Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 104.197

  (1)   CGT event J5 happens if you choose a small business roll - over under Subdivision   152 - E for a * CGT event that happens in relation to a * CGT asset in an income year and, by the end of the * replacement asset period:

  (a)   you have not * acquired a replacement asset (the replacement asset ), and have not incurred * fourth element expenditure in relation to a CGT asset (also the replacement asset ); or

  (b)   the replacement asset does not satisfy the conditions set out in subsection   (2).

Note:   You do not have to satisfy the basic conditions in Subdivision   152 - A for the gain in relation to CGT event J5 (see subsection   152 - 305(4)).

  (2)   The conditions are:

  (a)   the replacement asset must be your * active asset; and

  (b)   if the replacement asset is a * share in a company or an interest in a trust:

  (i)   you, or an entity * connected with you, must be a * CGT concession stakeholder in the company or trust; or

  (ii)   CGT concession stakeholders in the company or trust must have a * small business participation percentage in you of at least 90%.

Example:   Joseph owns 50% of the shares in Company A and Company B. He is therefore a CGT concession stakeholder in the companies: see section   152 - 60. The companies are connected with Joseph (see section   328 - 125) because he controls both of them.

  Company A owns land which it leases to Joseph for use in a business. It sells the land at a profit and buys shares in Company B.

  Subsection   (2) is satisfied for the shares because Joseph is connected with Company A and is a CGT concession stakeholder in Company B.

  (3)   The time of the event is at the end of the * replacement asset period.

  (4)   You make a capital gain equal to the amount of the * capital gain that you disregarded under Subdivision   152 - E.

  (5)   The * replacement asset period may be modified or extended as mentioned in section   104 - 190.