Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:1_14:p29
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 1 cl 14 (pt 29/40)
Character Range: 105078–107749

a company that is a *100% subsidiary of the ultimate holding company just after the break‑up time.

Subdivision 104‑K—Other CGT events

Table of sections

104‑205 Partial realisation of intellectual property: CGT event K1
104‑210 Bankrupt pays amount in relation to debt: CGT event K2
104‑215 Asset passing to tax‑advantaged entity: CGT event K3
104‑220 CGT asset starts being trading stock: CGT event K4
104‑225 Special collectable losses: CGT event K5
104‑230 Pre‑CGT shares or trust interest: CGT event K6

104‑205  Partial realisation of intellectual property: CGT event K1

 (1) CGT event K1 happens if there is a *partial realisation of an item of *intellectual property.

 (2) The time of the event is:

 (a) when you enter into the contract for the realisation; or

 (b) if there is no contract—when the realisation occurred.

 (3) You make a capital gain if the *capital proceeds from the realisation are more than the item's *cost base. If you make a *capital gain, the item's *cost base and *reduced cost base are also reduced to nil.

Note: You cannot make a capital loss.

 (4) On the other hand, if the *capital proceeds from the realisation are less than the item's *cost base, the item's cost base is reduced by that amount at the time of the realisation.

Example: On 1 January 1999 you buy a patent for an invention for $100,000. On 1 March 1999 you grant a 5 year licence to exploit the patent in South Australia for $60,000 (a partial realisation).

 Suppose the patent's cost base just before the grant is $100,000. The capital proceeds ($60,000) are less than the patent's cost base, which is reduced to $40,000.

 On 1 September 1999 you receive damages of $70,000 for infringement of the patent (another partial realisation).

 Suppose the patent's cost base just before the other realisation is $40,000. The capital proceeds ($70,000) exceed the patent's cost base. You make a capital gain of $30,000 and the patent's cost base is reduced to nil.

Extension of licence treated as grant of new licence

 (5) This section has effect as if an extension of the term of a licence relating to a patent, design or copyright were the grant of a new licence (and so a *partial realisation).

Exception

 (6) A *capital gain you make is disregarded if you *acquired the *CGT asset that is the item of intellectual property before 20 September 1985.

104‑210  Bankrupt pays amount in relation to debt: CGT event K2

 (1) CGT event K2 happens if:

 (a) you made a *net capital loss for an income year that, because of subsection 102‑5(2), cannot be applied in working out whether you made a *net capital gain for the income year or a