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- Australian income
These details provide a break up of label 12U (non-primary production income) and information necessary for those investors using the 2005 application for refund of imputation credits.
- Capital gains
It is assumed that the managed fund has no capital gains from collectables and the small business capital gains concessions are not applicable.
The information in this section is necessary to allow the unitholder to offset any capital losses against the grossed-up discount capital gain, to make choices about the order in which to deduct capital losses, and to provide the details for those investors required to complete the CGT schedule.
It is important to remember that foreign capital gains are shown in this section and not as foreign income in Part C. However, foreign capital gains that are deemed foreign income for foreign tax credit purposes are also shown in Part B. (Refer to Part B notes)
- Line 1: Discounted capital gain
If the trust's capital gain has been reduced by the 50% discount, show the part of the discounted capital gain that is included in the share of net income of the unitholder.
The figures used as an example, show $10 of trust expenses being offset against the discounted capital gain. This is to illustrate that, the gross up rules in Subdivision 115-C of the Income Tax Assessment Act 1997 (ITAA 1997) effectively require the line 1 figure to be multiplied by 2 (and not added to the CGT concession amount in line 2) - see further explanation.
- Line 2: CGT concession amount
The CGT concession amount is identified as the amount referred to in subsection 104-71(4) of the ITAA 1997. Frozen indexation amounts paid to the unitholder should not be shown as CGT concession amounts on the distribution statement.
This amount comprises the non-assessable CGT discount amount paid to the unitholder. It also includes the amount of capital loss or net capital loss applied by the trust (or another trust in the chain) to reduce capital gains made that is reflected in the payment to the unitholder. (Refer Items 1 and 7 of the Table in subsection 104-71(4).)
Following amendments to sections 104-70 and 104-71, unitholders are not required to adjust the cost base of their units for these amounts paid on or after 1 July 2001.
- Line 3 : Capital gains - indexation method
This line item shows the part of the capital gain calculated by the trustee under the indexation method that is included in the share of net income of the unitholder. This item, which is required to allow an investor to make choices about the order in which to deduct capital losses, forms part of the calculation of net capital gain, and is also relevant for CGT schedule preparers.
- Line 4 : Capital gains - other method
This line item shows the part of the capital gain included in the share of net income of the unitholder where the trustee has not applied the indexation or discount methods. This item, which is required to allow an investor to make choices about the order in which to deduct capital losses, forms part of the calculation of net capital gain and is also relevant for CGT schedule preparers.
- Line 5: Distributed capital gains
This item represents the actual cash amount of capital gains distributed and includes the non-assessable CGT concession amount. It is calculated as the sum of lines 1 to 4 of the cash distribution column for capital gains. This figure is not a tax figure but it allows fund managers to reconcile the Net cash distribution amount paid to the unitholder.
In our example, line 5 distributed capital gains is $240, being $70 + $80 + $60 + $30. The difference between $240 received and $230 total current year capital gains is due to the grossed up discounted capital gain ($140) being $10 less than the $150 discount capital gains actually received by the unitholder (that is, the $10 expenses referred to in paragraph 18).
- Line 6: Net capital gain
This item is the sum of line items 1, 3 and 4 of the taxable income column of capital gains and represents the net capital gain under the three methods included in the share of net income of the unitholder. In our example, this is $160 which feeds directly into label 17A of Part A.
Where the individual unitholder has no current year capital losses or prior year net capital losses, this figure can be used directly for completion of label 17A. If the unitholder has capital losses to offset, investors would need to refer to the Tax Office publications - Guide to capital gains tax 2004-05 or Personal investors guide to capital gains tax 2004-05
- Foreign income
This section is relevant for unitholders applying the foreign loss quarantining provisions under section 160AFD of the ITAA 1936. The classes shown are those considered relevant for a managed fund. If this is not the case, additional information should be provided. The classes of assessable foreign income and definitions are set out in subsections 160AFD(8) and (9) respectively.
It should be noted that foreign capital gains are not 'assessable foreign income' and should not be shown in this section of Part C but are included under capital gains.
The foreign tax credit amounts are shown only to reconcile the cash and taxable amount as foreign tax credit entitlements are determined under Part B.
- Other non-assessable amounts
The headings used are based on the terminology used in sections 104-70 and 104-71 of the ITAA 1997.
'Tax-exempted amounts' are amounts referred to in subsection 104-71(1). Unitholders are not required to adjust either the cost base or reduced cost base of their units for these amounts.
'Tax-free amounts' are amounts referred to in subsection 104-71(3). Unitholders are required to reduce the reduced cost base of their units by these amounts but not their cost base.
These amounts now only include infrastructure borrowing amounts under section 159GZZZZE and exempt income arising from shares in a PDF under sections 124ZM and 124ZN. (references are to the ITAA 1936)
'Tax-deferred amounts' are amounts referred to in subsection 104-70(1). Unitholders are required to reduce both the cost base and reduced cost base of their units by these amounts. It should be noted that building allowance amounts paid on or after 1 July 2001 are now treated as tax-deferred amounts.
'CGT concession amounts' are shown in the capital gains section to allow reconciliation of capital gains.
- less TFN amounts withheld
This item allows the cash amount to be reconciled in Part C.
- less other expenses
This item allows the cash amount to be reconciled in Part C.
This is to be used for expenses incurred by unitholders outside of the net income calculation per section 95 of the ITAA 1936. Ordinarily, deductible expenses would be netted off against the relevant class of income in the trust estate.
Only deductible expenses should feed through to Part A, label 12Y.
- Additional capital gains information
These items provide tax figures for the break up of Label 17H (total current year capital gains) shown in Part A. They are also necessary for unitholders with capital losses to offset and for completion of the CGT schedule.
Line 1: Capital gains - discount method.
This amount is the grossed up discounted capital gain. (that is, in our example, $70 x 2). It would assist understanding of instructions and guides if the words 'grossed up amount' were placed adjacent to this figure.
Line 2: Capital gains - indexation method.
This figure is taken from the taxable income column of the capital gains section of Part C (that is, line 3).
Line 3: Capital gains - other method.
This figure is taken from the taxable income column of the capital gains section of Part C (that is, line 4).
- 'please retain this statement for income tax purposes'
The use of this wording also exempts the fund manager from the requirement to include the words 'Payment summary' on the distribution statement where TFN amounts have been withheld from the investment. The Tax Office's position on this and other PAYG withholding payer issues was provided to IFSA on 21 December 2001.
Issued by the Tax Office on 28 June 2005.Last modified: 23 Dec 2005QC 18149