INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 6 - Trusts other than unit trusts  

SECTION 160ZYB   DEALING WITH INTEREST IN CORPUS OF TRUST ESTATE  

160ZYB(1)   [Application of section]  

Where -

(a) a person (in this section referred to as the ``beneficiary'') acquires an interest in the corpus of a trust estate, other than the estate of a unit trust or of a trust that arose upon or resulted from the death of another person;

(b) the beneficiary did not, apart from any operation of subsection 160ZH(9) , pay or give any consideration in respect of the acquisition of the interest and did not acquire the interest by way of assignment from another person; and

(c) the interest is disposed of in whole or in part during the year of income by the beneficiary,

the following provisions of this section have effect in relation to the disposal.

160ZYB(2)   [Capital gain]  

Subject to subsection (3), where the consideration in respect of the disposal exceeds -

(a) if the beneficiary is the only person having an interest in the corpus of the trust estate and the disposal relates to the whole of that interest - the amount (if any) remaining after deducting the total amount of the liabilities of the trust from the amount ascertained in accordance with the formula A + B , where -

A is the sum of -

(a) the market values at the time of the disposal of such of the assets (other than money) included in that corpus as were acquired by the trust estate before 20 September 1985; and

(b) the amounts that, if the trustee disposed of the remaining assets (other than money) included in that corpus at that time, would be the indexed cost bases to the trustee of those remaining assets; and

B is the sum of the amounts of any money included in that corpus;

(b) if there are two or more persons having an interest in the corpus of the trust estate and the disposal relates to the whole of the beneficiary's interest - so much of the amount (if any) that would be ascertained in accordance with paragraph (a) if that paragraph were applicable as bears to that amount the same proportion as the interest of the beneficiary in that corpus bears to the total of all the interests in that corpus; or

(c) if the disposal relates to part only of the beneficiary's interest in the corpus of the trust estate - so much of the amount (if any) that would be ascertained in accordance with paragraph (a) or (b), whichever paragraph would be applicable if the disposal related to the whole of that interest, as bears to that amount the same proportion as that part of that interest bears to the whole of that interest,

a capital gain equal to the excess shall be deemed for the purposes of this Part to have accrued to the beneficiary during the year of income.

160ZYB(3)   [Disposal within 12 months of acquisition]  

If the disposal of the interest or part of the interest occurred within 12 months after the day on which the interest was acquired by the beneficiary, a reference in paragraph (2)(a) to the indexed cost base to the trustee of an asset shall be construed as a reference to the cost base to the trustee of the asset.

160ZYB(4)   [Capital loss]  

Where the consideration in respect of the disposal is less than -

(a) if the beneficiary is the only person having an interest in the corpus of the trust estate and the disposal relates to the whole of that interest - the amount (if any) remaining after deducting the total amount of the liabilities of the trust from the amount ascertained in accordance with the formula A + B , where -

A is the sum of -

(a) the market values at the time of the disposal of such of the assets (other than money) included in that corpus as were acquired by the trust estate before 20 September 1985; and

(b) the amounts that, if the trustee disposed of the remaining assets (other than money) included in that corpus at that time, would be the reduced cost bases to the trustee of those remaining assets; and

B is the sum of the amounts of any money included in that corpus;

(b) if there are two or more persons having an interest in the corpus of the trust estate and the disposal relates to the whole of the beneficiary's interest - so much of the amount (if any) that would be ascertained in accordance with paragraph (a) if that paragraph were applicable as bears to that amount the same proportion as the interest of the beneficiary in that corpus bears to the total of all the interests in that corpus; or

(c) if the disposal relates to part only of the beneficiary's interest in the corpus of the trust estate - so much of the amount (if any) that would be ascertained in accordance with paragraph (a) or (b), whichever paragraph would be applicable if the disposal related to the whole of that interest, as bears to that amount the same proportion as that part of that interest bears to the whole of that interest,

the beneficiary shall be deemed for the purposes of this Part to have incurred during the year of income a capital loss equal to the difference between the consideration in respect of the disposal and the amount ascertained in accordance with paragraph (a), (b) or (c), whichever paragraph is applicable.

160ZYB(5)   [Section not applicable where disposal deemed by sec 160ZX(4)]  

This section does not apply where the beneficiary is deemed to have disposed of the interest or part of the interest by virtue of subsection 160ZX(4) .