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Does section 125-90 of the IncomeTax Assessment Act 1997 (ITAA 1997) provide that the taxpayer, the owner of an original interest acquired before 20 September 1985, has acquired a new interest in a demerged entity before this date where no CGT event happened under a demerger to the original interest?

No. Section 125-90 of the ITAA 1997 does not provide that the taxpayer has acquired a new interest in a demerged entity before 20 September 1985 where no CGT event happened under a demerger to the original interest acquired before 20 September 1985.

The taxpayer acquired shares (original interests) in the head entity of a demerger group before 20 September 1985 (pre-CGT).

The taxpayer acquired new shares in the demerged entity under a demerger which satisfied the conditions of the definition of a demerger in section 125-70 of the ITAA 1997.

The circumstances of the demerger were such that no CGT event happened to the taxpayer's original interests.

Section 125-80 of the ITAA 1997 allows capital gains tax (CGT) rollover relief when a CGT event happens to an original interest in an entity under a demerger and a new interest is received in the demerged entity.

However, where a demerger happens to a demerger group and no CGT event happens to a pre-CGT original interest, there is no CGT rollover relief available. Subsection 125-90(2) of the ITAA 1997 does not provide for subsections 125-80(4) to (7) of the ITAA 1997 to treat a new interest acquired in a demerged entity as a pre-CGT interest.

Under these circumstances, the taxpayer is not taken to have acquired their new shares in the demerged entity before 20 September 1985.