Asset of sovereign entity—deemed sale and purchase
880-25 Asset of sovereign entity—deemed sale and purchase
This section applies if:
a sovereign entity acquired an asset (other than money) on or before 27 March 2018 under a scheme; and
on or before 27 March 2018, the sovereign entity applied for a private ruling in relation to the scheme; and
before 1 July 2026, the Commissioner gave the entity a private ruling confirming that income from the asset was not subject to income tax, or withholding tax, because of the doctrine of sovereign immunity; and
the private ruling applied during at least part of the period:
starting on 27 March 2018; and
ending before 1 July 2026;
regardless of whether the private ruling started to apply before 27 March 2018, or ceased to apply before 1 July 2026; and
the sovereign entity holds the asset on the day mentioned in subsection (5).
For the purposes mentioned in subsection (3), the sovereign entity is taken:
to have disposed of the asset, immediately before the day mentioned in subsection (5), for a consideration equal to its market value; and
to have acquired the asset again, immediately after the disposal mentioned in paragraph (a), for a consideration equal to the higher of the following:
its market value immediately before that disposal;
its cost base immediately before that disposal.
The purposes are as follows:
the purposes of Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997;
if the asset is a revenue asset—determining whether an amount is included in, or can be deducted from, the assessable income of the entity.
Despite subsection (3):
disregard any capital gain or capital loss the sovereign entity makes because of the disposal mentioned in paragraph (2)(a); or
if the asset is a revenue asset—disregard any amount that could (apart from this subsection) be included in, or be deducted from, the assessable income of the entity as a result of that disposal.
For the purposes of paragraphs (1)(e) and (2)(a), the day is:
unless paragraph (b) applies—the later of the following days:
1 July 2026;
the day before the private ruling ceases to apply; or
a day earlier than the day mentioned in paragraph (a), if:
the scheme mentioned in paragraph (1)(a) is not, when it is first carried out, materially different to the scheme specified in the private ruling; and
it becomes, on the earlier day, materially different to the scheme specified in the private ruling.
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