Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

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

Division 116 - Capital proceeds  

Modifications to general rules  

SECTION 116-45   Non-receipt rule: modification 3  

116-45(1)    

The *capital proceeds from a *CGT event are reduced if:

(a) you are not likely to receive some or all (the unpaid amount ) of those proceeds; and

(b) this is not because of anything you (or your *associate) have done or omitted to do; and

(c) you took all reasonable steps to get the unpaid amount paid.

The capital proceeds are reduced by the unpaid amount.

Note:

This rule exists because the general rules treat you as having received an amount when you are entitled to receive it.

Example:

You sell a painting to another entity for $5,000 (the capital proceeds). You agree to accept monthly instalments of $100.

You receive $2,000, but then the other entity stops making payments. It becomes clear that you are not likely to receive the remaining $3,000. The capital proceeds are reduced to $2,000.

116-45(2)    
There is a further consequence if:

(a) those proceeds are reduced by the unpaid amount; but

(b) you later receive a part of that amount.

Those proceeds are increased by that part.

116-45(3)    
This Part and Part 3-3 apply to the debt owed to you (the unpaid amount) as if it were not a *CGT asset.