CHAPTER 3
-
SPECIALIST LIABILITY RULES
PART 3-1
-
CAPITAL GAINS AND LOSSES: GENERAL TOPICS
History
Pt 3-1 inserted by No 46 of 1998.
Division 115
-
Discount capital gains and trusts
'
net capital gains
History
Div 115 inserted by No 169 of 1999.
Subdivision 115-C
-
Rules about trusts with net capital gains
Operative provisions
SECTION 115-230
Choice for resident trustee to be specifically entitled to capital gain
Purpose
115-230(1)
The purpose of this section is to allow a trustee of a resident trust to make a choice that has the effect that the trustee will be assessed on a *capital gain of the trust if no trust property representing the capital gain has been paid to or applied for the benefit of a beneficiary of the trust.
History
S 115-230(1) substituted by No 62 of 2011, s 3 and Sch 2 item 13, effective 29 June 2011. For application provisions see note under s
115-200
. S 115-230(1) formerly read:
115-230(1)
The purpose of this section is to allow a trustee of a resident testamentary trust to make a choice that has the effect that the trustee will be assessed on *capital gains of the trust in situations where:
(a)
the gains would otherwise form part of a share of the net income of the trust estate that would be included in the assessable income of a beneficiary who could not benefit from them; or
(b)
the trustee would otherwise be liable to tax on the gains on behalf of such a beneficiary under section
98
of the
Income Tax Assessment Act 1936
.
Trusts for which choice can be made
115-230(2)
A trustee can only make a choice under this section in relation to a trust estate that is, in the income year in respect of which the choice is made, a resident trust estate (within the meaning of Division
6
of Part
III
of the
Income Tax Assessment Act 1936
).
History
S 115-230(2) substituted by No 62 of 2011, s 3 and Sch 2 item 14, effective 29 June 2011. For application provisions see note under s
115-200
. S 115-230(2) formerly read:
115-230(2)
A trustee can only make a choice under this section in relation to a trust estate:
(a)
that results from:
(i)
a will, a codicil or an order of a court that varied or modified the provisions of a will or a codicil; or
(ii)
an intestacy or an order of a court that varied or modified the application, in relation to the estate of a deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate; and
(b)
that is, in the income year in respect of which the choice is made, a resident trust estate within the meaning of Division
6
of Part
III
of the
Income Tax Assessment Act 1936
.
Circumstances in which choice can be made
115-230(3)
If:
(a)
a *capital gain is taken into account in working out the *net capital gain of a trust for an income year; and
(b)
trust property representing all or part of that capital gain has not been paid to or applied for the benefit of a beneficiary of the trust by the end of 2 months after the end of the income year;
(c)
(Repealed by No 62 of 2011)
the trustee may, no later than the deadline in subsection (5), make a choice that subsection (4) applies in respect of the capital gain.
History
S 115-230(3) amended by No 62 of 2011, s 3 and Sch 2 items 15 and 16, by substituting paras (a) and (b) for paras (a) to (c), and substituting
"
capital gain
"
for
"
beneficiary's share
"
, effective 29 June 2011. For application provisions see note under s
115-200
. Paras (a) to (c) formerly read:
(a)
apart from this section:
(i)
a share of the net income of a trust estate that is attributable to *capital gains would be included in the assessable income of a beneficiary for an income year under section
97
of the
Income Tax Assessment Act 1936
; or
(ii)
a trustee would, on behalf of a beneficiary, be assessed and liable to pay tax for an income year under section
98
of the
Income Tax Assessment Act 1936
in respect of a share of the net income of a trust estate that is attributable to capital gains; and
(b)
the beneficiary does not have a vested and indefeasible interest in trust property representing that share; and
(c)
trust property representing that share has not been paid to or applied for the benefit of the beneficiary;
Consequences if trustee makes choice
115-230(4)
These are the consequences if the trustee makes a choice that this subsection applies in respect of a *capital gain:
(a)
sections
115-215
and
115-220
do not apply in relation to the capital gain;
(b)
for the purposes of this Act, the trustee is taken to be *specifically entitled to all of the capital gain.
History
S 115-230(4) substituted by No 62 of 2011, s 3 and Sch 2 item 17, effective 29 June 2011. For application provisions see note under s
115-200
. S 115-230(4) formerly read:
115-230(4)
These are the consequences if the trustee makes a choice that this subsection applies in respect of a beneficiary
'
s share:
(a)
for the purposes of sections
97
,
98A
and
100
of the
Income Tax Assessment Act 1936
, the share is taken not to be included in the assessable income of the beneficiary;
(b)
the trustee is not assessed, and is not liable to pay tax, in respect of the share under section
98
of the
Income Tax Assessment Act 1936
.
Note 1:
Because of these consequences in relation to sections
97
and
98
of the
Income Tax Assessment Act 1936
, the trustee will be assessed on the beneficiary
'
s share under section
99A
or (at the Commissioner
'
s discretion)
99
of that Act.
Note 2:
Section
115-215
does not apply in relation to an amount to which this subsection applies.
Deadline for making choice
115-230(5)
The deadline for the purposes of subsection (3) is:
(a)
the day 2 months after the last day of the income year; or
(b)
a later day allowed by the Commissioner.
Note:
This deadline is an exception to the general rule about choices in section
103-25
.
History
S 115-230 inserted by
No 79 of 2007
, s 3 and Sch 3 item 2, applicable in relation to the 2005-2006 income year and later income years.
No 79 of 2007
, s 3 and Sch 3 items 3 and 4 also contains the following application provisions, effective 21 June 2007:
Application
3(2)
Despite subsection 115-230(5) of the
Income Tax Assessment Act 1997
, a choice under subsection 115-230(3) of that Act may be made no later than 2 years after the commencement of section 115-230 (or a later time allowed by the Commissioner) if the choice is in respect of the 2005-2006 income year.
3(3)
Despite subsection 115-230(5) of the
Income Tax Assessment Act 1997
, a choice under subsection 115-230(3) of that Act may be made no later than 2 years after the commencement of section 115-230 (or a later time allowed by the Commissioner) if:
(a)
section 115-230 commences after the end of the 2006-2007 income year; and
(b)
the choice is in respect of the 2006-2007 income year.
Amendment of assessments
4
Section
170
of the
Income Tax Assessment Act 1936
does not prevent the amendment of an assessment if:
(a)
the assessment was made before the commencement of this item; and
(b)
an application to amend the assessment is made, in the form approved for the purposes of subsection
170(5)
, within 2 years of the commencement of this item; and
(c)
the amendment is made for the purpose of giving effect to a choice under subsection 115-230(3) of the
Income Tax Assessment Act 1997
.
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