Division 149 ITAA97 sets out the rules that govern when an asset acquired before 20 September 1985 is to be treated as acquired after that date. 

Division 149--When an asset stops being a pre-CGT asset

Covers any entities, not just property companies and trusts, that have significant pre Sept 85 assets.  It says that where you can not identify continuity of the underlying interests in a group of natural persons – so trace through, etc, who at midnight on 19.09.85 held a majority underlying interest in that asset.  As soon as that test fails, i.e. where there is no continuity of greater than 50% underlying ownership, that asset in the company loses its pre CGT exempt status, and becomes a post CGT asset.  The cost base is the market value at the time it loses its pre CGT status.
*Section 149.10 - What is a pre-CGT asset?

A CGT asset that an entity owns is a pre-CGT asset if, and only if:

(i) the entity last acquired the asset before 20 September 1985;

(ii) the entity was not, immediately before the start of 1998/99 year, taken under the CGT provisions to have acquired the asset on or after 20 September 1985; and

(iii) the asset has not stopped being a pre-CGT asset of the entity because of Div 149 (149-10)

*Section149.15 - Majority underlying interests in a CGT asset
(1)  Majority underlying interests in a * CGT asset consist of:
  (a)  more than 50% of the beneficial interests that * ultimate owners have (whether directly or * indirectly) in the asset; and
 (b)  more than 50% of the beneficial interests that * ultimate owners have (whether directly or * indirectly) in any * ordinary income that may be * derived from the asset.
(2) . . .

An asset ceases to be a pre-CGT asset in specified circumstances.  There are different rules relating to the assets of non-public entities, public entities and demutualised public entities.
1. When asset of a non-public entity stops being a pre-CGT asset.  An asset of a non-public entity stops being a pre-CGT asset if the majority underlying interests in it are not held by ultimate owners who held those assets just before 20 September 1985.  The entity is taken to have acquired the asset at the earliest time when majority underlying interests in the asset were no longer held by ultimate owners who had held majority underlying interests immediately before 20 September 1985. 
2. When asset of public entity stops being a pre-CGT asset.  Subdivision 149-C applies to a company if its shares are listed on an approved stock exchange, to a publicly traded unit trust, to a mutual insurance or mutual affiliate company and to certain related entities. 
3. How to treat a demutualised public entity.  Subdivision 149-F contains rules for determining the underlying interests in assets of certain entities that were mutual companies at the starting day but have demutualised since that time.

(9) Other Provisions
ITAA97, Division 109 & 128

*Division 109--Acquisition of CGT assets

*Division 128--Effect of death

There are many other CGT acquisition rules which apply in specific situations and which are dealt with by specific provisions covering these situations (s109-55 ITAA97).  These situations are where:
1. a CGT asset devolves to a legal personal representative or a beneficiary because someone dies;
2. a CGT asset passes to the taxpayer as beneficiary in the estate of a deceased individual;
3. a surviving joint tenant acquires a deceased joint tenant’s interest in a CGT asset;
4. a taxpayer gets only a partial main residence exemption on a dwelling but would have got a full exemption if a CGT event happened to it just before the first time it became income-producing;
5. the trustee of a deceased estate acquires a dwelling under a will for a taxpayer to occupy it and the taxpayer obtains an interest in it;
6. a replacement-asset roll-over happens for a pre-CGT asset;
7. a replacement-asset roll-over happens for a Crown lease, or for a prospecting or mining entitlement, that is renewed or replaced and part of the new entitlement relates to a part of a pre-CGT entitlement;
8. the taxpayer obtains a same-asset roll-over for a pre-CGT asset;
9. there is a same-asset roll-over for a post-CGT asset because the trust deed of a complying superannuation fund or approved deposit fund is changed;
10. a company or unit trust issues bonus equities to a taxpayer and no amount is included in the taxpayer’s assessable income;
11. a taxpayer owns shares in a company or units in a unit trust and exercises rights to acquire new equities in the company or trust;
12. a taxpayer acquires shares in a company or units in a unit trust by converting a convertible note;
13. a taxpayer acquires a qualifying share or right under an employee share scheme and a CGT event does not happen to it at the cessation time or within 30 days after that time;
14. a lessee of land acquires the reversionary interest of the lessor and there is no roll-over for the acquisition;
15. the taxpayer owns a pre-CGT asset and there has been a change in the majority underlying interests in the asset;
16. the taxpayer becomes a resident while owning a post-CGT asset that did not have the necessary connection with Australia;
17. an asset is rolled over between companies in the same wholly-owned group and the recipient company stops being a 100% owned subsidiary of the wholly-owned group. 
The provisions of ITAA97 that deal with the effect of death are contained in Div 128.

Section 128-1 provides a guide to the Division.

It indicates that the Division sets out what happens when a taxpayer dies and his or her CGT assets devolve to a legal personal representative or pass to a beneficiary of the estate.  The death of a person results in the necessity for the apportionment of either an executor or administrator.  Generally, the death of a taxpayer does not constitute the disposal of an asset by the deceased.  The general rule is that when a taxpayer dies, the death does not constitute a disposal.  The effect is set out in s128-10 ITAA97 as:
 
“When you die, a capital gain or capital loss from a CGT event that results for a CGT asset you owned just before dying is disregarded.”

There is an exception to the rule in s128-10.  The exception applies if the CGT asset passes to a beneficiary in the taxpayer’s estate who is: (1) an exempt entity; (ii) the trustee of a complying superannuation entity; or (iii) not an Australian resident. 

Division 128 of the ITAA97 provides that a CGT event arising from death is disregarded and instead gives a rollover of the cost base of post-property to the new owners for the purpose of calculating their gains or losses.  The new owners are deemed to have acquired pre-assets at their market value on the date of death so that gains on pre-assets up to the time of death are exempt from taxation.