(1) There are 6 modifications to the general rules that may be relevant. The table in section 116- 25 lists which ones may be relevant to each CGT event listed in the table.
Explanation of modifications
(2) The first is a market value substitution rule. It is relevant if:
• you receive no capital proceeds from a CGT event; or
• some or all of the capital proceeds cannot be valued; or
• you did not deal at arm's length with another entity in connection with the event.
(3) The second is an apportionment rule. It is relevant if a payment you receive in connection with a transaction relates in part only to a CGT event.
Example: You sell 3 CGT assets for a total of $100,000. The $100,000 needs to be apportioned between the 3 assets.
(4) The third is a non-receipt rule. It is relevant if you do not receive, or are not likely to receive, some or all of the capital proceeds from a CGT event.
(5) The fourth is a repaid rule. It is relevant if you are required to repay some or all of the capital proceeds from a CGT event.
(6) The fifth is relevant only if another entity assumes a liability in connection with a CGT event.
(7) The sixth relates to misappropriation by an employee or agent. It is relevant if your employee or agent misappropriates all or part of the capital proceeds from a CGT event.
Note 1: Also, these provisions of the Income Tax Assessment Act 1936 modify capital proceeds:
(a) section 23B (undistributed FIF attribution income on disposal of an interest in a FIF);
(b) sections 159GZZZF and 159GZZZG (cancellation of shares in a holding company);
(c) sections 159GZZZQ and 159GZZZS (buy-backs of shares);
(d) sections 401, 422, 423 and 461 (CFCs).
Note 2: Section 230- 505 of this Act (Division 230 financial arrangement as consideration for provision or acquisition of a thing) also modifies capital proceeds.