• Cost-base adjustments for AMIT members

    Under the new tax system for AMITs, the cost base of your units in the AMIT that are CGT assets can be adjusted both upward and downward (upward adjustments were not previously allowed). Your cost base is adjusted at the end of each income year by the 'AMIT cost base net amount'.

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    AMIT cost base net amount

    The AMIT will calculate an AMIT cost base net amount for the income year in relation to your units or interests in the AMIT and must state it in your AMMA statement. You will then need to apply the AMIT cost base net amount to adjust the cost base and reduced cost base of your units or interests in the AMIT.

    The AMIT cost base net amount is the balance of your cost base reduction amount and your cost base increase amount.

    Effectively, the cost base of your membership interests is increased by any assessable income (including amounts of trust capital gains) and non-assessable non-exempt (NANE) income you are attributed from the trust, while your cost base is reduced by any actual payments you receive (or are entitled to receive) and any tax offsets you have for amounts attributed to you.

    The reduction and increase amounts are netted off against each other each year to result in either a net increase or decrease to your cost base amount (that is, your AMIT cost base net amount), which you will then use in your own cost base calculations.

    The AMIT cost base net amount broadly represents any difference between amounts that are included in your assessable income (or NANE income) for the AMIT and actual distributions you receive from the AMIT.

    The table below shows how an AMIT cost base net amount is calculated by the AMIT, as well as the effect on your cost base (and reduced cost base) and future capital gains or losses relating to your units or interests in the AMIT.

    When assessable and NANE amounts attributed to you are:

    The AMIT cost base net amount will reflect a:

    Applied to your cost base:

    CGT impact

    more than the actual payments (or entitlements) and tax offsets

    Net cost base increase amount

    Increases your cost base and reduced cost base

    Reduced capital gain or increased capital loss on the disposal of your units

    less than the actual payments (or entitlements) and tax offsets

    Net cost base reduction amount

    Reduces your cost base and reduced cost base

    Greater capital gain or reduced capital loss on the disposal of your units

    less than the actual payments (or entitlements) and tax offsets

    Net cost base reduction amount

    If the reduction amount is greater than your cost base amount, it reduces your cost base to nil

    CGT event E10 is triggered – the gross capital gain is the balance of the AMIT cost base net amount

    Where you hold your interest in the AMIT as a revenue asset (and it is not a Division 230 financial arrangement), you will need to use the AMIT cost base net amount to make similar adjustments to the cost of your interests when working out any revenue gain or loss when you dispose of your interests.

    CGT event E10

    Once your cost base is reduced to nil, any remaining AMIT cost base net amount will trigger CGT event E10 and you will have a capital gain equal to the excess amount.

    In effect, the reduction in the cost base to nil means that you have fully recovered the cost of your asset, so that any extra amount applied to reduce your cost base is a return on your asset.

    Where you hold your interest in the AMIT as a revenue asset (and it is not a Division 230 financial arrangement), any excess AMIT cost base net amount remaining after reducing the cost of your interests in the AMIT to nil will be included in your assessable income.

    Non-assessable amounts, tax-deferred and tax-free distributions

    Non-assessable amounts such as tax-free and tax-deferred amounts are not directly relevant to determining cost base adjustments for a member's interests in AMITs, although they should broadly be reflected in the AMIT cost base net amount.

    Where such non-assessable amounts are distributed to members of an AMIT, they will not be otherwise assessable to the member. This assumes that:

    • the amounts are not remuneration or consideration for providing finance, services, goods or property, and
    • the membership interest, for which the distribution is made, is neither trading stock nor a Division 230 financial arrangement of the member.

    See also:

    • LCG 2015/11 Attribution Managed Investment Trusts: annual cost base adjustments for units in an AMIT and associated transitional rules
      Last modified: 06 Oct 2016QC 47436