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INCOME TAX ASSESSMENT ACT 1997 - SECT 104.175

Company ceasing to be member of wholly - owned group after roll - over: CGT event J1

  (1)   CGT event J1 happens if:

  (a)   there is a roll - over under Subdivision   126 - B for a * CGT event (the roll - over event ) that happens in relation to a * CGT asset (the roll - over asset ) involving 2 companies that are members of the same * wholly - owned group; and

  (b)   the company (the recipient company ) that owns the roll - over asset just after the roll - over stops being a 100% subsidiary of a company in the group in the circumstances set out in subsection   (2) or (3); and

  (c)   at the time of the roll - over, the recipient company was a * 100% subsidiary of:

  (i)   the other company involved in the roll - over event (the originating company ); or

  (ii)   another member of the same * wholly - owned group.

Note:   If the roll - over was under former section   160ZZO of the Income Tax Assessment Act 1936 , CGT event J1 does not happen if there would not have been a deemed disposal and re - acquisition under that Act: see section   104 - 175 of the Income Tax (Transitional Provisions) Act 1997 .

  (2)   This condition applies if there has been only one roll - over within the * wholly - owned group under Subdivision   126 - B involving the roll - over asset.

    The recipient company must stop, at a time (the break - up time ) when it still owns the roll - over asset, being a * 100% subsidiary of a member of the group (the ultimate holding company ) that is not a 100% subsidiary of any other member of the group at the time of the roll - over event.

  (3)   This condition applies if the roll - over event was the last in a series of * CGT events involving the roll - over asset and there was a roll - over within the * wholly - owned group under Subdivision   126 - B for all the events.

    The recipient company must stop, at a time (also the break - up time ) when it still owns the roll - over asset, being a * 100% subsidiary of another member of the group (also the ultimate holding company ) that was not a 100% subsidiary of any other member of the group at the time of the first of the events.

  (4)   The time of the event is the break - up time.

  (5)   The recipient company makes a capital gain if the roll - over asset's * market value (at the break - up time) is more than its * cost base. It makes a capital loss if that market value is less than its * reduced cost base.

Exceptions

  (6)   CGT event J1 does not happen if the conditions in section   104 - 180 or 104 - 182 are satisfied.

  (7)   A * capital gain or * capital loss the recipient company makes is disregarded if the roll - over asset is taken to have been * acquired by it before 20   September 1985 under Subdivision   126 - B (except where the roll - over asset has stopped being a * pre - CGT asset, for example, because of Division   149).

Note:   CGT event J1 does not happen to a demerged entity or a member of a demerger group if CGT event A1 or C2 happens to a demerging entity under a demerger: see section   125 - 160.

Acquisition rule

  (8)   The recipient company is taken to have * acquired the roll - over asset at the break - up time.

Cost base adjustment

  (9)   The first element of the recipient company's * cost base and * reduced cost base of the roll - over asset (just after the break - up time) is its * market value (at the break - up time).


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