INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 3 - Determination of capital gains and capital losses  

SECTION 160ZM   RETURN OF CAPITAL ON INVESTMENT IN TRUST  

160ZM(1)   [Application of section]  

Where the trustee of a trust pays an amount to a taxpayer that is not assessable income of the taxpayer in respect of an interest or units in the trust, being an interest or units acquired by the taxpayer after 19 September 1985, (not being a payment in respect of the disposal of the interest or units), the following provisions of this section have effect for the purposes of this Part.

160ZM(1A)   [Sec 23AI, 23AK, 99B(2)(d) and (e) disregarded]  

Sections 23AI and 23AK and paragraphs 99B(2)(d) and (e) are to be disregarded in determining whether an amount is assessable income of the taxpayer for the purposes of subsection (1) of this section.

160ZM(2)   [Deemed disposal for consideration equal to indexed cost base]  

Subject to subsection (4), the taxpayer shall be deemed to have disposed of the interest or units at the time of the payment for a consideration equal to the amount of the indexed cost base to the taxpayer in respect of the interest or units, and to have immediately re-acquired the interest or units:

(a) for the purpose of ascertaining whether a capital gain accrued to the taxpayer in the event of a subsequent disposal of the interest or units by the taxpayer:

(i) if, had the taxpayer disposed of the interest or units at the time of the payment, the indexed cost base to the taxpayer in respect of the interest or units would have exceeded the amount of the adjusted payment - for a consideration equal to the excess; or

(ii) if, had the taxpayer disposed of the interest or units at the time of the payment, the indexed cost base to the taxpayer in respect of the interest or units would not have exceeded the amount of the adjusted payment - without having paid or given any consideration in respect of the re-acquisition; or

(b) for the purpose of ascertaining whether the taxpayer incurred a capital loss in the event of a subsequent disposal of the interest or units by the taxpayer:

(i) if, had the taxpayer disposed of the interest or units at the time of the payment, the reduced cost base to the taxpayer in respect of the interest or units would have exceeded the amount of the payment - for a consideration equal to the excess; or

(ii) if, had the taxpayer disposed of the interest or units at the time of the payment, the reduced cost base to the taxpayer in respect of the interest or units would not have exceeded the amount of the payment - without having paid or given any consideration in respect of the re-acquisition.

160ZM(3)   [Adjusted payment exceeds indexed cost base]  

Subject to subsection (4), where, if the taxpayer had disposed of the interest or units at the time of the payment, the amount of the adjusted payment would have exceeded the indexed cost base to the taxpayer in respect of the interest or units, a capital gain equal to the excess shall be deemed to have accrued to the taxpayer at the time of the payment.

160ZM(3A)   [``adjusted payment'']  

In subsections (2) and (3):

"adjusted payment"
means so much of the amount of the payment as is attributable to none of the following:

(a) a deduction allowed under Division 10C or 10D of Part III or under Division 43 of the Income Tax Assessment Act 1997 ;

(b) income that is exempt from income tax because of section 124ZM or 124ZN (which exempt income arising from shares in a PDF);

(c) consideration in respect of a disposal of shares in a company that is a PDF at the time of the disposal;

(d) an amount that, because of section 159GZZZZE (which relates to infrastructure borrowings), is not included in assessable income.

160ZM(4)   [Disposal within 12 months of acquisition of interest or units]  

If the taxpayer disposed of the interest or units (otherwise than because of the application of this section) within 12 months after the taxpayer acquired the interest or units (otherwise than because of the application of this section), subsections (2) and (3) have effect as if the references in those subsections to the indexed cost base to the taxpayer in respect of the interest or units were references to the cost base to the taxpayer in respect of the interest or units.