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Taxation Determination

TD 93/171

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 ruling.
    This ruling contains references to repealed provisions, some of which may have been rewritten. The ruling still has effect. Paragraph 32 in TR 2006/10 provides further guidance on the status and binding effect of public rulings where the law has been repealed or repealed and rewritten. The legislative references at the end of the ruling indicate the repealed provisions and, where applicable, the rewritten provisions.
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

FOI status:

may be releasedFOI number: I 1216017

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

1. The general position covering the capital gains consequences of non assessable unit trust distributions is set out in TD 93/169.

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, there will be two consequences:-

(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 is an "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
2/9/93

Previously issued as Draft TD 93/D133

References

ATO references:
NO (CGTDET 77)

ISSN 1038 - 8982

Related Rulings/Determinations:

TD 93/169
TD 93/170

Subject References:
Capital gains tax
unit trust distributions

Legislative References:
ITAA 160ZM(2)(a)
ITAA 160ZM(2)(b)
ITAA 160ZM(3)
ITAA 160ZM(3A)

TD 93/171 history
  Date: Version: Change:
  2 September 1993 Original ruling  
You are here 29 November 2006 Original ruling + note Repeal provision note

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