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Draft Taxation Determination

TD 93/D133

Income tax: capital gains: what are the consequences where a taxpayer receives a non-assessable distribution in respect of units in a unit trust and the distribution exceeds the indexed cost base of the units?

  • Please note that the PDF version is the authorised version of this draft ruling.
    This document has been finalised by TD 93/171.

FOI status:

draft only - for comment

Preamble

Draft Taxation Determinations (TDs) represent the preliminary, though considered, views of the ATO. Draft TDs may not be relied on; only final TDs are authoritative statements of the ATO.

1. The general position covering the capital gains consequences of non-assessable unit trust distributions is set out in TD 93/D131.

2. Subsection 160ZM(3) of the Income Tax Assessment Act 1936 covers the situation where a taxpayer receives a non-assessable distribution which exceeds the indexed cost base. In this situation two consequences will follow:-

(i)
the indexed cost base will reduce to nil;
(ii)
an assessable capital gain equal to the excess will arise.

3. Any subsequent non-assessable distribution will constitute a capital gain.

Example

Indexed cost base before distribution $8,500
Non-assessable distribution $9,000

The non-assessable distribution does not include any "adjusted payment" as defined in subsection 160ZM(3A).

A capital gain of $500 arises upon distribution.

Indexed cost base after distribution will be nil.

Commissioner of Taxation
3 June 1993

References


BO (CGTDET 77)

ISSN: 1038-8982

Related Rulings/Determinations:

TD 93/D131
TD 93/D132

Subject References:
Capital gains tax
Unit trust distributions

Legislative References:
ITAA 160ZH
ITAA 160ZM


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