Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 116.45

  (1)   The * capital proceeds from a * CGT event are reduced if:

  (a)   you are not likely to receive some or all (the unpaid amount ) of those proceeds; and

  (b)   this is not because of anything you (or your * associate) have done or omitted to do; and

  (c)   you took all reasonable steps to get the unpaid amount paid.

    The capital proceeds are reduced by the unpaid amount.

Note:   This rule exists because the general rules treat you as having received an amount when you are entitled to receive it.

Example   You sell a painting to another entity for $5,000 (the capital proceeds). You agree to accept monthly instalments of $100.

  You receive $2,000, but then the other entity stops making payments. It becomes clear that you are not likely to receive the remaining $3,000. The capital proceeds are reduced to $2,000.

  (2)   There is a further consequence if:

  (a)   those proceeds are reduced by the unpaid amount; but

  (b)   you later receive a part of that amount.

    Those proceeds are increased by that part.

  (3)   This Part and Part   3 - 3 apply to the debt owed to you (the unpaid amount) as if it were not a * CGT asset.