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Tax Law Improvement Act (No. 1) 1998
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Administered by
Department of the Treasury
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C2004A00308
22 June 1998
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21 June 1998
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1 Short title
2 Commencement
3 Schedules
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4 Application of amendments
Schedule 1—Amendment of the Income Tax Assessment Act 1997
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Part 3-1—Capital gains and losses: general topics
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Division 100—A Guide to capital gains and losses
General overview
100-1 What this Division is about
100-5 Effect of this Division
100-10 Fundamentals of CGT
100-15 Overview of Steps 1 and 2
Step 1—Have you made a capital gain or a capital loss?
100-20 What events attract CGT?
100-25 What are CGT assets?
100-30 Does an exception or exemption apply?
100-33 Can there be a roll-over?
Step 2—Work out the amount of the capital gain or loss
100-35 What is a capital gain or loss?
100-40 What factors come into calculating a capital gain or loss?
100-45 How to calculate the capital gain or loss for most CGT events
Step 3—Work out your net capital gain or loss for the income year
100-50 How to work out your net capital gain or loss
100-55 How do you comply with CGT?
Keeping records for CGT purposes
100-60 Why keep records?
100-65 What records?
100-70 How long you need to keep records
Division 102—Assessable income includes net capital gain
Guide to Division 102
102-1 What this Division is about
Operative provisions
102-5 Assessable income includes net capital gain
102-10 How to work out your net capital loss
102-15 How to apply net capital losses
102-20 Ways you can make a capital gain or a capital loss
102-22 Amounts of capital gains and losses
102-23 CGT event still happens even if gain or loss disregarded
102-25 Order of application of CGT events
102-30 Exceptions and modifications
Division 103—General rules
Guide to Division 103
103-1 What this Division is about
Operative provisions
103-5 Giving property as part of a transaction
103-10 Entitlement to receive money or property
103-15 Requirement to pay money or give property
103-20 Amounts to be expressed in Australian currency
103-25 Choices
Division 104—CGT events
Guide to Division 104
104-1 What this Division is about
104-5 Summary of the CGT events
Subdivision 104-A—Disposals
104-10 Disposal of a CGT asset: CGT event A1
Subdivision 104-B—Use and enjoyment before title passes
104-15 Use and enjoyment before title passes: CGT event B1
Subdivision 104-C—End of a CGT asset
104-20 Loss or destruction of a CGT asset: CGT event C1
104-25 Cancellation, surrender and similar endings: CGT event C2
104-30 End of option to acquire shares etc.: CGT event C3
Subdivision 104-D—Bringing into existence a CGT asset
104-35 Creating contractual or other rights: CGT event D1
104-40 Granting an option: CGT event D2
104-45 Granting a right to income from mining: CGT event D3
Subdivision 104-E—Trusts
104-55 Creating a trust over a CGT asset: CGT event E1
104-60 Transferring a CGT asset to a trust: CGT event E2
104-65 Converting a trust to a unit trust: CGT event E3
104-70 Capital payment for trust interest: CGT event E4
104-75 Beneficiary becoming entitled to a trust asset: CGT event E5
104-80 Disposal to beneficiary to end income right: CGT event E6
104-85 Disposal to beneficiary to end capital interest: CGT event E7
104-90 Disposal by beneficiary of capital interest: CGT event E8
104-95 Making a capital gain
104-100 Making a capital loss
104-105 Creating a trust over future property: CGT event E9
Subdivision 104-F—Leases
104-110 Granting a lease: CGT event F1
104-115 Granting a long-term lease: CGT event F2
104-120 Lessor pays lessee to get lease changed: CGT event F3
104-125 Lessee receives payment for changing lease: CGT event F4
104-130 Lessor receives payment for changing lease: CGT event F5
Subdivision 104-G—Shares
104-135 Capital payment for shares: CGT event G1
104-140 Shifts in share values: CGT event G2
104-145 Liquidator declares shares worthless: CGT event G3
Subdivision 104-H—Special capital receipts
104-150 Forfeiture of deposit: CGT event H1
104-155 Receipt for event relating to a CGT asset: CGT event H2
Subdivision 104-I—Australian residency ends
104-160 Individual or company stops being resident: CGT event I1
104-165 Exception for individual who stops being resident
104-170 Trust stops being a resident trust: CGT event I2
Subdivision 104-J—Reversal of roll-overs
104-175 Company ceasing to be member of wholly-owned group after roll-over: CGT event J1
104-180 Sub-group break-up
Subdivision 104-K—Other CGT events
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
Division 106—Entity making the gain or loss
Guide to Division 106
106-1 What this Division is about
Subdivision 106-A—Partnerships
106-5 Partnerships
Subdivision 106-B—Bankruptcy and liquidation
106-30 Effect of bankruptcy
106-35 Effect of liquidation
Subdivision 106-C—Absolutely entitled beneficiaries
106-50 Absolutely entitled beneficiaries
Subdivision 106-D—Security holders
106-60 Acts by security holders
Division 108—CGT assets
Guide to Division 108
108-1 What this Division is about
Subdivision 108-A—What a CGT asset is
108-5 CGT assets
108-7 Interest in CGT assets as joint tenants
Subdivision 108-B—Collectables
108-10 Losses from collectables to be offset only against gains from collectables
108-15 Sets of collectables
108-17 Cost base of a collectable
Subdivision 108-C—Personal use assets
108-20 Losses from personal use assets must be disregarded
108-25 Sets of personal use assets
108-30 Cost base of a personal use asset
Subdivision 108-D—Separate CGT assets
Guide to Subdivision 108-D
108-50 What this Subdivision is about
Operative provisions
108-55 When is a building a separate asset from land?
108-60 Plant that is part of a building is a separate asset
108-65 Land adjacent to land acquired before 20 September 1985
108-70 When is a capital improvement a separate asset?
108-75 Capital improvements to CGT assets for which a roll-over may be available
108-80 Deciding if capital improvements are related to each other
108-85 Meaning of improvement threshold
Division 109—Acquisition of CGT assets
Guide to Division 109
109-1 What this Division is about
Subdivision 109-A—Operative rules
109-5 General acquisition rules
109-10 When you acquire a CGT asset without a CGT event
109-15 Exception
Subdivision 109-B—Signposts to other acquisition rules
109-50 Effect of this Subdivision
109-55 Other acquisition rules
109-60 Acquisition rules outside this Part and Part 3-3
Division 110—Cost base and reduced cost base
Guide to Division 110
110-1 What this Division is about
110-5 Modifications to general rules
110-10 Rules about cost base not relevant for some CGT events
Subdivision 110-A—Cost base
110-25 General rules about cost base
110-30 Cost base of partnership assets
110-35 Incidental costs
Subdivision 110-B—Reduced cost base
110-55 General rules about reduced cost base
110-60 Reduced cost base for partnership assets
Division 112—Modifications to cost base and reduced cost base
Guide to Division 112
112-1 What this Division is about
112-5 Discussion of modifications
Subdivision 112-A—General modifications
112-15 General rule for replacement modifications
112-20 Market value substitution rule
112-25 Split, changed or merged assets
112-30 Apportionment rules on acquisition or disposal of part
112-35 Assumption of liability rule
Subdivision 112-B—Finding tables for special rules
112-40 Effect of this Subdivision
112-45 CGT events
112-50 Main residence
112-55 Effect of you dying
112-60 Bonus shares or units
112-65 Rights
112-70 Convertible notes
112-75 Employee share schemes
112-80 Leases
112-85 Options
112-87 Residency
112-90 An asset stops being a pre-CGT asset
112-95 Transfer of net capital losses within wholly-owned groups of companies
112-97 Modifications outside this Part and Part 3-3
Subdivision 112-C—Replacement-asset roll-overs
112-100 Effect of this Subdivision
112-105 What is a replacement-asset roll-over?
112-110 How is the cost base of the replacement asset modified?
112-115 Table of replacement-asset roll-overs
Subdivision 112-D—Same-asset roll-overs
112-135 Effect of this Subdivision
112-140 What is a same-asset roll-over?
112-145 How is the cost base of the asset modified?
112-150 Table of same-asset roll-overs
Division 114—Indexation of cost base
114-1 Indexing elements of cost base
114-5 When indexation relevant
114-10 Requirement for 12 months ownership
114-15 Cost base modifications
114-20 When expenditure is incurred for roll-overs
Division 116—Capital proceeds
Guide to Division 116
116-1 What this Division is about
116-5 General rules
116-10 Modifications to general rules
General rules
116-20 General rules about capital proceeds
Modifications to general rules
116-25 Table of modifications to the general rules
116-30 Market value substitution rule: modification 1
116-40 Apportionment rule: modification 2
116-45 Non-receipt rule: modification 3
116-50 Repaid rule: modification 4
116-55 Assumption of liability rule: modification 5
Special rules
116-65 Disposal of a CGT asset the subject of an option
116-70 Option requiring both acquisition and disposal
116-75 Special rule for CGT event C2 happening to a lease
116-80 Special rule if CGT asset is shares or an interest in a trust
116-85 Section 47A of 1936 Act applying to rolled-over asset
116-95 Company changes residence from an unlisted country
Division 118—Exemptions
Guide to Division 118
118-1 What this Division is about
Subdivision 118-A—General exemptions
Exempt assets
118-5 Cars, motor cycles and valour decorations
118-10 Collectables and personal use assets
118-12 Assets used to produce exempt income
118-13 Shares in a PDF
Exempt receipts
118-15 Exempt capital receipts
Anti-overlap provisions
118-20 Reducing capital gains if amount otherwise assessable
118-22 Eligible termination payments
118-25 Trading stock
118-30 Film copyright
118-35 Research and development
Exempt or loss-denying transactions
118-40 Expiry of a lease
118-42 Transfer of stratum units
118-45 Sale of rights to mine
118-55 Foreign currency hedging gains and losses
118-60 Gifts under Cultural Bequests Program
Subdivision 118-B—Main residence
Guide to Subdivision 118-B
118-100 What this Subdivision is about
118-105 Map of this Subdivision
Basic case and concepts
118-110 Basic case
118-115 Meaning of dwelling
118-120 Extension to adjacent land
118-125 Meaning of ownership period
118-130 Meaning of ownership interest in land or a dwelling
Rules that may extend the exemption
118-135 Moving into a dwelling
118-140 Changing main residences
118-145 Absences
118-150 If you build, repair or renovate a dwelling
118-155 Where individual referred to in section 118-150 dies
118-160 Destruction of dwelling and sale of land
Rules that may limit the exemption
118-165 Separate CGT event for adjacent land or other structures
118-170 Spouse having different main residence
118-175 Dependent child having different main residence
118-180 Acquisition of dwelling from company or trust on marriage breakdown—roll-over provision applying
Partial exemption rules
118-185 Partial exemption where dwelling was your main residence during part only of ownership period
118-190 Use of dwelling for producing assessable income
118-192 Special rule for first use to produce income
Dwellings acquired from deceased estates
118-195 Dwelling acquired from a deceased estate
118-200 Partial exemption for deceased estate dwellings
118-205 Adjustment if dwelling inherited from deceased individual
118-210 Trustee acquiring dwelling under will
Subdivision 118-C—Goodwill
118-250 Exempting part of a capital gain attributable to goodwill
118-255 Exception
118-260 Meaning of business exemption threshold
Subdivision 118-D—Insurance and superannuation
118-300 Insurance policies
118-305 Superannuation
118-310 RSA’s
Subdivision 118-E—Units in pooled superannuation trusts
118-350 Units in pooled superannuation trusts
Division 121—Record keeping
Guide to Division 121
121-10 What this Division is about
Operative provisions
121-20 What records you must keep
121-25 How long you must retain the records
121-30 Exceptions
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Part 3-3—Capital gains and losses: special topics
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Division 122—Roll-over for the disposal of assets to, or the creation of assets in, a wholly-owned company
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Guide to Division 122
122-1 What this Division is about
Subdivision 122-A—Disposal or creation of assets by individual to a wholly-owned company
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Guide to Subdivision 122-A
122-5 What this Subdivision is about
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When is a roll-over available
122-15 Disposal or creation of assets—wholly-owned company
122-20 What you receive for the trigger event
122-25 Other requirements to be satisfied
122-35 What if the company undertakes to discharge a liability (disposal case)
122-37 Rules for working out what a liability in respect of an asset is
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Replacement-asset roll-over if you dispose of a CGT asset
122-40 Disposal of a CGT asset
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Replacement-asset roll-over if you dispose of all the assets of a business
122-45 Disposal of all the assets of a business
122-50 All assets acquired on or after 20 September 1985
122-55 All assets acquired before 20 September 1985
122-60 Assets acquired before and after 20 September 1985
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Replacement-asset roll-over for a creation case
122-65 Creation of asset
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Same-asset roll-over consequences for the company (disposal case)
122-70 Consequences for the company (disposal case)
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Same-asset roll-over consequences for the company (creation case)
122-75 Consequences for the company (creation case)
Subdivision 122-B—Disposal or creation of assets by partners to a wholly-owned company
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Guide to Subdivision 122-B
122-120 What this Subdivision is about
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When is a roll-over available
122-125 Disposal or creation of assets—wholly-owned company
122-130 What the partners receive for the trigger event
122-135 Other requirements to be satisfied
122-140 What if the company undertakes to discharge a liability (disposal case)
122-145 Rules for working out what a liability in respect of an interest in an asset is
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Replacement-asset roll-over if partners dispose of a CGT asset
122-150 Capital gain or loss disregarded
122-155 Disposal of post-CGT or pre-CGT interests
122-160 Disposal of both post-CGT and pre-CGT interests
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Replacement-asset roll-over if the partners dispose of all the assets of a business
122-170 Capital gain or loss disregarded
122-175 Other consequences
122-180 All interests acquired on or after 20 September 1985
122-185 All interests acquired before 20 September 1985
122-190 Interests acquired before and after 20 September 1985
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Replacement-asset roll-over for a creation case
122-195 Creation of asset
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Same-asset roll-over consequences for the company (disposal case)
122-200 Consequences for the company (disposal case)
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Same-asset roll-over consequences for the company (creation case)
122-205 Consequences for the company (creation case)
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Division 124—Replacement-asset roll-overs
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Guide to Division 124
124-1 What this Division is about
124-5 How to find your way around this Division
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Subdivision 124-A—General rules
124-10 Your ownership of one CGT asset ends
124-15 Your ownership of more than one CGT asset ends
Subdivision 124-B—Asset compulsorily acquired, lost or destroyed
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When a roll-over is available
124-70 Events giving rise to a roll-over
124-75 Other requirements if you receive money
124-80 Other requirements if you receive an asset
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The consequences of a roll-over being available
124-85 Consequences for receiving money
124-90 Consequences for receiving an asset
124-95 You receive both money and an asset
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Subdivision 124-C—Statutory licences
124-140 Renewal or extension of a statutory licence
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Subdivision 124-D—Strata title conversion
124-190 Strata title conversion
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Subdivision 124-E—Exchange of shares or units
124-240 Exchange of shares in the same company
124-245 Exchange of units in the same unit trust
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Subdivision 124-F—Exchange of rights or options
124-295 Exchange of rights or option to acquire shares in a company
124-300 Exchange of rights or option to acquire units in a unit trust
Subdivision 124-G—Exchange of shares in one company for shares in another company
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Guide to Subdivision 124-G
124-350 What this Subdivision is about
124-355 Summary of rules
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Disposal case
124-360 Disposal of shares in one company for shares in another one
124-365 Other requirements to be satisfied
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Redemption or cancellation case
124-370 Redemption or cancellation of shares in one company for shares in another one
124-375 Other requirements to be satisfied
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Rules applying to both cases
124-380 Requirements to be satisfied in both cases
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Consequences for the interposed company
124-385 Consequences for the interposed company
Subdivision 124-H—Exchange of units in a unit trust for shares in a company
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Guide to Subdivision 124-H
124-435 What this Subdivision is about
124-440 Summary of rules
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Disposal case
124-445 Disposal of units in a unit trust for shares in a company
124-450 Other requirements to be satisfied
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Redemption or cancellation case
124-455 Redemption or cancellation of units in a unit trust for shares in a company
124-460 Other requirements to be satisfied
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Rules applying to both cases
124-465 Requirements to be satisfied in both cases
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Consequences for the company
124-470 Consequences for the company
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Subdivision 124-I—Conversion of a body to an incorporated company
124-520 Conversion of a body to an incorporated company
Subdivision 124-J—Crown leases
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Guide to Subdivision 124-J
124-570 What this Subdivision is about
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Operative provisions
124-575 Extension or renewal of Crown lease
124-580 Meaning of Crown lease
124-585 Original right differs in area from new right
124-590 Part of original right excised
124-595 Treating parts of new right as separate assets
124-600 What is the roll-over?
124-605 Change of lessor
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Subdivision 124-K—Plant
124-655 Roll-over for depreciable plant
124-660 Right granted to associate
Subdivision 124-L—Prospecting and mining entitlements
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Guide to Subdivision 124-L
124-700 What this Subdivision is about
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Operative provisions
124-705 Extension or renewal of prospecting or mining entitlement
124-710 Meaning of prospecting entitlement and mining entitlement
124-715 Original entitlement differs in area from new entitlement
124-720 Part of original entitlement excised
124-725 Treating parts of new entitlement as separate assets
124-730 What is the roll-over?
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Division 126—Same-asset roll-overs
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Guide to Division 126
126-1 What this Division is about
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Subdivision 126-A—Marriage breakdown
126-5 CGT event involving spouses
126-15 CGT event involving company or trustee
126-20 Subsequent CGT event happening to roll-over asset where transferor was a CFC or a non-resident trust
Subdivision 126-B—Companies in the same wholly-owned group
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Guide to Subdivision 126-B
126-40 What this Subdivision is about
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Operative provisions
126-45 Roll-over for members of wholly-owned group
126-50 Requirements for roll-over
126-55 When there is a roll-over
126-60 Consequences of roll-over
126-65 Choosing for no roll-over in loss situation
126-70 Loss disregarded if intention not realised
126-75 Originating company is a CFC
126-80 Roll-over asset is an interest in a CFC or FIF
126-85 Effect of roll-over on certain liquidations
Subdivision 126-C—Changes to trust deeds
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Guide to Subdivision 126-C
126-125 What this Subdivision is about
126-130 Changes to trust deeds
126-135 Consequences of roll-over
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Division 128—Effect of death
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Guide to Division 128
128-1 What this Division is about
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General rules
128-10 Capital gain or loss when you die is disregarded
128-15 Effect on the legal personal representative or beneficiary
128-20 When does an asset pass to a beneficiary?
128-25 The beneficiary is a trustee of a superannuation fund etc.
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Special rules for joint tenants
128-50 Joint tenants
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Division 130—Investments
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Guide to Division 130
130-1 What this Division is about
Subdivision 130-A—Bonus shares and units
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Guide to Subdivision 130-A
130-15 Acquisition time and cost base of bonus equities
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Operative provisions
130-20 Issue of bonus shares or units
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Subdivision 130-B—Rights
130-40 Exercise of rights
130-45 Timing rules
130-50 Application to options
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Subdivision 130-C—Convertible notes
130-60 Shares or units acquired by converting a convertible note
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Subdivision 130-D—Employee share schemes
130-80 Share or right acquired under employee share scheme
130-83 Qualifying shares and qualifying rights
130-85 Share or right acquired under employee share scheme involving your associate
130-90 Share or right acquired under an employee share trust
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Division 132—Leases
132-1 Lessee incurs expenditure to get lease term varied or waived
132-5 Lessor pays lessee for improvements
132-10 Grant of a long-term lease
132-15 Lessee of land acquires reversionary interest of lessor
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Division 134—Options
134-1 Exercise of options
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Division 136—Non-residents
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Guide to Division 136
136-1 What this Division is about
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Subdivision 136-A—Making a capital gain or loss
136-5 What if you are a non-resident just before a CGT event
136-10 Making a capital gain or loss from most CGT events
136-15 Making a capital gain or loss from CGT events D1 and E9
136-20 Those events you cannot make a capital gain or loss from
136-25 When an asset has the necessary connection with Australia
136-30 Reducing a capital gain or loss from a business asset
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Subdivision 136-B—Becoming a resident
136-40 Individual or company becomes resident
136-45 Trust becomes a resident trust
136-50 CFC becomes an Australian resident
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Division 140—Share value shifting
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Guide to Division 140
140-1 What this Division is about
140-5 Map of this Division
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Subdivision 140-A—When is there share value shifting?
140-10 Shifts in share values
140-15 What is a share value shift
140-20 When is an entity a controller (for CGT purposes) of a company?
140-22 When an entity has an associate-inclusive control interest
140-25 When is there a material decrease in the value of a share?
140-30 Interests in shares etc.
Subdivision 140-B—Consequences of share value shifting
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Guide to Subdivision 140-B
140-45 What this Subdivision is about
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Different consequences where share value shift is neutral
140-50 What if the share value shift is neutral for each shareholder?
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Value shifted to shares acquired on or after 20 September 1985
140-55 Making a capital gain
140-60 Cost base adjustment for shares decreasing in value
140-65 Cost base adjustment for shares increasing in value
140-70 Gain referable to fall in value of shares owned by others
140-75 Gain referable to fall in value of shares owned by the entity
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Value shifted to shares acquired before 20 September 1985
140-90 Making a capital gain
140-95 Adjustments to cost base and reduced cost base
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Division 149—When an asset stops being a pre-CGT asset
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Subdivision 149-A—Key concepts
149-10 What is a pre-CGT asset?
149-15 Majority underlying interests in a CGT asset
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Subdivision 149-B—When asset of non-public entity stops being a pre-CGT asset
149-25 Which entities are affected
149-30 Effects if asset no longer has same majority underlying ownership
149-35 Cost base elements of asset that stops being a pre-CGT asset
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Subdivision 149-C—When asset of public entity stops being a pre-CGT asset
149-50 Which entities are affected
149-55 Entity to determine periodically whether asset still has same majority underlying ownership
149-60 What the determination must show
149-65 Effects of not making the determination
149-70 Effects if asset no longer has same majority underlying ownership
149-75 Cost base elements of asset that stops being a pre-CGT asset
149-80 No further determination needed after asset stops being a pre-CGT asset
Subdivision 149-D—How to treat holdings of less than 1% in certain entities
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Guide to Subdivision 149-D
149-100 What this Subdivision is about
149-105 Basic principles
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Special tracing rules for certain companies and publicly traded unit trusts
149-110 Holdings of less than 1% in the entity
149-115 Holdings of less than 1% in interposed company or unit trust
149-120 Notional single shareholder or unitholder of head entity
149-125 Notional single shareholder or unitholder of interposed company or trust
149-130 Notional shareholder taken to have minimum rights to distributions
149-135 Income and capital unitholding of less than 1%
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When the rules in this Subdivision do not apply
149-140 If company or unit trust would not otherwise pass the continuity of ownership test
Subdivision 149-E—How to treat certain interposed funds, companies and government bodies
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Guide to Subdivision 149-E
149-145 What this Subdivision is about
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Special tracing rules for certain companies and publicly traded unit trusts
149-150 When certain funds, companies or government bodies are taken to have rights to capital, dividends or other income
149-155 Limits on tracing through interposed fund or body
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Subdivision 149-F—How to treat a “demutualised” public entity
149-165 Members treated as having underlying interests in assets until demutualisation
149-170 Effect of demutualisation of interposed company
Subdivision 165-CA—Applying net capital losses of earlier income years
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Guide to Subdivision 165-CA
165-93 What this Subdivision is about
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Operative provisions
165-96 When a company cannot apply a net capital loss
Subdivision 165-CB—Working out the net capital gain and the net capital loss for the income year of the change
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Guide to Subdivision 165-CB
165-99 What this Subdivision is about
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When a company must work out its net capital gain and net capital loss under this Subdivision
165-102 On a change of ownership, or of control of voting power, unless the company carries on the same business
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Working out the company’s net capital gain and net capital loss
165-105 First, divide the income year into periods
165-108 Next, calculate the notional net capital gain or notional net capital loss for each period
165-111 How to work out the company’s net capital gain
165-114 How to work out the company’s net capital loss
Subdivision 165-C—Deducting bad debts
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Guide to Subdivision 165-C
165-117 What this Subdivision is about
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Operative provisions
165-120 To deduct a bad debt
165-123 Company must maintain the same owners
165-126 Alternatively, company must carry on same business
165-129 Same people must control the voting power, or company must carry on same business
165-132 When tax losses resulting from bad debts cannot be deducted
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Subdivision 166-C—Deducting bad debts
166-40 How Subdivision 165-C applies to a listed public company
166-45 How Subdivision 165-C applies to a 100% subsidiary of a listed public company
166-50 Companies can choose that this Subdivision is not to apply to them
Subdivision 170-B—Transfer of net capital losses within wholly-owned groups of companies
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Guide to Subdivision 170-B
170-101 What this Subdivision is about
170-105 Basic principles for transferring a net capital loss
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Effect of transferring a net capital loss
170-110 When a company can transfer a net capital loss
170-115 Who can apply transferred loss
170-120 Gain company is taken to have made transferred loss
170-125 Tax treatment of consideration for transferred tax loss
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Conditions for transfer
170-130 Companies must be in existence and members of the same wholly-owned group
170-135 The loss company
170-140 The gain company
170-145 Maximum amount that can be transferred
170-150 Transfer by written agreement
170-155 Losses must be transferred in order they are made
170-160 Gain company cannot transfer transferred net capital loss
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Effect of agreement to transfer more than can be transferred
170-165 Agreement transfers as much as can be transferred
170-170 Amendment of assessments
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Effect of transfer on cost base of equity or debt interest held by company in the same wholly-owned group
170-175 Direct and indirect interests in the loss company
170-180 Direct and indirect interests in the gain company
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Subdivision 175-CA—Tax benefits from unused net capital losses of earlier income years
175-40 When Commissioner can disallow net capital loss of earlier income year
175-45 First case: capital gain injected into company because of available net capital loss
175-50 Second case: someone else obtains a tax benefit because of net capital loss available to company
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Subdivision 175-CB—Tax benefits from unused capital losses of the current year
175-55 When Commissioner can disallow capital loss of current year
175-60 Capital gain injected into company because of available capital loss
175-65 Capital loss injected into company because of available capital gain
175-70 Someone else obtains a tax benefit because of capital loss or gain available to company
175-75 Net capital loss resulting from disallowed capital losses
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Subdivision 175-C—Tax benefits from unused bad debt deductions
175-80 When Commissioner can disallow deduction for bad debt
175-85 First case: income or capital gain injected into company because of available bad debt
175-90 Second case: someone else obtains a tax benefit because of bad debt deduction available to company
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Subdivision 175-D—Shareholding interest in the company
175-95 When a person has a shareholding interest in the company
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Division 373—Intellectual property
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Guide to Division 373
373-1 What this Division is about
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Subdivision 373-A—Deductions for registering items of intellectual property
373-5 Expenditure incurred in registering an item
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Subdivision 373-B—Deductions for capital expenditure on intellectual property
373-10 Conditions for deduction
373-15 Meaning of item of intellectual property
373-20 How much you can deduct
373-25 Meaning of unrecouped expenditure
373-30 Meaning of expenditure on the item
373-35 Effective life of intellectual property
Subdivision 373-C—Partial realisation of item of intellectual property
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Guide to Subdivision 373-C
373-40 What this Subdivision is about
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Operative provisions
373-45 Amount arising from a partial realisation of the item
373-50 How to work out the effects of the partial realisation
373-55 Item of intellectual property left after partial realisation
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Subdivision 373-D—Balancing adjustments
373-60 When balancing adjustment is required
373-65 How to do the adjustment
373-70 Meaning of termination value
373-75 Meaning of written down value
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Subdivision 373-E—Application of the Common rules
373-80 Application of Common rules in Division 41
373-85 Common rule 1 (roll-over relief for related entities)
Subdivision 373-F—Adjustments affecting your deductions under this Division
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Adjusting the amount you can deduct
373-90 Benefits from rights exercised outside Australia
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Increasing your unrecouped expenditure on the item
373-95 Expenditure incurred in obtaining the surrender of a licence
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Adjusting your expenditure on the item
373-100 If the item is acquired in a non-arm’s length transaction
373-105 Some cases where the item is a percentage interest of another item, or is a licence
Subdivision 387 C—Establishing horticultural plants
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Guide to Subdivision 387 C
387 160 What this Subdivision is about
387 162 Simplified outline
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Deductions
387 165 Deduction for expenditure relating to establishment of a horticultural plant
387 170 Meaning of horticultural plant, horticulture business, horticulture and commercial horticulture
387 175 Meaning of effective life
387 177 Determination of effective life by the Commissioner
387 180 Immediate write off for a horticultural plant with an effective life under 3 years
387 185 Deduction for a horticultural plant with an effective life of 3 years or more
387 190 Extra deduction for income year of destruction of a horticultural plant with an effective life of 3 years or more
387 195 Expenditure you cannot deduct
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Change of ownership
387 205 Getting tax information if you acquire a horticultural plant (regardless of its effective life)
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Lessees and licensees of land with horticultural plants are treated as owners
387 210 Lessees and licensees of land are treated as if they own horticultural plants on the land
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Division 392—Long term averaging of primary producers’ tax liability
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Guide to Division 392
392 1 What this Division is about
392 5 Overview of averaging process
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Subdivision 392 A—Is your income tax affected by averaging?
392 10 Individuals who carry on a primary production business
392 15 Meaning of basic taxable income
392 20 Trust beneficiaries taken to be carrying on primary production business
392 25 Choosing not to have your income tax averaged
Subdivision 392 B—What kind of averaging adjustment must you make?
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Guide to Subdivision 392 B
392 30 What this Subdivision is about
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Tax offset or extra income tax
392 35 Will you get a tax offset or have to pay extra income tax?
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How to work out the comparison rate
392 40 Identify income years for averaging your basic taxable income
392 45 Work out your average income for those years
392 50 Work out the income tax on your average income at basic rates
392 55 Work out the comparison rate
Subdivision 392 C—How big is your averaging adjustment?
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Guide to Subdivision 392 C
392 60 What this Subdivision is about
392 65 What your averaging adjustment reflects
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Your gross averaging amount
392 70 Working out your gross averaging amount
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Your averaging adjustment
392 75 Working out your averaging adjustment
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How to work out your averaging component
392 80 Work out your taxable primary production income
392 85 Work out your taxable non primary production income
392 90 Work out your averaging component
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Subdivision 392 D—Effect of permanent reduction of your basic taxable income
392 95 You are treated as if you had not carried on business before
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Division 400—Environmental impact assessment and environmental protection
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Guide to Division 400
400 1 What this Division is about
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Subdivision 400 A—Deducting expenditure on environmental impact assessment
400 15 Deducting your expenditure on environmental impact assessment of your project
400 20 Limits on deductions
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Subdivision 400 B—Deducting expenditure on environmental protection activities
400 55 Deducting your expenditure on environmental protection activities
400 60 Meaning of environmental protection activities
400 65 Limits on deductions
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Subdivision 400 C—Property taken to be used for producing assessable income
400 100 Use for environmental impact assessment or environmental protection activities taken to be use for purpose of producing assessable income
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Division 405—Above average special professional income of authors, inventors, performing artists, production associates and sportspersons
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Guide to Division 405
405 1 What this Division is about
405 5 Special rate of income tax on your above average special professional income
405 10 Overview of the Division
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Subdivision 405 A—Above average special professional income
405 15 When do you have above average special professional income?
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Subdivision 405 B—Assessable professional income
405 20 What you count as assessable professional income
405 25 Meaning of special professional, performing artist, production associate, sportsperson and sporting competition
405 30 What you cannot count as assessable professional income
405 35 Limits on counting amounts as assessable professional income
405 40 Joint author or inventor treated as sole author or inventor
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Subdivision 405 C—Taxable professional income and average taxable professional income
405 45 Working out your taxable professional income
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405 50 Working out your average taxable professional income
Schedule 2—CGT (new Parts 3-1, 3-3 and 3-5)
Part 1—Amendment of the Income Tax (Transitional Provisions) Act 1997
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Part 3-1—Capital gains and losses: general topics
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Division 102—Application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997
102-1 Application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997
102-5 Working out capital gains and capital losses
102-15 Applying net capital losses
102-20 Net capital gains, capital gains and capital losses for income years before 1998 99
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Division 104—CGT events
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Subdivision 104-B—Use and enjoyment before title passes
104-15 Use and enjoyment before title passes
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Subdivision 104-E—Trusts
104-70 Capital payment before 18 December 1986 for trust interest
104-72 Application to Divisions 10C and 10D of Part III of the Income Tax Assessment Act 1936
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Subdivision 104-J—Reversal of roll-overs
104-175 Company ceasing to be member of wholly-owned group after roll-over
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Subdivision 104-K—Other CGT events
104-210 Bankrupt pays amount in relation to debt
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Division 108—CGT assets
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Subdivision 108-A—What a CGT asset is
108-5 CGT assets
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Subdivision 108-B—Collectables
108-15 Sets of collectables
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Subdivision 108-D—Separate CGT assets
108-75 Capital improvements to CGT assets for which a roll-over may be available
108-85 Improvement threshold
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Division 109—Acquisition of CGT assets
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Subdivision 109-A—Operative rules
109-5 General acquisition rules
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Division 110—Cost base and reduced cost base
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Subdivision 110-A—Cost base
110-35 Incidental costs
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Division 112—Modifications to cost base and reduced cost base
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Subdivision 112-A—General rules
112-20 Market value substitution rule
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Division 118—Exemptions
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Subdivision 118-A—General exemptions
118-10 Interests in collectables
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Subdivision 118-B—Main residence
118-195 Exemption—dwelling acquired from deceased estate
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Subdivision 118-C—Goodwill
118-260 Business exemption threshold
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Division 121—Record keeping
121-15 Retaining records under Division 121
121-25 Records for mergers between qualifying superannuation funds
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Part 3-3—Capital gains and losses: special topics
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Division 126—Same asset roll-overs
126-100 Merger of qualifying superannuation funds
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Division 128—Effect of death
128-15 Effect on the legal personal representative or beneficiary
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Division 130—Investments
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Subdivision 130-A—Bonus shares and units
130-20 Issue of bonus shares or units
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Subdivision 130-B—Rights
130-40 Exercise of rights
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Subdivision 130-C—Convertible notes
130-60 Shares or units acquired by converting a convertible note
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Subdivision 130-D—Employee share schemes
130-95 Application of Division
130-100 Cost base modification
130-105 Time of acquisition
130-110 Disposals by trustees
130-115 Deceased estates
130-120 Amendment of assessments
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Division 134—Options
134-1 Exercise of options
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Division 136—Non-residents
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Subdivision 136-A—Making a capital gain or loss
136-25 When an asset has the necessary connection with Australia
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Division 140—Share value shifting
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Subdivision 140-A—When is there share value shifting?
140-7 Pre-1994 share value shifts irrelevant
140-15 Off-market buy backs
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Division 149—When an asset stops being a pre-CGT asset
149-5 Assets that stopped being pre-CGT assets under old law
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Part 3-5—Corporate taxpayers and corporate distributions
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Division 165—Income tax consequences of changing ownership or control of a company
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Subdivision 165-CA—Applying net capital losses of earlier income years
165-95 Application of Subdivision 165-CA of the Income Tax Assessment Act 1997
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Subdivision 165-CB—Working out the net capital gain and the net capital loss for the income year of the change
165-105 Application of Subdivision 165-CB of the Income Tax Assessment Act 1997
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Division 170—Treatment of company groups for income tax purposes
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Subdivision 170-B—Transfer of net capital losses within wholly-owned groups of companies
170-101 Application of Subdivision 170-B of the Income Tax Assessment Act 1997
170-175 Direct and indirect interests in the loss company
170-180 Direct and indirect interests in the gain company
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Division 175—Use of a company’s losses, deductions or bad debts to avoid income tax
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Subdivision 175-CA—Tax benefits from unused net capital losses of earlier income years
175-40 Application of Subdivision 175-CA of the Income Tax Assessment Act 1997
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Subdivision 175-CB—Tax benefits from unused capital losses of the current year
175-55 Application of Subdivision 175-CB of the Income Tax Assessment Act 1997
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Chapter 6—The Dictionary
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Part 6-1—Concepts and topics
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Division 960—General
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Subdivision 960-M—Indexation
960-262 Application of Subdivision 960-M of the Income Tax Assessment Act 1997
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960-275 Indexation factor
Part 2—Consequential amendment of the Income Tax Assessment Act 1997
42-395 How CGT applies to pooled plant
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Subdivision 166-B—Working out the taxable income, tax loss, net capital gain and net capital loss for the income year of the change
175-25 Deduction injected into company because of available income or capital gain
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Working out a PDF’s net capital gain and net capital loss
195-25 Applying a PDF’s net capital losses
195-30 PDF cannot transfer net capital loss
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195-35 Net capital loss for year in which company becomes a PDF
Part 3—Consequential amendment of the Income Tax Assessment Act 1936
102AAZB General modifications—CGT
124ZZD No net capital loss
159GZZZBC Capital gains adjustment
159GZZZBD Capital loss adjustment
159GZZZN Buy-back and cancellation disregarded for certain purposes
160ZNBA Application of this Division
160ZNTA Application of this Division
160ZZPJA Continued operation of Division
160ZZPZAA Continued operation of Division
160ZZRAAAA Continued operation of Division
160ZZZH Net capital losses
304 CGT rules are primary code for treatment of gains and losses
306 Treatment of CGT asset owned at the end of 30 June 1988
311 Exercise of rights
315 Options
408 Certain capital gains and losses disregarded
408A Certain events before commencing day ignored
409 Losses before 30 June 1990 to be disregarded
410 General modifications—CGT
414 Exercise of rights
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419 Modified application of Subdivision 126-B of the Income Tax Assessment Act 1997
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Part 4—Consequential amendment of other Acts
Australian Industry Development Corporation Act 1970
Bank Integration Act 1991
Civil Aviation Legislation Amendment Act 1995
Commonwealth Serum Laboratories Act 1961
Defence Act 1903
Federal Airports Corporation Act 1986
57D Capital gains tax
Financial Corporations (Transfer of Assets and Liabilities) Act 1993
18 Additional roll-over relief
19 For the receiving corporation, asset has necessary connection with Australia
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Schedule 2—Net capital losses and the Income Tax Assessment Act 1997
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Effect of transferring a net capital loss
170-110 When a corporation can transfer a net capital loss
170-115 Who can apply transferred loss
170-120 Gain company is taken to have made transferred loss
170-125 Tax treatment of consideration for transferred tax loss
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Conditions for transfer
170-128 Financial Corporations (Transfer of Assets and Liabilities) Act 1993 must apply to asset transfer from loss company to gain company
170-132 The loss year
170-133 The transfer year
170-135 The loss company
170-140 The gain company
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170-145 Maximum amount that can be transferred
Income Tax Rates Act 1986
Industry Research and Development Act 1986
Transport Legislation Amendment (Search and Rescue Service) Act 1997
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Schedule 3—Company bad debts
Part 1—Amendment of the Income Tax (Transitional Provisions) Act 1997
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Subdivision 165-C—Deducting bad debts
165-135 Application of Subdivision 165-C of the Income Tax Assessment Act 1997
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Division 166—Income tax consequences of changing ownership or control of a listed public company
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Subdivision 166-C—Deducting bad debts
166-40 Application of Subdivision 166-C of the Income Tax Assessment Act 1997
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Subdivision 175-C—Tax benefits from unused bad debt deductions
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175-40 Application of Subdivision 175-C of the Income Tax Assessment Act 1997
Part 2—Consequential amendment of the Income Tax Assessment Act 1997
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165-1 What this Division is about
Part 3—Consequential amendment of the Income Tax Assessment Act 1936
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Part 4—Consequential amendment of other Acts
Commonwealth Bank Sale Act 1995
Financial Corporations (Transfer of Assets and Liabilities) Act 1993
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Schedule 4—Intellectual property (new Division 373)
Part 1—Amendment of the Income Tax (Transitional Provisions) Act 1997
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Division 373—Intellectual property
373-1 Application of Division 373 of the Income Tax Assessment Act 1997
373-10 Application to item of intellectual property you owned before 1998-99
373-65 Effect on balancing adjustment if there has been roll-over relief under the old law only
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373-100 Item you acquired in a non-arm’s length transaction
Part 2—Consequential amendment of the Income Tax Assessment Act 1997
Part 3—Consequential amendment of the Income Tax Assessment Act 1936
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Schedule 5—Horticultural plants (new Subdivision 387-C)
Part 1—Amendment of the Income Tax (Transitional Provisions) Act 1997
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Subdivision 387 C—Establishing horticultural plants
387 160 Application of Subdivision 387 C of the Income Tax Assessment Act 1997
387 175 Saving of determinations specifying periods for effective life
387 190 Deduction for destruction of a horticultural plant first used for commercial horticulture before 1998 99 income year
387 195 Treatment of deductions under Division 10F of Part III of the Income Tax Assessment Act 1936
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387 205 New owners’ requests for tax information from last owners of horticultural plants
Part 2—Consequential amendment of the Income Tax Assessment Act 1997
Part 3—Consequential amendment of the Income Tax Assessment Act 1936
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Subdivision AA—Application
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124ZZEA This Division does not apply after 1997 98 year of income
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Schedule 6—Averaging primary producers’ tax liability (new Division 392)
Part 1—Amendment of the Income Tax (Transitional Provisions) Act 1997
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Division 392—Long term averaging of primary producers’ tax liability
392 1 Application of Division 392 of the Income Tax Assessment Act 1997
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392 25 Transitional provision—election under section 158A of the Income Tax Assessment Act 1936
Part 2—Consequential amendment of the Income Tax Assessment Act 1997
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4 25 Special provisions for working out your basic income tax liability
Part 3—Consequential amendment of the Income Tax Assessment Act 1936
Part 4—Consequential amendment of the Income Tax Rates Act 1986
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12A Rate of extra income tax for primary producers
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Schedule 7— Environment (new Division 400)
Part 1—Amendment of the Income Tax (Transitional Provisions) Act 1997
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Division 400—Environmental impact assessment and environmental protection
400 10 Application of Subdivision 400 A of the Income Tax Assessment Act 1997
400 20 Deductions under section 82BB of the Income Tax Assessment Act 1936
400 50 Application of Subdivision 400 B of the Income Tax Assessment Act 1997
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400 100 Application of Subdivision 400 C of the Income Tax Assessment Act 1997
Part 2—Consequential amendment of the Income Tax Assessment Act 1997
Part 3—Consequential amendment of the Income Tax Assessment Act 1936
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Schedule 8—Above-average special professional income (new Division 405)
Part 1—Amendment of the Income Tax (Transitional Provisions) Act 1997
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Division 405—Above average special professional income of authors, inventors, performing artists, production associates and sportspersons
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405 1 Application of Division 405 of the Income Tax Assessment Act 1997
Part 2—Consequential amendment of the Income Tax Assessment Act 1936
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158BA Division 16A does not apply to 1998 99 or later year of income
Part 3—Consequential amendment of the Income Tax Rates Act 1986
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Schedule 9—Consequential amendments relating to indexation
Part 1—Amendment of the Income Tax (Transitional Provisions) Act 1997
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42-70 Adjustment: acquiring a car at a discount
Part 2—Consequential amendment of the Income Tax Assessment Act 1997
Part 3—Consequential amendment of the Income Tax Assessment Act 1936
Part 4—Application
Schedule 10—Amendment of Chapter 6 (the Dictionary) of the Income Tax Assessment Act 1997
Subdivision 960-M—Indexation
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Guide to Subdivision 960-M
960-260 What this Subdivision is about
960-265 The provisions for which indexation is relevant
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Operative provisions
960-270 Indexing amounts
960-275 Indexation factor
960-280 Index number