Treasury Laws Amendment (2017 Measures No. 2) Act 2017 (55 of 2017)

Schedule 1   Amendments relating to superannuation reform package

Part 1   Amendments

Income Tax (Transitional Provisions) Act 1997

19   At the end of Subdivision 294-B

Add:

294-125 Pooled superannuation trust using proportionate or alternative exemption method - deemed sale and purchase of CGT asset

Application

(1) This section applies in relation to a CGT asset of a trust if:

(a) the trust is a pooled superannuation trust throughout the pre-commencement period; and

(b) either of the following is greater than nil:

(i) the proportion mentioned in subsection 295-400(1) of the Income Tax Assessment Act 1997 in respect of the trust for the 2016-17 income year;

(ii) if the trustee has made a choice under subsection 295-400(3) of that Act - the percentage mentioned in subsection 295-400(4) of that Act in respect of the trust for the 2016-17 income year; and

(c) the trust held the asset throughout the pre-commencement period; and

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

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

(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 trust is required to lodge the trust's income tax return for the 2016-17 income year; and

(c) cannot be revoked.

Deemed sale and purchase

(3) For the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997, the trust is taken:

(a) to have sold, immediately before 1 July 2017, the asset for a consideration equal to its market value; and

(b) to have purchased the asset again just after that sale for a consideration equal to its market value.

294-130 Pooled superannuation trusts using proportionate or alternative exemption method - disregard initial capital gain but recognise deferred notional gain

Application

(1) This section applies in relation to a CGT asset of a pooled superannuation trust if:

(a) section 294-125 applies in relation to the CGT asset; and

(b) as a result of paragraph 294-125(3)(a), the trust makes a capital gain in respect of the asset (disregarding this section); and

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

(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 trust is required to lodge the trust's income tax return for the 2016-17 income year; and

(c) cannot be revoked.

Disregard initial capital gain

(3) Disregard the capital gain mentioned in paragraph (1)(b).

Recognition of deferred notional gain

(4) The deferred notional gain is the 2016-17 non-exempt proportion of the amount of the trust'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 trust made no capital gains in that income year other than the gain mentioned in paragraph (1)(b); and

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

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

(5) 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 trust 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.

(6) Section 295-400 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).

(7) In this section:

2016-17 non-exempt proportion means:

(a) unless paragraph (b) applies - 1 minus the proportion mentioned in subsection 295-400(1) of the Income Tax Assessment Act 1997;or

(b) if the trustee has made a choice under subsection 295-400(3) of that Act - the percentage worked out by subtracting the percentage mentioned in subsection 295-400(4) of that Act in respect of the trust for the 2016-17 income year from 100%.

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