Tax Laws Amendment (2011 Measures No. 9) Act 2012 (12 of 2012)

Schedule 6  

Part 10   Small business participation percentage

Division 2   Discretionary trusts

Income Tax Assessment Act 1997

112   At the end of section 152-70

Add:

Discretionary trusts

(4) Subsections (5) and (6) apply for the purpose of working out the *direct small business participation percentage in an entity in connection with a *CGT event that happened in an income year (the CGT event year ), if:

(a) the entity is a trust (where entities do not have entitlements to all the income and capital of the trust); and

(b) during the relevant year mentioned in item 3 of the table in subsection (1) (disregarding subsection (5)), the trustee mentioned in that item:

(i) does not make a distribution of income; and

(ii) does not make a distribution of capital.

(5) Treat the references in that item to the relevant year as being references to:

(a) if the trustee made a distribution of income or capital during the CGT event year - the CGT event year; or

(b) otherwise - the last income year before the CGT event year in which the trustee did make a distribution of income or capital.

(6) Despite subsection (5), an entity holds a direct small business participation percentage of 0% in the trust at the relevant time if either:

(a) the trust:

(i) had a *net income for the relevant year; and

(ii) did not have a *tax loss for the relevant year; or

(b) the trustee did not make a distribution of income or capital at any time before the end of the CGT event year.