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 104-95   Making a capital gain  
You are the only beneficiary

104-95(1)    
If you are the only beneficiary with an interest in the trust capital and you *dispose of that interest, you work out if you have made a *capital gain in this way: Working out your capital gain

104-95(2)    

The net asset amount is worked out in this way: Working out the net asset amount

Example:

You dispose of your interest in the trust capital for $10,000 (the capital proceeds).

The total of the cost bases of the CGT assets that the trustee acquired on or after 20 September 1985 is $6,000.

The total of the market values of the CGT assets that the trustee acquired before 20 September 1985 is $2,500.

There is $1,000 in the trust. The trust liabilities are $500.

The net asset amount is:

$6,000   +   $2,500   +   $1,000   −   $500   =   $9,000

You make a capital gain of:

$10,000   −   $9,000   =   $1,000

104-95(3)    
If you *dispose of only part of that interest, any *capital gain is worked out using the method statement in subsection (1), except that the Step 2 amount is replaced by:

The net asset amount

×

The part of the interest   you are disposing of (expressed as a fraction)

Example:

To vary the example in subsection (2), suppose you dispose of 50% of your interest for $5,000 (the capital proceeds).

The Step 2 amount becomes:

$9,000   ×   50%   =   $4,500

You make a capital gain of:

$5,000   −   $4,500   =   $500

There is more than one beneficiary

104-95(4)    
If you are not the only beneficiary with an interest in the trust capital and you *dispose of your interest, any *capital gain is worked out using the method statement in subsection (1), except that the Step 2 amount is replaced by:

The net asset amount

×

Your interest in the trust capital     (expressed as a fraction)

Example:

To vary the example in subsection (2), suppose you have a 20% interest in the trust capital and you dispose of it for $4,000 (the capital proceeds).

The Step 2 amount becomes:

$9,000   ×   20%   =   $1,800

You make a capital gain of:

$4,000   −   $1,800   =   $2,200

104-95(5)    
If you are not the only beneficiary with an interest in the trust capital and you *dispose of part of your interest, any *capital gain is worked out using the method statement in subsection (1), except that the Step 2 amount is replaced by:

The net asset amount

×

Your interest in the trust capital (expressed as a fraction)

×

The part of the interest   you are disposing of (expressed as a fraction)

Example:

To vary the example in subsection (2), suppose you have a 50% interest in the trust capital. You dispose of 20% of it for $1,000 (the capital proceeds).

The Step 2 amount becomes:

$9,000   ×   50%   ×   20%   =   $900

You make a capital gain of:

$1,000   −   $900   =   $100

Exception

104-95(6)    
A *capital gain you make is disregarded if you *acquired the *CGT asset that is the interest in the trust capital before 20 September 1985.

Note:

You can make a gain if you dispose of an interest in a trust that you acquired before that day: see CGT event K6.