Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) For the purposes of this Part and Part 3 - 3 (about capital gains and losses) and Subdivision 328 - C (What is a small business entity):
(a) the vesting of a * CGT asset in an entity is ignored, if:
(i) the vesting is for the purpose of enforcing, giving effect to or maintaining a security, charge or encumbrance over the asset; and
(ii) the security, charge or encumbrance remains over the asset just after the vesting; and
(b) a CGT asset is treated as vesting in an entity at the time a security, charge or encumbrance ceases to be over the asset, if:
(i) the entity holds the asset just after that time because the asset vested in the entity at an earlier time; and
(ii) that earlier vesting was ignored under paragraph (a) because it was for the purpose of enforcing, giving effect to or maintaining the security, charge or encumbrance.
(2) This Part, Part 3 - 3 and Subdivision 328 - C apply to an act done by an entity (or an * agent of the entity) in relation to a * CGT asset for the purpose of enforcing, giving effect to or maintaining a security, charge or encumbrance over the asset as if the act had been done by the entity that provided the security (instead of by the first - mentioned entity or its agent).
Example: A CGT asset of a borrower vests in a lender as security for a loan. No CGT event happens as a result of the vesting.
If the borrower fails to make payments on the loan and the lender sells the CGT asset under the security arrangement, any capital gain or loss is made by the borrower, not the lender.
Table of Subdivisions
Guide to Division 108
108 - A What a CGT asset is
108 - B Collectables
108 - C Personal use assets
108 - D Separate CGT assets