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WHAT ARE THE CGT ROLLOVERS FOR REPLACEMENT ENTITLEMENT?

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24
May

We all are aware of the fact that a capital gain tax (CGT) is imposed when a capital gain is made on disposal of any asset. A capital gain or loss can be deferred or roll over for some specific event until another CGT event happens. It can be done either by switching to a new similar asset keeping the old cost base or by letting a new owner to keep the previous owner’s cost base. Such rollover provision mostly applies when an asset is replaced in the following circumstances:

  • An individual (sole trader), trustee, or the partners in a partnership, dispose assets to a wholly owned company and assume assets in the company such as shares;
  • Acquire replacement assets as a result of a CGT event happening to small business assets; 
  • Renew, extension or replacement of statutory licence;
  • Exchange of shares or unit for shares or units in the same company or unit trust;
  • Exchange of rights or options to acquire shares or units in a company or unit trust to shares or units in the company or trust;
  • Exchange of shares in one company for shares in an interposed company; 
  • Exchange of units in a unit trust for shares in a company; 
  • Conversion of unincorporated body to an incorporated company; 
  • Disposing of an existing crown lease and replacing it with another;
  • Disposing of depreciating assets and replacing them;
  • Disposing of prospecting and mining entitlements and replacing them;
  • Disposing of a security under a securities lending arrangement;
  • Ownership of units or interests ends under a trust restructure; 
  • Replacement of a membership interest in a Medical Defence Organisation (MDO) with a
    similar membership interest in another MDO when both MDOs are companies limited by guarantee;
  • Replacement of an entitlement to water with one or more different water entitlements.

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