Commonwealth Consolidated Acts Commonwealth Consolidated Acts
Income Tax Assessment Act 1997
1 At the end of subsection 104 - 70(1)
Add:
Note 1: Subsections 104 - 70(2) and (7) can affect the calculation of the non - assessable part.
Note 2: Section 104 - 71 can reduce the non - assessable part if the trustee has claimed the general discount or the small business 50% reduction.
2 Subsection 104 - 70(4)
Omit "(adjusted by subsections ( 7) and (7A))".
3 Subsection 104 - 70(4) (note)
Repeal the note, substitute:
Note 1: You cannot make a capital loss.
Note 2: Your capital gain might be reduced if you are the trustee of a fixed trust: see section 104 - 72.
4 Subsection 104 - 70(7A)
Repeal the subsection.
5 After section 104 - 70
Insert:
When this section applies
(1) If:
(a) * CGT event E4 happens because of a payment to you (the actual payment ); and
(b) you are taken to have a * capital gain under paragraph 115 - 215(3)(b) or (c) ( your notional gain ) in respect of a corresponding trust gain (the trust gain ); and
(c) all or some of the non - assessable part under section 104 - 70 of the actual payment is attributable to proceeds from the trust gain;
follow the steps in this section to determine whether the non - assessable part (the original non - assessable part ) of the actual payment is reduced.
Work out the maximum non - assessable part of a notional payment to you of your notional gain
(2) First, work out what would have been under section 104 - 70 the non - assessable part (the maximum non - assessable part ) of a payment if:
(a) the whole of the payment had been attributable to proceeds from the trust gain; and
(b) the payment had been the only payment to you, by the trustee, of an amount so attributable; and
(c) the amount of the payment had been:
(i) if the trustee did not include indexation in the * cost base of the * CGT asset in working out the trust gain--the amount of your notional gain under paragraph 115 - 215(3)(b) or (c); or
(ii) if the trustee did include indexation in the * cost base--what would have been the amount of your notional gain if the trustee had worked out the trust gain without indexation.
Note: If more than one beneficiary is presently entitled to a share of the income of the relevant trust estate, the notional gain for each beneficiary will be only so much of the trust gain (calculated without indexation) as that beneficiary is presently entitled to.
Example: A trust has a trust gain of $10,000 which is reduced to $5,000 under subsection 102 - 5(1) by the general concession. David, the sole beneficiary of the trust, includes that $5,000 in his assessable income under Division 6 of Part III (trust income) of the Income Tax Assessment Act 1936 .
If David had received a capital payment of $10,000 from the proceeds of the trust gain, the non - assessable part under section 104 - 70 would have been $5,000: the $10,000 reduced by the $5,000 already included in David's assessable income. That non - assessable part is the maximum non - assessable part.
Work out the concession amount for your notional gain
(3) Next, work out the total (the concession amount ) of:
(a) the amount (if any) by which the choice of indexation reduced your notional gain from what it would have been without the indexation; and
(b) the amount (if any) by which your notional gain was reduced under step 3 of the method statement in subsection 102 - 5(1) (discount capital gains); and
(c) the amount (if any) by which your notional gain was reduced under paragraph 115 - 215(4)(b) (small business 50% reduction).
(If none of those amounts exists, the concession amount is nil.)
Note: For a company, the concession amount will be nil unless the company is eligible for the small business 50% reduction.
Example: David is taken to have a notional gain of $10,000 under paragraph 115 - 215(3)(b). David applies $2,000 worth of losses leaving a gain of $8,000. That gain is reduced by $4,000 because of the general discount of 50%, leaving a gain of $4,000. David's concession amount is $4,000.
Working out the maximum excluded amount
(4) Then, compare the maximum non - assessable part with the concession amount:
(a) if the maximum non - assessable part is greater:
(i) the difference is the maximum excluded amount ; and
(ii) subsection ( 5) applies; but
(b) otherwise, the original non - assessable part is not reduced by this section.
Note: The maximum excluded amount is the maximum amount by which non - assessable parts of payments attributable to proceeds from the trust gain can be reduced.
Example: David's maximum excluded amount is $1,000 ($5,000 - $4,000).
Is the concession amount used up?
(5) Compare the original non - assessable part of the actual payment with the concession amount:
(a) if the original non - assessable part is greater, subsection ( 6) applies to reduce it; but
(b) otherwise, the original non - assessable part is not reduced.
Note: If the original non - assessable part of this payment is not reduced, you may be able to reduce the non - assessable part of a later payment that is attributable to the proceeds from the same trust gain.
Example: David receives an actual payment of $9,500 with an original non - assessable part of $4,500. This amount is greater than the concession amount of $4,000, so subsection ( 6) reduces the original non - assessable part.
Amount of reduction
(6) The original non - assessable part of the actual payment is reduced by the lesser of:
(a) the amount by which the original non - assessable part of the actual payment exceeds the concession amount; and
(b) the maximum excluded amount.
Example: David's original non - assessable part of $4,500 exceeds the concession amount of $4,000 by $500. This is less than the maximum excluded amount of $1,000. David therefore reduces his original non - assessable by $500 and includes only $4,000 as a non - assessable part under section 104 - 70.
Effect of previous payments from proceeds of the trust gain
(7) Subsections ( 5) and (6) apply differently if before the actual payment, the trustee made:
(a) a payment to you to which section 104 - 70 applied and all or some of the non - assessable part of which was attributable to proceeds from the trust gain (whether or not the non - assessable part was reduced by subsection ( 6) of this section); or
(b) 2 or more payments of that kind.
Reducing the concession amount if you have received previous payments
(8) The concession amount is reduced (but not below 0) by the non - assessable part of each previous payment of that kind (as reduced under subsection ( 6), if it was reduced).
Example: David receives another payment that is attributable to the proceeds from the same trust gain.
In applying this section to the second payment, he therefore reduces his concession amount of $4,000 to nil because of the $4,000 non - assessable part (as reduced under subsection ( 6)) of the first payment.
Reducing the maximum excluded amount if you have reduced previous non - assessable parts
(9) The maximum excluded amount is reduced (but not below 0) by the amount (if any) by which the non - assessable part of each previous payment was reduced by subsection ( 6). If the maximum excluded amount is reduced to 0, the original non - assessable part of the actual payment is not reduced.
Example: In applying this section to David's second payment, the maximum excluded amount of $1,000 is reduced by $500 (the amount by which the original non - assessable part of the first payment was reduced under subsection ( 6)). His maximum excluded amount becomes $500.
104 - 72 Reducing your capital gain under CGT event E4 if you are a trustee
(1) A * capital gain you make under subsection 104 - 70(4) is reduced if:
(a) you are the trustee of another trust that is a * fixed trust; and
(b) you are taken to have a * capital gain under paragraph 115 - 215(3)(b) or (c) ( your notional gain ) in respect of a corresponding trust gain (the trust gain ); and
(c) all or some (the attributable amount ) of the total of the non - assessable parts referred to in subsection 104 - 70(4) is attributable to proceeds from the trust gain.
(2) The * capital gain is reduced (but not below 0) by the lesser of:
(a) your notional gain; and
(b) the attributable amount.
Effect of previous reduction under this section
(3) Subsection ( 2) applies differently if, because of your notional gain, this section has previously reduced a * capital gain you made under subsection 104 - 70(4) because of payments made to you by the trustee in an earlier income year in respect of your unit or interest.
(4) Subsection ( 2) applies as if your notional gain were reduced by the amount of each such previous reduction.
6 Application of amendments
The amendments made by this Schedule apply to assessments for the income year including 21 September 1999 and all later income years, for CGT events that happen after 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999.