Document ID: chunk:federal_register_of_legislation:C2010C00612:clause:2_4:p3
Version: federal_register_of_legislation:C2010C00612
Segment Type: clause
Provision Reference: sch 2 cl 4 (pt 3/5)
Character Range: 71096–73585

kind you had in the original entity.

124‑785  What is the roll‑over?

 (1) A *capital gain you make from your original interest is disregarded.

 (2) You work out the first element of the *cost base of each *CGT asset you received as a result of the exchange by reasonably attributing to it the cost base (or the part of it) of your original interest for which it was exchanged and for which you obtained the roll‑over.

 (3) In applying subsection (2), you reduce the *cost base of your original interest (just before you stop owning it) by so much of that cost base as is attributable to an ineligible part (see section 124‑790).

 (4) The first element of the *reduced cost base is worked out similarly.

Example 1: Lyn exchanges 1 share with a cost base of $10 for another share. The cost base of the new share is $10.

Example 2: Glenn exchanges 2 shares with cost bases of $10 and $11 respectively for one new share. The cost base of the new share is $21.

Example 3: Wayne exchanges 1 share with a cost base of $9 for share A with a market value of $5 and share B with a market value of $10. The cost base of share A is $3 and the cost base of share B is $6.

124‑790  Partial roll‑over

 (1) You can obtain only a partial roll‑over if you receive something other than your replacement interest (the ineligible proceeds). There is no roll‑over for that part (the ineligible part) of your original interest for which you received ineligible proceeds.

 (2) The *cost base of the ineligible part is that part of the cost base of your original interest as is reasonably attributable to it.

Example: Ken owns 100 shares in Aim Ltd. Those shares have a cost base of $2.

 Ken accepts an offer from LBZ Ltd to acquire those shares. The offer is 1 share in LBZ (market value $4) plus $1 for each Aim share.

 Ken chooses the roll‑over to the extent that he can.

 The cost base of the ineligible part is [$100  $200]  $500  $40.

 Ken makes a capital gain of $100  $40  $60.

 (3) The *reduced cost base of the ineligible part is worked out similarly.

124‑795  Exceptions

 (1) You cannot obtain the roll‑over if, just before you stop owning your original interest, you are not an Australian resident unless, just after you *acquire your replacement interest, the acquiring entity is an Australian resident or a *resident trust for CGT purposes.

Note: If you are not an Australian resident and the acquiring entity is, the replacement interest has the necessary connection with