Tax Laws Amendment (New Tax System for Managed Investment Trusts) Act 2016 (53 of 2016)

Schedule 2   Annual cost base adjustment for member's unit or interest in AMIT

Income Tax Assessment Act 1997

3   At the end of Subdivision 104-E

Add:

104-107A AMIT - cost base reduction exceeds cost base: CGT event E10

(1) CGT event E10 happens if:

(a) you are a *member of an *AMIT in respect of an income year because you have a *CGT asset that is your unit or your interest in the AMIT; and

(b) the *cost base of that asset is reduced under subsection 104-107B(2) at a time; and

(c) the asset's *AMIT cost base net amount for the income year in which the reduction occurs exceeds the cost base of the asset.

(2) The time of the event is the time at which the reduction occurs under section 104-107B.

(3) You make a capital gain equal to the excess mentioned in paragraph (1)(c).

Note 1: If you make a capital gain, the cost base and reduced cost base of the CGT asset are reduced to nil (see paragraph 104-107B(2)(a)).

Note 2: You cannot make a capital loss.

Exceptions

(4) A *capital gain you make from *CGT event E10 is disregarded if you *acquired the *CGT asset that is the unit or interest before 20 September 1985.

104-107B Annual cost base adjustment for member's unit or interest in AMIT

(1) This section applies if you are a *member of an *AMIT in respect of an income year because you have a *CGT asset that is your unit or your interest in the AMIT.

(2) If the *CGT asset's *AMIT cost base net amount for the income year is the excess mentioned in paragraph 104-107C(a):

(a) in a case where that AMIT cost base net amount exceeds the *cost base of the asset - reduce the cost base and *reduced cost base of the asset to nil; or

(b) otherwise - reduce the cost base and reduced cost base of the asset by that AMIT cost base net amount.

Note: If that AMIT cost base net amount exceeds the cost base of the asset, CGT event E10 will happen (see section 104-107A).

(3) If the *CGT asset's *AMIT cost base net amount for the income year is the shortfall mentioned in paragraph 104-107C(b), increase the *cost base and *reduced cost base of the asset by that AMIT cost base net amount.

(4) The time of the reduction or increase is:

(a) unless paragraph (b) applies - just beforethe end of the income year; or

(b) if a *CGT event happens to the *CGT asset at a time when you hold it beforethe end of the income year - just before the time of that CGT event.

104-107C AMIT cost base net amount

The *CGT asset's AMIT cost base net amount for the income year is:

(a) if the CGT asset's *AMIT cost base reduction amount for the income year exceeds the CGT asset's *AMIT cost base increase amount for the income year - the amount of the excess; or

(b) if the CGT asset's AMIT cost base reduction amount for the income year falls short of the CGT asset's AMIT cost base increase amount for the income year - the amount of the shortfall.

104-107D AMIT cost base reduction amount

(1) The *CGT asset's AMIT cost base reduction amount for the income year is the total of:

(a) money, and the *market value of any property, if:

(i) you start to have a right to receive the money or property from the trustee of the *AMIT in the income year; and

(ii) that right is indefeasible (disregarding section 276-55) or is reasonably likely not to be defeated; and

(b) all amounts of *tax offset that you have for the income year in respect of the AMIT because of the operation of section 276-80;

to the extent that the total is reasonably attributable to the CGT asset.

(2) If:

(a) *CGT event A1, C2, E1, E2, E6 or E7 happens to the *CGT asset before the end of the income year; and

(b) as a result, the time of the reduction or increase mentioned in subsection 104-107B(4) is just before the time of that CGT event;

do not include in the CGT asset's AMIT cost base reduction amount for the income year any *capital proceeds from that CGT event.

104-107E AMIT cost base increase amount

(1) The *CGT asset's AMIT cost base increase amount for the income year is the total of the 2 amounts set out in the following subsections.

First amount - total of amounts not related to capital gains

(2) The first amount is the total of all of the following amounts included in your assessable income or *non-assessable non-exempt income for the income year in respect of the *AMIT, to the extent that they are reasonably attributable to the *CGT asset:

(a) amounts so included because of the operation of section 276-80;

(b) amounts so included otherwise than because of the operation of section 276-80 (as reduced in accordance with section 276-100).

(3) For the purposes of subsection (2), disregard the *AMIT's *net capital gain (if any) for the income year.

Second amount - total of amounts related to capital gains

(4) The second amount is the total of each *determined member component of a character relating to *capital gains that:

(a) you have for the income year in respect of the *AMIT; and

(b) is taken into account under section 276-80.

Residence assumption

(5) For the purposes of working out amounts under subsections (2) and (4), assume that you are an Australian resident.

104-107F Receipt of money etc. increasing AMIT cost base reduction amount not to be treated as income

(1) Subsections (2) and (3) apply if:

(a) you start to have a right to receive any money or any property from the trustee of an *AMIT in an income year; and

(b) the right is indefeasible (disregarding section 276-55) or is reasonably likely not to be defeated; and

(c) the right is not remuneration or consideration for you providing finance, services, goods or property to the trustee of the AMIT or to another person; and

(d) the right is reasonably attributable to a *CGT asset that is a *membership interest in the AMIT; and

(e) the CGT asset is neither*trading stock nor a *Division 230 financial arrangement; and

(f) as a result of you starting to have the right, the CGT asset's *AMIT cost base reduction amount for the income year is increased because of the operation of section 104-107E.

(2) These provisions do not apply to you starting to have the right:

(a) sections 6-5 (about *ordinary income), 8-1 (about amounts you can deduct), 15-15 and 25-40 (about profit-making undertakings or plans);

(b) sections 25A and 52 of the Income Tax Assessment Act 1936 (about profit-making undertakings or schemes).

(3) Section 6-10 (about *statutory income) does not apply to you starting to have the right except so far as that section applies in relation to section 102-5 (about net capital gains).

104-107G Effect of AMIT cost base net amount on cost of AMIT membership interest or unit that is a revenue asset - adjustment of cost of asset

(1) This section applies if:

(a) you are a *member of an *AMIT in respect of an income year because you have a *CGT asset that is your unit or your interest in the AMIT; and

(b) the CGT asset is a *revenue asset; and

(c) the CGT asset is not a *Division 230 financial arrangement.

(2) Make the adjustments in subsection (3) for the purposes of working out an amount included in your assessable income (or working out an amount treated as a deduction) under any of these provisions:

(a) sections 6-5 (about *ordinary income), 8-1 (about amounts you can deduct), 15-15 and 25-40 (about profit-making undertakings or plans);

(b) sections 25A and 52 of the Income Tax Assessment Act 1936 (about profit-making undertakings or schemes).

(3) If the *CGT asset's *AMIT cost base net amount for the income year is the excess mentioned in paragraph 104-107C(a):

(a) in a case where that AMIT cost base net amount exceeds the cost of the asset - reduce the cost of the asset to nil; or

(b) otherwise - reduce the cost of the asset by that AMIT cost base net amount.

Note: If the AMIT cost base net amount exceeds the cost of the asset, see section 104-107H.

(4) If the *CGT asset's *AMIT cost base net amount for the income year is the shortfall mentioned in paragraph 104-107C(b), increase the cost of the asset by that AMIT cost base net amount.

(5) The time of the reduction or increase is:

(a) unless paragraph (b) applies - just beforethe end of the income year; or

(b) if a *CGT event happens to the *CGT asset at a time when you hold it beforethe end of the income year - just before the time of that CGT event.

(6) For the purposes of this section and section 104-107H, in working out the *CGT asset's *AMIT cost base net amount for the income year, disregard any right that you start to have in the income year if:

(a) the right is for you to receive any money or any property from the trustee of the *AMIT; and

(b) the right is remuneration or consideration for you providing finance, services, goods or property to the trustee of the AMIT or to another person.

(7) For the purposes of section 118-20, treat this section as being outside of this Part.

Note: Section 118-20 deals with reducing capital gains if an amount is otherwise assessable.

104-107H Effect of AMIT cost base net amount on cost of AMIT membership interest or unit that is a revenue asset - amount included in assessable income

(1) Subsection (2) applies if:

(a) paragraph 104-107G(3)(a) applies in respect of the *CGT asset's *AMIT cost base net amount for the income year; and

(b) that AMIT cost base net amount exceeds the cost of the *CGT asset just before the time mentioned in subsection 104-107G(5).

(2) Include in your assessable income for the income year in which that time occurs:

(a) if the cost of the *CGT asset was nil just before that time - the cost reduction amount; or

(b) otherwise - the excess mentioned in paragraph (1)(b).

(3) Subsection (2) applies despite subsection 104-107F(3).

(4) For the purposes of section 118-20, treat this section as being outside of this Part.

Note: Section 118-20 deals with reducing capital gains if an amount is otherwise assessable.