount paid to exercise the rights, except to the extent that the amount is represented in the paragraph (a) amount; and (c) all the amounts to be added under subsection (6A). The first element of their * reduced cost base is worked out similarly. 2 You exercise rights you * acquired from another entity to acquire the * shares, units or options. The first element of your * cost base for the shares, units or options is the sum of: (a) the cost base of the rights at the time of exercise; and (b) any amount paid to exercise the rights, except to the extent that the amount is represented in the paragraph (a) amount; and (c) all the amounts to be added under subsection (6A). The first element of their * reduced cost base is worked out similarly. 3 You exercise rights issued to you to * acquire the * shares, units or options, and you acquired the original shares or * convertible interests, or the original units or convertible interests, before 20 September 1985. The first element of your * cost base for the shares, units or options is the sum of: (a) the * market value of the rights when they were exercised; and (b) any amount paid to exercise the rights, except to the extent that the amount is represented in the paragraph (a) amount; and (c) all the amounts to be added under subsection (6A). The first element of their * reduced cost base is worked out similarly. (6A) An amount is to be added under this subsection if a * capital gain made from the right has been reduced under section 118 ‑ 20. This is so even though a capital gain that is made on exercise is disregarded under subsection (7). The amount to be added is the amount of the reduction. Note: For example, a capital gain made on the exercise of the right under section 118 ‑ 20 may be reduced because an amount is included in the owner’s assessable income under subsection 26BB(2) of the Income Tax Assessment Act 1936 (about assessing a gain on disposal or redemption of a traditional security) or section 159GS of that Act (about balancing adjustments on transfer of a qualifying security). (7) A * capital gain or * capital loss you make from the exercise of the rights is disregarded. Note 1: The exercise of the rights would be an example of CGT event C2 (about a CGT asset ending). Note 2: There are transitional rules for some rights: see section 130 ‑ 40 of the Income Tax (Transitional Provisions) Act 1997 . Note 3: The effect of this Subdivision is modified in 2 cases by sections 102AAZBA (about non ‑ resident trusts) and 414 (about CFC’s) of the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 94 of 1999, effective 16 July 1999 (s 2(1)–(3)) | Amended by No 163 of 2001, effective 1 July 2001 | Amended by No 133 of 2003, effective 17 Dec 2003 | Amended by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent

s 130-45 — Timing rules

Acquisition of rights (1) If you * acquired the rights from the company or trustee, you are taken to have acquired the rights when you acquired the original shares or interests or the original units or interests. Acquisition of shares, units or options on exercise of rights (2) You are taken to have * acquired the new * shares, units or options when you exercise the rights.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4)) | Amended by No 163 of 2001, effective 1 July 2001

s 130-50 — Application to options

This Subdivision applies to options in the same way that it applies to rights.

Amendment history: Inserted by No 46 of 1998, effective s 4, Sch 1, Sch 2 (items 4–48), Sch 3 (items 3–12), Sch 4 (items 2–11), Sch 5 (items 3–5), Sch 6 (items 2–7), Sch 7 (items 2–11), Sch 9 (items 2–6, 8) and Sch 10: 22 June 1998 (s 2(1)–(4))