Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p2
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 2/12)
Character Range: 1931806–1934747

to 705‑D); and
 (c) some or all (the unallocated amount) of the reduction cannot be allocated as mentioned in subsection 705‑40(2).
 (2) The time of the event is just after the entity becomes a *subsidiary member of the group.
 (3) For the head company core purposes mentioned in subsection 701‑1(2), the *head company makes a capital loss equal to the unallocated amount.

Division 106—Entity making the gain or loss

Table of Subdivisions
 Guide to Division 106
106‑A Partnerships
106‑B Bankruptcy and liquidation
106‑C Absolutely entitled beneficiaries
106‑D Securities, charges and encumbrances

Guide to Division 106

106‑1  What this Division is about

      This Division sets out the cases where a capital gain or loss is made by someone other than the entity to which a CGT event happens.
      The entities affected are:
                    partnerships (Subdivision 106‑A);
                     bankruptcy trustees and company liquidators (Subdivision 106‑B);
                     trustees where there is an absolutely entitled beneficiary (Subdivision 106‑C);
                    security holders (Subdivision 106‑D).

Subdivision 106‑A—Partnerships

106‑5  Partnerships
 (1) Any *capital gain or *capital loss from a *CGT event happening in relation to a partnership or one of its *CGT assets is made by the partners individually.
  Each partner's gain or loss is calculated by reference to the partnership agreement, or partnership law if there is no agreement.
             Example 1: A partnership creates contractual rights in another entity (CGT event D1). Each partner's capital gain or loss is calculated by allocating an appropriate share of the capital proceeds from the event and the incidental costs that relate to the event (according to the partnership agreement, or partnership law if there is no agreement).
             Example 2: Helen and Clare set up a business in partnership. Helen contributes a block of land to the partnership capital. Their partnership agreement recognises that Helen has a 75% interest in the land and Clare 25%. The agreement is silent as to their interests in other assets and profit sharing.
              When the land is sold, Helen's capital gain or loss will be determined on the basis of her 75% interest. For other partnership assets, Helen's gain or loss will be determined on the basis of her 50% interest (under the relevant Partnership Act).
 (2) Each partner has a separate *cost base and *reduced cost base for the partner's interest in each *CGT asset of the partnership.
 (3) If a partner leaves a partnership, a remaining partner *acquires a separate *CGT asset to the extent that the remaining partner acquires a share of the departing partner's interest in a partnership asset.
Note: The remaining partners would not be affected if the departing partner sells its interests to an entity that was not a partner.
Example: (Indexation is ignored for the purpose of