Income Tax (Transitional Provisions) Act 1997



Division 294 - Transfer balance cap  

Subdivision 294-B - CGT relief  

SECTION 294-120   Superannuation funds using the proportionate method - disregard initial capital gain but recognise deferred notional gain  


This section applies in relation to a CGT asset of a complying superannuation fund if:

(a) section 294-115 applies in relation to the CGT asset; and

(b) as a result of paragraph 294-115(3)(a) , the fund makes a capital gain in respect of the asset (disregarding this section); and

(c) the trustee of the fund makes a choice for the purposes of this paragraph in respect of the asset in accordance with subsection (2).

A choice made for the purposes of paragraph (1)(c):

(a) is to be in the approved form; and

(b) can only be made on or before the day by which the trustee of the fund is required to lodge the fund ' s income tax return for the 2016-17 income year; and

(c) cannot be revoked. Disregard initial capital gain

Disregard the capital gain mentioned in paragraph (1)(b). Recognition of deferred notional gain

The deferred notional gain is the 2016-17 non-exempt proportion of the amount of the fund ' s net capital gain for the 2016-17 income year determined on the assumptions that:

(a) subsection (3) of this section does not apply; and

(b) the fund made no capital gains in that income year other than the gain mentioned in paragraph (1)(b); and

(c) the fund made no capital losses in that income year; and

(d) the fund had no previously unapplied net capital losses from earlier income years.

For the purposes of Division 102 of the Income Tax Assessment Act 1997 , if a realisation event happens to the asset in an income year that starts on or after 1 July 2017:

(a) treat the fund as having made a capital gain in that income year equal to the deferred notional gain; and

(b) disregard section 102-20 of that Act in respect of that capital gain; and

(c) treat that capital gain as not being a discount capital gain.

Subsection 295-390(1) of the Income Tax Assessment Act 1997 does not apply to the amount by which a net capital gain is increased (or comes into existence) as a result of subsection (5).

In this section:

2016-17 non-exempt proportion
means 1 minus the proportion mentioned in subsection 295-390(3) of the Income Tax Assessment Act 1997 in respect of the fund for the 2016-17 income year.

deferred notional gain
has the meaning given by subsection (4).

This information is provided by CCH Australia Limited Link opens in new window. View the disclaimer and notice of copyright.