Income tax: capital gains: is rollover relief available under section 160ZZL of the Income Tax Assessment Act 1936 if a taxpayer receives a replacement asset(s) that is different from an asset that has been compulsorily acquired?

Yes, rollover relief is available provided the other requirements of section 160ZZL are satisfied.

Section 160ZZL does not require a replacement asset to be of the same nature, used for a similar purpose, or used in the same business as the original asset. The replacement asset need only be received by way of compensation for the compulsory acquisition of the original asset.

There is no restriction on the number of assets that can be acquired in replacement of an original asset.

Rollover relief is not available if the replacement asset is trading stock immediately after its acquisition (paragraph 160ZZL(1)(aa)). Example: A Ltd acquired land in 1988 that is compulsorily acquired by the State Government. By way of compensation, A Ltd receives within 12 months shares in a Government owned investment company. The shares are not trading stock of A Ltd immediately after their acquisition. The market value of the shares at the time they were acquired by A Ltd exceeded the indexed cost base of the land. If A Ltd elects for section 160ZZL to apply, it is not regarded as having disposed of its land but is regarded as having acquired the shares for the indexed cost base of the resumed land.