Show download pdf controls
  • AMIT non-assessable payments (CGT event E10)

    Like other unit trusts, an attribution managed investment trust (AMIT) can make non-assessable payments to members (unit holders), which can affect the cost base or reduced cost base of their membership interests.

    Managed funds are only classed as AMITs if they're eligible managed investment trusts (MITs) and have elected into the attribution regime. CGT event E10 applies to CGT assets that are membership interests in an AMIT, while CGT event E4 applies to other trusts – see Trust non-assessable payments (CGT event E4).

    If you receive non-assessable payments from an AMIT, the cost base and reduced cost base of your membership interests will need to be adjusted both upward and downward.

    If you own membership interests in an AMIT, your fund manager will calculate a 'cost base net amount', which will be specified in your AMIT member annual (AMMA) statement. This amount is the balance of your cost base reduction amount and your cost base increase amount.

    Calculating the 'cost base net amount'

    A cost base reduction reflects the actual payments received (or which you have a right to receive) from the AMIT and any tax offsets that you have as a result of amounts attributed to you by the AMIT.

    A cost base increase reflects the amounts included in your assessable income (including capital gains), as well as any non-assessable non-exempt income related to your membership interests in the AMIT. This is calculated on the assumption that that you are an Australian resident.

    The reduction and the increase amounts are netted off against each other to arrive at your 'cost base net amount', which you will then apply to your asset cost base.

    CGT event E10

    Where the cost base reduction amount exceeds the cost base increase amount, the resulting cost base net amount reduces your asset’s cost base or reduced cost base. If the net amount is greater than your cost base, it will reduce your cost base to nil, and any remaining excess will give rise to a capital gain as a result of CGT event E10.

    Where the cost base increase amount exceeds the cost base reduction amount, the resulting cost base net amount increases your asset's cost base and reduced cost base. This will not trigger a CGT event; however, it may result in a reduced capital gain or increased capital loss in the future if you dispose of your CGT asset.

    See also:

    Example: AMIT cost base net adjustment

    Miriam owns units in the Exponential Growth Fund, which has elected in to the new tax system for managed investment trusts in 2016–17 and is therefore an AMIT.

    The fund attributes $13 per unit to Miriam for the income year but pays a cash amount of $3 per unit. The balance of $10 is retained by Exponential Growth Fund for reinvestment, rather than paid as a cash distribution. Miriam includes the $13 attributed amount in her assessable income as 'Share of net income from trusts' at 13 Partnerships and trusts.

    Cost base consequences

    The $13 attributed to Miriam is added to her cost base of $55, while the actual payment of $3 is taken away from her cost base. In this way, the cost base increase is netted off against the cost base reduction, resulting in a cost base net increase of $10 per unit. The cost base increase and cost base reduction are shown in Miriam's AMMA statement, along with a cost base net amount of $10.

    The $10 cost base net amount is not included in Miriam's assessable income or capital gains because it represents amounts that have already been taxed to her on attribution, but is used to increase the cost base of her units in Exponential Growth Fund for future years. Miriam will need to include it in her cost base calculations when she eventually sells her units in the fund, to ensure that the undistributed amount attributed to her is not double taxed as a capital gain. 

    Cost base per unit

    $55

    plus taxable income attributed in 2016–17

    $13

    less cash dividend for 2016–17

    $3

    New cost base per unit

    $65

     

    End of example
    Last modified: 17 Jul 2017QC 52216