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TAX LAWS AMENDMENT (NEW TAX SYSTEM FOR MANAGED INVESTMENT TRUSTS) ACT 2016 - SCHEDULE 2

Annual cost base adjustment for member's unit or interest in AMIT

 

Income Tax Assessment Act 1997

1   Section   104 - 5 (after table item dealing with CGT event E9)

Insert:

E10 Annual cost base reduction exceeds cost base of interest in AMIT

[See section   104 - 107A ]

when reduction happens

excess of cost base reduction over cost base

no capital loss

2   After subsection   104 - 70(1)

Insert:

  (1A)   However, CGT event E4 does not happen if the unit or interest mentioned in subsection   ( 1) is a unit or interest in an * AMIT .

3   At the end of Subdivision   104 - E

Add:

104 - 107A   AMIT--cost base reduction exceeds cost base: CGT event E10

  (1)   CGT event E10 happens if:

  (a)   you are a * member of an * AMIT in respect of an income year because you have a * CGT asset that is your unit or your interest in the AMIT; and

  (b)   the * cost base of that asset is reduced under subsection   104 - 107B (2) at a time; and

  (c)   the asset's * AMIT cost base net amount for the income year in which the reduction occurs exceeds the cost base of the asset .

  (2)   The time of the event is the time at which the reduction occurs under section   104 - 107B .

  (3)   You make a capital gain equal to the excess mentioned in paragraph   ( 1)(c) .

Note 1:   If you make a capital gain, the cost base and reduced cost base of the CGT asset are reduced to nil (see paragraph   104 - 107B (2)(a)) .

Note 2:   You cannot make a capital loss .

Exceptions

  (4)   A * capital gain you make from * CGT event E10 is disregarded if you * acquired the * CGT asset that is the unit or interest before 20   September 1985 .

104 - 107B   Annual cost base adjustment for member's unit or interest in AMIT

  (1)   This section applies if you are a * member of an * AMIT in respect of an income year because you have a * CGT asset that is your unit or your interest in the AMIT .

  (2)   If the * CGT asset's * AMIT cost base net amount for the income year is the excess mentioned in paragraph   104 - 107C (a):

  (a)   in a case where that AMIT cost base net amount exceeds the * cost base of the asset--reduce the cost base and * reduced cost base of the asset to nil; or

  (b)   otherwise--reduce the cost base and reduced cost base of the asset by that AMIT cost base net amount .

Note:   If that AMIT cost base net amount exceeds the cost base of the asset, CGT event E10 will happen (see section   104 - 107A ) .

  (3)   If the * CGT asset's * AMIT cost base net amount for the income year is the shortfall mentioned in paragraph   104 - 107C (b), increase the * cost base and * reduced cost base of the asset by that AMIT cost base net amount .

  (4)   The time of the reduction or increase is:

  (a)   unless paragraph   ( b) applies--just before the end of the income year; or

  (b)   if a * CGT event happens to the * CGT asset at a time when you hold it before the end of the income year--just before the time of that CGT event .

104 - 107C   AMIT cost base net amount

    The * CGT asset's AMIT cost base net amount for the income year is:

  (a)   if the CGT asset's * AMIT cost base reduction amount for the income year exceeds the CGT asset's * AMIT cost base increase amount for the income year--the amount of the excess; or

  (b)   if the CGT asset's AMIT cost base reduction amount for the income year falls short of the CGT asset's AMIT cost base increase amount for the income year--the amount of the shortfall .

104 - 107D   AMIT cost base reduction amount

  (1)   The * CGT asset's AMIT cost base reduction amount for the income year is the total of:

  (a)   money, and the * market value of any property, if:

  (i)   you start to have a right to receive the money or property from the trustee of the * AMIT in the income year; and

  (ii)   that right is indefeasible (disregarding section   276 - 55 ) or is reasonably likely not to be defeated; and

  (b)   all amounts of * tax offset that you have for the income year in respect of the AMIT because of the operation of section   276 - 80 ;

to the extent that the total is reasonably attributable to the CGT asset .

  (2)   If:

  (a)   * CGT event A1, C2, E1, E2, E6 or E7 happens to the * CGT asset before the end of the income year; and

  (b)   as a result, the time of the reduction or increase mentioned in subsection   104 - 107B (4) is just before the time of that CGT event;

do not include in the CGT asset's AMIT cost base reduction amount for the income year any * capital proceeds from that CGT event .

104 - 107E   AMIT cost base increase amount

  (1)   The * CGT asset's AMIT cost base increase amount for the income year is the total of the 2 amounts set out in the following subsections .

First amount--total of amounts not related to capital gains

  (2)   The first amount is the total of all of the following amounts included in your assessable income or * non - assessable non - exempt income for the income year in respect of the * AMIT, to the extent that they are reasonably attributable to the * CGT asset:

  (a)   amounts so included because of the operation of section   276 - 80 ;

  (b)   amounts so included otherwise than because of the operation of section   276 - 80 (as reduced in accordance with section   276 - 100 ) .

  (3)   For the purposes of subsection   ( 2), disregard the * AMIT's * net capital gain (if any) for the income year .

Second amount--total of amounts related to capital gains

  (4)   The second amount is the total of each * determined member component of a character relating to * capital gains that:

  (a)   you have for the income year in respect of the * AMIT; and

  (b)   is taken in to account under section   276 - 80 .

Residence assumption

  ( 5 )   For the purposes of working out amounts under subsections   ( 2) and ( 4 ), assume that you are an Australian resident .

104 - 107F   Receipt of money etc . increasing AMIT cost base reduction amount not to be treated as income

  (1)   Subsections   ( 2) and (3) apply if:

  (a)   you start to have a right to receive any money or any property from the trustee of an * AMIT in an income year; and

  (b)   the right is indefeasible (disregarding section   276 - 55 ) or is reasonably likely not to be defeated; and

  (c)   the right is not remuneration or consideration for you providing finance, services, goods or property to the trustee of the AMIT or to another person; and

  (d)   the right is reasonably attributable to a * CGT asset that is a * membership interest in the AMIT; and

  (e)   the CGT asset is neither * trading stock nor a * Division   230 financial arrangement; and

  (f)   as a result of you starting to have the right, the CGT asset's * AMIT cost base reduction amount for the income year is increased because of the operation of section   104 - 107 E .

  (2)   These provisions do not apply to you starting to have the right:

  (a)   sections   6 - 5 (about * ordinary income), 8 - 1 (about amounts you can deduct), 15 - 15 and 25 - 40 (about profit - making undertakings or plans);

  (b)   sections   25A and 52 of the Income Tax Assessment Act 1936 (about profit - making undertakings or schemes) .

  (3)   Section   6 - 10 (about * statutory income) does not apply to you starting to have the right except so far as that section applies in relation to section   102 - 5 (about net capital gains) .

104 - 107G   Effect of AMIT cost base net amount on cost of AMIT membership interest or unit that is a revenue asset --adjustment of cost of asset

  (1)   This section applies if:

  (a)   you are a * member of an * AMIT in respect of an income year because you have a * CGT asset that is your unit or your interest in the AMIT; and

  (b)   the CGT asset is a * revenue asset; and

  (c)   the CGT asset is not a * Division   230 financial arrangement .

  (2)   Make the adjustments in subsection   ( 3) for the purposes of working out an amount included in your assessable income (or working out an amount treated as a deduction) under any of these provisions:

  (a)   sections   6 - 5 (about * ordinary income), 8 - 1 (about amounts you can deduct), 15 - 15 and 25 - 40 (about profit - making undertakings or plans);

  (b)   sections   25A and 52 of the Income Tax Assessment Act 1936 (about profit - making undertakings or schemes) .

  (3)   If the * CGT asset's * AMIT cost base net amount for the income year is the excess mentioned in paragraph   104 - 107C (a):

  (a)   in a case where that AMIT cost base net amount exceeds the cost of the asset--reduce the cost of the asset to nil; or

  (b)   otherwise--reduce the cost of the asset by that AMIT cost base net amount .

Note:   If the AMIT cost base net amount exceeds the cost of the asset, see section   104 - 107H .

  (4)   If the * CGT asset's * AMIT cost base net amount for the income year is the shortfall mentioned in paragraph   104 - 107C (b), increase the cost of the asset by that AMIT cost base net amount .

  (5)   The time of the reduction or increase is:

  (a)   unless paragraph   ( b) applies--just before the end of the income year; or

  (b)   if a * CGT event happens to the * CGT asset at a time when you hold it before the end of the income year--just before the time of that CGT event .

  (6)   For the purposes of this section and section   104 - 107H , in working out the * CGT asset's * AMIT cost base net amount for the income year , disregard any right that you start to have in the income year if:

  (a)   the right is for you to receive any money or any property from the trustee of the * AMIT; and

  (b)   the right is remuneration or consideration for you providing finance, services, goods or property to the trustee of the AMIT or to another person .

  (7)   For the purposes of section   118 - 20, treat this section as being outside of this Part .

Note:   Section   118 - 20 deals with reducing capital gains if an amount is otherwise assessable .

104 - 107H   Effect of AMIT cost base net amount on cost of AMIT membership interest or unit that is a revenue asset--amount included in assessable income

  (1)   Subsection   ( 2) applies if:

  (a)   paragraph   104 - 107G (3)(a) applies in respect of the * CGT asset's * AMIT cost base net amount for the income year; and

  (b)   that AMIT cost base net amount exceeds the cost of the * CGT ass et just before the time mention ed in subsection   104 - 107G (5) .

  (2)   Include in your assessable income for the income year in which that time occurs:

  (a)   if the cost of the * CGT asset was nil just before that time--the cost reduction amount; or

  (b)   otherwise--the excess mentioned in paragraph   ( 1)(b) .

  (3)   Subsection   ( 2) applies despite subsection   104 - 107F (3) .

  (4)   For the purposes of section   118 - 20, treat this section as being outside of this Part .

Note:   Section   118 - 20 deals with reducing capital gains if an amount is otherwise assessable .

4   Section   977 - 5

After "E4", insert ", CGT event E10" .



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