Commonwealth Consolidated Acts Commonwealth Consolidated ActsPurpose
(1) The purpose of this section is to ensure that appropriate amounts of the trust estate's net income attributable to the trust estate's * capital gains are treated as a beneficiary's capital gains when assessing the beneficiary, so:
(a) the beneficiary can apply * capital losses against gains; and
(b) the beneficiary can apply the appropriate * discount percentage (if any) to gains.
Extra capital gains
(3) If you are a beneficiary of the trust estate, for each * capital gain of the trust estate, Division 102 applies to you as if you had:
(a) if the capital gain was not reduced under either step 3 of the method statement in subsection 102 - 5(1) (discount capital gains) or Subdivision 152 - C (small business 50% reduction)--a capital gain equal to the amount mentioned in subsection 115 - 225(1); and
(b) if the capital gain was reduced under either step 3 of the method statement or Subdivision 152 - C but not both (even if it was further reduced by the other small business concessions)--a capital gain equal to twice the amount mentioned in subsection 115 - 225(1); and
(c) if the capital gain was reduced under both step 3 of the method statement and Subdivision 152 - C (even if it was further reduced by the other small business concessions)--a capital gain equal to 4 times the amount mentioned in subsection 115 - 225(1).
Note: This subsection does not affect the amount (if any) included in your assessable income under Division 6 of Part III of the Income Tax Assessment Act 1936 because of the capital gain of the trust estate . However, Division 6E of that Part may have the effect of reducing the amount included in your assessable income under Division 6 of that Part by an amount related to the capital gain you have under this subsection.
(4) For each * capital gain of yours mentioned in paragraph (3)(b) or (c):
(a) if the relevant trust gain was reduced under step 3 of the method statement in subsection 102 - 5(1)--Division 102 also applies to you as if your capital gain were a * discount capital gain, if you are the kind of entity that can have a discount capital gain; and
(b) if the relevant trust gain was reduced under Subdivision 152 - C--the capital gain remaining after you apply step 3 of the method statement is reduced by 50%.
Note: This ensures that your share of the trust estate's net capital gain is taxed as if it were a capital gain you made (assuming you made the same choices about cost bases including indexation as the trustee).
(4A) To avoid doubt, subsection (3) treats you as having a * capital gain for the purposes of Division 102, despite section 102 - 20.
Section 118 - 20 does not reduce extra capital gains
(5) To avoid doubt, section 118 - 20 does not reduce a * capital gain that subsection (3) treats you as having for the purpose of applying Division 102.