Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 115 - Discount capital gains and certain trust capital gains  

Subdivision 115-C - Rules about trusts with net capital gains  

Operative provisions

SECTION 115-225   Attributable gain  

115-225(1)    
The amount is the product of:

(a)    the amount of the * capital gain remaining after applying steps 1 to 6 of the method statement in subsection 102-5(1) ; and

(b)    your * share of the capital gain (see section 115-227 ), divided by the amount of the capital gain.

Special rule if net income falls short of certain amount

115-225(2)    
Subsection (3) applies if the net income of the trust estate (disregarding the amount of any * franking credits) for the relevant income year falls short of the sum of:

(a)    the * net capital gain (if any) of the trust estate for the income year; and

(b)    the total of all * franked distributions (if any) included in the assessable income of the trust estate for the income year (to the extent that an amount of the franked distributions remained after reducing them by deductions that were directly relevant to them).

115-225(3)    
For the purposes of subsection (1) , replace paragraph (a) of that subsection with the following paragraph:

(a)    the product of:

(i) the amount of the * capital gain remaining after applying " steps 1 to 6 of the method statement in subsection 102-5(1) ; and

(ii) the * net income of the trust estate for that income year (disregarding the amount of any * franking credits), divided by the sum mentioned in subsection (2) ; and

Special rule relating to indexation

115-225(4)    
Subsection (5) applies if the * capital gain has been worked out using a * cost base that includes indexation because of subsection 110-36(1A) , and the amount mentioned in subsection (1) of this section:

(a)    is being worked out for the purposes of subsection 115-215(3) in circumstances where, had you:

(i) made the capital gain; and

(ii) * acquired and held any relevant * CGT asset in the same way as the trust estate did;

that indexation could not have applied to the cost base; or

(b)    is being worked out for the purposes of subsection 115-215(3) in connection with you having a resultant * discount capital gain to which section 115-102 (about new residential dwellings) or 115-125 (about affordable housing) applies; or

(c)    is being worked out for the purposes of subsection 115-220(2) in relation to a beneficiary in circumstances where, had the beneficiary:

(i) made the capital gain; and

(ii) acquired and held any relevant CGT asset in the same way as the trust estate did;

that indexation could not have applied to the cost base; or

(d)    is being worked out for the purposes of subsection 115-220(2) in connection with a beneficiary having a resultant discount capital gain to which section 115-102 (about new residential dwellings) or 115-125 (about affordable housing) applies; or

(e)    is being worked out for the purposes of subsection 115-222(4) .

Note 1:

For paragraph (a) or (c) , indexation under subsection 110-36(1A) is only applicable in relation to capital gains, of individuals and trusts, that arise from a CGT event that happens on or after 1 July 2027. In addition, residency requirements for individuals apply under section 114-25 .

Note 2:

For paragraph (b) or (d) , indexation may be able to be chosen by the trustee of a trust as an alternative to the discount percentage applying for a beneficiary ' s attributed gain: see subsections 115-102(5) and 115-125(6) .

Note 3:

For paragraph (e) , subsection 115-222(4) relates to assessing trustees under section 99A of the Income Tax Assessment Act 1936 .

115-225(5)    
For the purposes of the provision mentioned in subsection (6) of this section, determine the amount of the * capital gain remaining assuming that:

(a)    in working out the amount of the capital gain before any reductions under the method statement in subsection 102-5(1) were applied, the * cost base was adjusted to remove the effect of indexation on its calculation; and

(b)    the assumption in paragraph (a) did not result in any changes to the application of * capital losses, previously unapplied * net capital losses or quarantined amounts (including how much of each of those was applied) under that method statement to reduce the capital gain.

115-225(6)    
The provision is:

(a)    if subsection (3) does not apply - paragraph (1)(a) ; or

(b)    if subsection (3) applies - subparagraph (1)(a)(i) (as taken to be included because of subsection (3) ).