Commonwealth Numbered Acts

TAXATION LAWS AMENDMENT ACT 1992No. 35, 1992 - SECT 35

35. After section 122JF of the Principal Act the following section is
inserted: Roll-over relief where CGT roll-over relief allowed under section
160ZZM, 160ZZMA, 160ZZN, 160ZZNA or 160ZZO or where election for roll-over
relief made under section 122R (Roll-over relief where CGT roll-over relief
allowed)

"122JG.(1) This section applies to the disposal of property by a taxpayer (in
this section called the 'transferor') to another taxpayer (in this section
called the 'transferee') if:

   (a)  either:

        (i)    in a case where the transferor is not a partnership - section
               160ZZM, 160ZZMA, 160ZZN or 160ZZO applies to the disposal of
               the property by the transferor; or

        (ii)   if the transferor is a partnership - the property is
               partnership property of the partnership and section 160ZZNA
               applies to the corresponding disposal, by all of the partners
               in the partnership, of their interests in the property; and

   (b)  deductions have been allowed or are allowable under this Subdivision
        to the transferor in respect of the property. (Roll-over relief where
        joint election made under section 122R)

"(2) This section also applies if a joint election for roll-over relief is
made under subsection 122R(2A) by both the transferor and the transferee
referred to in that subsection in relation to the disposal of property. (No
balancing charges or deductions)

"(3) Section 122K (which deals with balancing charges and deductions) does not
apply to the disposal of the property by the transferor. (Transferee to
inherit certain characteristics from transferor)

"(4) This Subdivision and Subdivision C (to the extent to which it relates to
this Subdivision) apply as if:

   (a)  if any part of the expenditure of the transferor in respect of the
        property is allowable capital expenditure of the transferor - the
        transferee had acquired the property for a consideration equal to the
        amount worked out using the formula:
Transferor's - Transferor's deductions + Undeducted excess
  expenditure                                  amounts
where:
'Transferor's expenditure' means so much of the total expenditure of a capital
nature of the transferor in respect of the property as is allowable capital
expenditure of the transferor;
'Transferor's deductions' means the sum of the deductions allowed or allowable
to the transferor under this Subdivision in respect of so much of the
expenditure of a capital nature of the transferor in respect of the property
as is allowable capital expenditure of the transferor;
'Undeducted excess amounts' means the sum of the excess amounts referred to in
subsection (5) in respect of the property; and

   (b)  if no part of the expenditure of the transferor in respect of the
        property is allowable capital expenditure of the transferor - the
        transferee had acquired the property for nil consideration; and

   (c)  if the property is a quarrying or prospecting right or quarrying or
        prospecting information:

        (i)    a notice under section 122JD in respect of the acquisition of
               the property had been given to the Commissioner by the
               transferor and the transferee; and

        (ii)   the amount specified in the notice were the amount worked out
               under paragraph (a) of this subsection; and

        (iii)  subsections 122JD(2), 122JE(11) and 122JF(9) were not
               applicable to that notice; and

   (d)  if the property is not a quarrying or prospecting right or quarrying
        or prospecting information - subsection 122JE(10) were not applicable
        to the disposal of the property; and

   (e)  the reference in subparagraph 122JE(2)(a)(ii) to a year of income in
        respect of which a deduction has been allowed or is allowable, or,
        apart from the operation of subsection 122JE(5), would have been
        allowed or would be allowable, in respect of an amount of allowable
        capital expenditure of the transferee in respect of the property
        included a reference to a year of income in respect of which a
        deduction has been allowed or is allowable, or, apart from the
        operation of subsection 122JE(5), would have been allowed or would be
        allowable, in respect of allowable capital expenditure of:

        (i)    the transferor in respect of the property; or

        (ii)   if there have been 2 or more prior successive applications of
               this section - any of the prior successive transferors in
               respect of the property. (Transfer of subsection 122JE(9)
               excess amounts)

"(5) If, apart from this subsection, the following conditions are satisfied in
relation to a deduction allowable to the transferor under subsection 122JE(1)
in respect of the property:

   (a)  the deduction is allowable because of the application of subsection
        122JE(9);

   (b)  the deduction is in respect of an amount (in this subsection called
        the 'excess amount') of expenditure of a capital nature in respect of
        the property;

   (c)  the deduction is allowable for the year of income in which the
        disposal took place; then:

   (d)  the excess amount is taken, under subsection 122JE(9), to be a
        deduction that is allowable under subsection 122JE(1) to the
        transferee for the year of income in which the disposal took place;
        and

   (e)  a deduction is not allowable to the transferor under subsection
        122JE(1) in respect of the excess amount. (Transfer of subsection
        122JF(6) excess amounts)

"(6) If, apart from this subsection, the following conditions would have been
satisfied in relation to a contingent deduction allowable to the transferor
under subsection 122JF(1) in respect of the property:

   (a)  the deduction is allowable because of the application of subsection
        122JF(6);

   (b)  the deduction is in respect of an amount (in this subsection called
        the 'excess amount') of expenditure of a capital nature in respect of
        the property;

   (c)  the contingency is that the transferor had derived assessable income
        in the year of income in which the disposal took place or a subsequent
        year of income; then:

   (d)  the excess amount is taken, under subsection 122JF(6), to be a
        deduction that is allowable under subsection 122JF(1) to the
        transferee for:

        (i)    if the transferee derives assessable income in the year of
               income in which the disposal took place - that year of income;
               or

        (ii)   the first subsequent year of income in which the transferee
               derives assessable income; and

   (e)  a deduction is not allowable to the transferor under subsection
        122JF(1) in respect of the excess amount. (Inheritance of section
        122JF election)

"(7) If the transferor made an election under subsection 122JF(10) in respect
of expenditure on the property, the transferee is taken to have made an
election under subsection 122JF(10) in respect of expenditure on the property.
(Rule where no section 122JF election made)

"(8) If the transferor did not make an election under subsection 122JF(10) in
respect of expenditure on the property, the transferee is not entitled to make
an election under subsection 122JF(10) in respect of expenditure on the
property. (Recoupment of expenditure - consequential amendment of assessments)

"(9) Section 170 does not prevent the amendment at any time of an assessment
of the transferee where section 122T has applied to:

   (a)  the transferor in respect of the property; or

   (b)  if there have been 2 or more prior successive applications of this
        section - any of the prior successive transferors in respect of the
        property. (Disposal by transferee where no roll-over relief -
        inheritance of deductions)

"(10) If:

   (a)  after the disposal of the property to the transferee:

        (i)    the property is lost or destroyed; or

        (ii)   the transferee disposes of the property; or

        (iii)  the use of the property by the transferee for prescribed
               purposes or eligible purposes (within the meaning of section
               122K) is otherwise terminated; and

   (b)  in the case of a disposal by the transferee - this section does not
        apply to the disposal; then, for the purposes of the application of
        section 122K in relation to the loss, destruction, disposal or
        termination, the total of:

   (c)  the deductions allowed or allowable to the transferor under this
        Subdivision in relation to the property; and

   (d)  if there have been 2 or more prior successive applications of this
        section - the deductions allowed or allowable to the prior successive
        transferors under this Subdivision in relation to the property; are
        taken to have been deductions allowed or allowable to the transferee
        under this Subdivision in relation to the property. (Disposal by
        transferee where no roll-over relief - inheritance of total
        expenditure of a capital nature)

"(11) In spite of subsection (4), if:

   (a)  after the disposal of the property to the transferee:

        (i)    the property is lost or destroyed; or

        (ii)   the transferee disposes of the property; or

        (iii)  the use of the property by the transferee for prescribed
               purposes or eligible purposes (within the meaning of section
               122K) is otherwise terminated; and

   (b)  in the case of a disposal by the transferee - this section does not
        apply to the disposal; then, for the purposes of the application of
        section 122K in relation to the loss, destruction, disposal or
        termination, the total expenditure of a capital nature of the
        transferee in respect of the property is to be worked out as if the
        rule set out in subsection (12) had been applicable to:

   (c)  the disposal of the property by the transferor to the transferee; and

   (d)  if there have been 2 or more prior successive applications of this
        section - each prior successive disposal. (Rule referred to in
        subsection (11))

"(12) The rule referred to in subsection (11) is that the transferee had
acquired the property for a consideration equal to the total expenditure of a
capital nature of the transferor in respect of the property. (CGT roll-over
relief applies to motor vehicles)

"(13) For the purposes of this section, in addition to the effect that
sections 160ZZM, 160ZZMA, 160ZZN, 160ZZNA and 160ZZO have apart from this
subsection, these sections also have the effect that they would have if a
reference in those sections to an asset included a reference to a motor
vehicle of a kind mentioned in paragraph 82AF(2)(a).".