Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 104.75

  (1)   CGT event E5 happens if a beneficiary becomes absolutely entitled to a * CGT asset of a trust (except a unit trust or a trust to which Division   128 applies) as against the trustee (disregarding any legal disability the beneficiary is under).

Note:   Division   128 deals with the effect of death.

  (2)   The time of the event is when the beneficiary becomes absolutely entitled to the asset.

Trustee makes a capital gain or loss

  (3)   The trustee makes a capital gain if the * market value of the asset (at the time of the event) is more than its * cost base. The trustee makes a capital loss if that market value is less than the asset's * reduced cost base.

Exception for trustee

  (4)   A * capital gain or * capital loss the trustee makes is disregarded if it * acquired the asset before 20   September 1985.

Note:   There is also an exception for employee share trusts: see section   130 - 80.

Beneficiary makes a capital gain or loss

  (5)   The beneficiary makes a capital gain if the * market value of the asset (at the time of the event) is more than the * cost base of the beneficiary's interest in the trust capital to the extent it relates to the asset.

    The beneficiary makes a capital loss if that market value is less than the * reduced cost base of that beneficiary's interest in the trust capital to the extent it relates to the asset.

Exceptions for beneficiary

  (6)   A * capital gain or * capital loss the beneficiary makes is disregarded if:

  (a)   the beneficiary * acquired the * CGT asset that is the interest (except by way of an assignment from another entity) for no expenditure; or

  (b)   the beneficiary acquired it before 20   September 1985; or

  (c)   all or part of the capital gain or capital loss the trustee makes from the * CGT event is disregarded under Subdivision   118 - B (about main residence).

Expenditure can include giving property: see section   103 - 5.

Note 1:   For provisions affecting the application of Subdivision   118 - B to the trustee, see sections   118 - 215 to 118 - 230.

Note 2:   There are also exceptions for employee share trusts: see sections   130 - 80 and 130 - 90.