Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 152.10

             (1)  A * capital gain (except a capital gain from * CGT event K7) you make may be reduced or disregarded under this Division if the following basic conditions are satisfied for the gain:

                     (a)  a * CGT event happens in relation to a * CGT asset of yours in an income year;

Note:       This condition does not apply in the case of CGT event D1: see section 152- 12.

                     (b)  the event would (apart from this Division) have resulted in the gain;

                     (c)  at least one of the following applies:

                              (i)  you are a * small business entity for the income year;

                             (ii)  you satisfy the maximum net asset value test (see section 152-15);

                            (iii)  you are a partner in a partnership that is a small business entity for the income year and the CGT asset is an interest in an asset of the partnership;

                            (iv)  the conditions mentioned in subsection (1A) or (1B) are satisfied in relation to the CGT asset in the income year;

Note:       For determining whether an entity is a small business entity, see Subdivision 328-C (as affected by sections 152-48 and 152-78).

                     (d)  the CGT asset satisfies the active asset test (see section 152- 35).

Note:       This condition does not apply in the case of CGT event D1: see section 152- 12.

Passively held assets--affiliates and entities connected with you

          (1A)  The conditions in this subsection are satisfied in relation to the * CGT asset in the income year if:

                     (a)  your * affiliate, or an entity that is * connected with you, is a * small business entity for the income year; and

                     (b)  you do not carry on a * business in the income year (other than in partnership); and

                     (c)  if you carry on a business in partnership--the CGT asset is not an interest in an asset of the partnership; and

                     (d)  in any case--the small business entity referred to in paragraph (a) is the entity that, at a time in the income year, carries on the business (as referred to in subparagraph 152-40(1)(a)(ii) or (iii) or paragraph 152-40(1)(b)) in relation to the CGT asset.

Note 1:       The meaning of connected with is affected by section 152-78.

Note 2:       For determining whether an entity is a small business entity, see Subdivision 328-C (as affected by sections 152-48 and 152-78).

Note 3:       For businesses that are winding up, see section 152-49 and subsection 328-110(5).

Passively held assets--partnerships

          (1B)  The conditions in this subsection are satisfied in relation to the * CGT asset in the income year if:

                     (a)  you are a partner in a partnership in the income year; and

                     (b)  the partnership is a * small business entity for the income year; and

                     (c)  you do not carry on a * business in the income year (other than in partnership); and

                     (d)  the CGT asset is not an interest in an asset of the partnership; and

                     (e)  the business you carry on as a partner in the partnership referred to in paragraph (a) is the business that you, at a time in the income year, carry on (as referred to in subparagraph 152-40(1)(a)(i) or paragraph 152-40(1)(b)) in relation to the CGT asset.

Note 1:       For determining whether an entity is a small business entity , see Subdivision 328-C (as affected by section 152-48).

Note 2:       For businesses that are winding up, see section 152-49 and subsection 328-110(5).

Additional basic conditions for shares in a company or interests in a trust

             (2)  If the * CGT asset is a * share in a company or an interest in a trust (the object company or trust ), one of these additional basic conditions must be satisfied just before the * CGT event:

                     (a)  you are a * CGT concession stakeholder in the object company or trust; or

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

Example:    A discretionary trust sells shares in an operating company (the object company). Anna receives 90% of the distributions from the trust, and the trust has a 50% interest in the object company.

                   The trust cannot be a CGT concession stakeholder in the object company because it is not an individual and therefore cannot satisfy paragraph (2)(a).

                   However, the trust can satisfy paragraph (2)(b) because Anna is a CGT concession stakeholder in the object company (because her small business participation percentage in the object company is 45%, which is greater than 20%) and her small business participation percentage in the trust is 90%.

Extra conditions for some concessions

             (3)  In addition to the basic conditions in this section, some of the concessions in this Division have extra conditions that must be satisfied for the concession to be available. These extra conditions are set out in the relevant Subdivisions.

Special rules for certain CGT events

             (4)  Subdivisions 152-B and 152-C do not apply to * CGT events J2, J5 and J6. In addition, Subdivision 152-E does not apply to CGT events J5 and J6.

Note 1:       Those CGT events are about previous applications of the roll-over in Subdivision 152-E.

Note 2:       This Subdivision does not apply to CGT events J5 and J6 in relation to the retirement exemption (see subsection 152- 305(4)).