Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:1_3:p4
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 1 cl 3 (pt 4/6)
Character Range: 431574–434296

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 or *capital loss 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) the sum of the *capital gains and the sum of the *capital losses the subsidiary would make on the *disposal of its CGT roll‑over 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:

                (a) an overall capital gain from Step 1 and an overall capital gain from Step 2; or

                (b) an overall capital loss from Step 1 and an overall capital loss 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 or *capital loss from Step 2 by the fraction from Step 4.

           Step 6. Reduce the overall *capital gain or *capital loss from Step 1 by the amount from Step 5. The result is the *capital gain or *capital loss 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.

Subdivision 126‑C—Changes to trust deeds

Guide to Subdivision 126‑C

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