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 104-85   Disposal to beneficiary to end capital interest: CGT event E7  

104-85(1)    
CGT event E7 happens if the trustee of a trust (except a unit trust or a trust to which Division 128 applies) *disposes of a *CGT asset of the trust to a beneficiary in satisfaction of the beneficiary's interest, or part of it, in the trust capital.

Note:

Division 128 deals with the effect of death.

104-85(2)    
The time of the event is when the disposal occurs.

Trustee makes a capital gain or loss

104-85(3)    

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

Exception for trustee

104-85(4)    
A *capital gain or *capital loss the trustee makes is disregarded if it *acquired the asset before 20 September 1985.

Beneficiary makes a capital gain or loss

104-85(5)    

The beneficiary makes a capital gain if the *market value of the asset (at the time of the disposal) is more than the *cost base of the interest, or the part of it, being satisfied. The beneficiary makes a capital loss if that market value is less than the *reduced cost base of that interest or part.

Exceptions for beneficiary

104-85(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 is also an exception for employee share trusts: see section 130-90 .