Commentary

C2.1169 Property rich collective investment vehicles—the exemption election and deemed disposals

Capital gains tax
Capital gains tax | Commentary

C2.1169 Property rich collective investment vehicles—the exemption election and deemed disposals

Capital gains tax | Commentary

C2.1169 Property rich collective investment vehicles—the exemption election and deemed disposals

A deemed disposal of each of the investor's interest in the qualifying fund (the CIV) or the qualifying company will occur in the following situations:

  1.  

    (a)     where an exemption election ceases to have effect because the applicable conditions are no longer met (except for cases where the failure is temporary and lasts no longer than 30 days, see C2.1168)1

  2.  

    (b)     where an exemption election ceases to have effect because it has been revoked, see C2.11672, or

  3.  

    (c)     where a return of value is made to investors and the amount in question is of a revenue nature (see below)3

In such cases, there is a deemed disposal and reacquisition at market value of all of the investors' interests in the qualifying fund or the qualifying company. The deemed disposal and reacquisition arises immediately before the point the election ceases to have effect (in cases (a) and (b)) or immediately before the date of receipt (in case (c)).

Any tax payable as a result of a deemed disposal is not typically due until funds are paid to the investor in respect of their interest in the fund or a period of three years elapses from the deemed disposal, other than in a case of revocation of the election. See below for further

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial