Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 104 - CGT events  

Subdivision 104-E - Trusts  

SECTION 104-75   Beneficiary becoming entitled to a trust asset: CGT event E5  

104-75(1)    
CGT event E5 happens if a beneficiary becomes absolutely entitled to a *CGT asset of a trust (except a unit trust or a trust to which Division 128 applies) as against the trustee (disregarding any legal disability the beneficiary is under).

Note:

Division 128 deals with the effect of death.

104-75(2)    
The time of the event is when the beneficiary becomes absolutely entitled to the asset.

Trustee makes a capital gain or loss

104-75(3)    

The trustee makes a capital gain if the *market value of the asset (at the time of the event) is more than its *cost base. The trustee makes a capital loss if that market value is less than the asset ' s *reduced cost base.

Exception for trustee

104-75(4)    
A *capital gain or *capital loss the trustee makes is disregarded if it *acquired the asset before 20 September 1985.

Note:

There is also an exception for employee share trusts: see section 130-80 .

Beneficiary makes a capital gain or loss

104-75(5)    

The beneficiary makes a capital gain if the *market value of the asset (at the time of the event) is more than the *cost base of the beneficiary ' s interest in the trust capital to the extent it relates to the asset.

The beneficiary makes a capital loss if that market value is less than the *reduced cost base of that beneficiary ' s interest in the trust capital to the extent it relates to the asset.

Exceptions for beneficiary

104-75(6)    
A *capital gain or *capital loss the beneficiary makes is disregarded if:

(a) the beneficiary *acquired the *CGT asset that is the interest (except by way of an assignment from another entity) for no expenditure; or

(b) the beneficiary acquired it before 20 September 1985; or

(c) all or part of the capital gain or capital loss the trustee makes from the *CGT event is disregarded under Subdivision 118-B (about main residence).

Expenditure can include giving property: see section 103-5 .

Note 1:

For provisions affecting the application of Subdivision 118-B to the trustee, see sections 118-215 to 118-230 .

Note 2:

There are also exceptions for employee share trusts: see sections 130-80 and 130-90 .