If you choose this exemption, you disregard the amount of the capital gain you have chosen as the CGT exempt amount.
The amount of any capital gain that exceeds the CGT exempt amount does not qualify for this exemption.
Payments made to CGT concession stakeholder
If you are a CGT concession stakeholder, a payment you receive from a company or trust to satisfy the retirement exemption requirements is exempt from income tax. This has implications for any tax losses from prior years (not capital losses) you are entitled to claim as a deduction. A tax loss must first be offset against net exempt income.
If you are a company or trust making the payment, it is not able to be deducted from your assessable income.
Interposed entities receiving or making payments on or after 23 June 2009
If you are a company or trust receiving a payment (whether directly or indirectly through one or more interposed entities) that another company or trust made to satisfy the retirement exemption requirements, and you are passing that payment on to a CGT concession stakeholder or another interposed entity:
- the payment you receive is not included in your assessable income and is not exempt income, and
- the payment you make is not deductible from your assessable income.
Amounts which are not assessable income and not exempt income have no implications for tax losses of previous years.
A payment you make to satisfy the retirement exemption requirements is not treated as a dividend nor a frankable distribution provided:
- you are an interposed entity receiving a payment and passing that payment on, or
- you are a company making a payment to
- a CGT concession stakeholder, or
- an interposed entity.
This is the case despite section 109 of the ITAA 1936. which can treat excessive payments to shareholders, directors and associates as dividends. Therefore, section 109 no longer has any application to these payments.
Division 7A of the ITAA 1936 also no longer applies to treat such payments made by a company or trust as dividends.
For payments made prior to 23 June 2009, the company or trust is required to make the payment directly to the CGT concession stakeholder.