Document ID: chunk:federal_register_of_legislation:C2025C00029:section:6:p4
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 6 (pt 4/20)
Character Range: 1563612–1566188

also apply to disposals of certain items on hand at the end of 1996‑97 that are not trading stock but were trading stock as defined in the Income Tax Assessment Act 1936: see section 70‑10 of the Income Tax (Transitional Provisions) Act 1997.

70‑95  Purchase price is taken to be market value
  If an entity disposes of an item of the entity's *trading stock outside the ordinary course of *business, the entity acquiring the item is treated as having bought it for the amount included in the disposing entity's assessable income under section 70‑90.

70‑100  Notional disposal when you stop holding an item as trading stock
 (1) An item of *trading stock is treated as having been disposed of outside the ordinary course of *business if it stops being trading stock on hand of an entity (the transferor) and, immediately afterwards:
 (a) the transferor is not the item's sole owner; but
 (b) an entity that owned the item (alone or with others) immediately beforehand still has an interest in the item.
Example: A grocer decides to take her daughters into partnership with her. Her trading stock becomes part of the partnership assets, owned by the partners equally. As a result, it becomes trading stock on hand of the partnership instead of the grocer. This section treats the grocer as having disposed of the trading stock to the partnership outside the ordinary course of her business.
Note: If the transferor is the item's sole owner after it stops being trading stock on hand of the transferor, section 70‑110 applies instead of this section.
 (2) As a result, the transferor's assessable income includes the *market value of the item on the day it stops being *trading stock on hand of the transferor.
 (3) The entity or entities (the transferee) that own the item immediately after it stops being *trading stock on hand of the transferor are treated as having bought the item for the same value on that day.

Election to treat item as disposed of at closing value
 (4) However, an election can be made to treat the item as having been disposed of for what would have been its *value as *trading stock of the transferor on hand at the end of an income year ending on that day.
 (5) If this election is made, this *value is included in the transferor's assessable income for the income year that includes that day. The transferee is treated as having bought the item for the same value on that day.
 (6) This election can only be made if:
 (a) immediately after the item stops being *trading stock on hand of the transferor, it is an asset of a *business carried on by