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 | 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 .
(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) .
(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 .
(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" .