Issue
Where more than one 'new event' (as defined in subsection 170-275(1) of the Income Tax Assessment Act 1997 (ITAA 1997)) happens after a 'deferral event' (as defined in paragraph 170-255(1)(a) of the ITAA 1997) is the time of the happening of each of the new events relevant for the purposes of subsection 170-275(1) of the ITAA 1997?
Decision
No. Only the time of the happening of the earliest of the new events is relevant for the purposes of subsection 170-275(1) of the ITAA 1997.
Facts
An 'originating company' (as defined in paragraph 170-255(1)(a) of the ITAA 1997) disposed of a CGT asset to another entity.
The disposal of the CGT asset resulted in section 170-255 of the ITAA 1997 applying. As a consequence, a capital loss that the originating company would otherwise have been entitled to was disregarded under section 170-270 of the ITAA 1997.
Subsequently, the relevant CGT asset acquired by the other entity was scrapped by disposing of it to a scrap metal dealer.
The scrap metal dealer is an entity that is none of those mentioned in subparagraphs 170-275(1)(b)(i), (ii) or (iii) of the ITAA 1997, so a new event happened for the purposes of paragraph 170-275(1)(b) of the ITAA 1997.
The scrap metal dealer later made the relevant CGT asset into molten metal which resulted in a new event happening for the purposes of paragraph 170-275(1)(a) of the ITAA 1997.
Reasons for Decision
Where a capital loss has been disregarded under section 170-270 of the ITAA 1997 the originating company is taken to have made an equivalent capital loss immediately before the time of the happening of the new event or the earliest of the new events, as the case may be, under section 170-275 of the ITAA 1997.
Therefore, only the time of the happening of the earliest of the new events is relevant for the purposes of subsection 170-275(1) of the ITAA 1997.
In this case, the time of the happening of the earliest of the new events is the time when the relevant CGT asset was acquired by the scrap metal dealer from the other entity.