ATO Interpretative Decision

ATO ID 2003/652 (Withdrawn)

Income Tax

Capital gains tax: CGT discount - public trading trust
FOI status: may be released

This ATO Interpretative Decision is a simple restatement of the law and does not contain an interpretative decision.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Will the entity, a public trading trust as defined in section 102R of the Income Tax Assessment Act 1936 (ITAA 1936), be eligible for the CGT discount under Division 115 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

Yes. A capital gain made by a public trading trust, as defined in section 102R of the ITAA 1936, is eligible for the CGT discount under Division 115 of the ITAA 1997 provided the requirements in section 115-5 of the ITAA 1997 are met.

Facts

The public trading trust made a capital gain from the sale of shares that it acquired after 21 September 1999. The trust had owned the shares for more than 12 months at the time that it disposed of them.

The trust has not made a choice under section 703-50 of the ITAA 1997 to form a consolidated group.

Reasons for Decision

A capital gain which meets the requirements of sections 115-10, 115-15, 115-20 and 115-25 of the ITAA 1997 is a discount capital gain, unless sections 115-40 and 115-45 of the ITAA 1997 apply to treat the capital gain as not being a discount capital gain (section 115-5 of the ITAA 1997).

Under paragraph 115-10(c) of the ITAA 1997, a capital gain made by a trust can be a discount capital gain. A public trading trust is a 'trust' for the purpose of this paragraph.

As the capital gain made by the public trading trust satisfied all the other requirements for a 'discount capital gain' under section 115-5 of the ITAA 1997, the capital gain is eligible for the 50% CGT discount under Division 115 of the ITAA 1997.

Note 1: A corporate unit trust as defined in section 102J of the ITAA 1936 that has not made a choice under section 703-50 of the ITAA 1997 to form a consolidated group, will also be eligible for the CGT discount under Division 115 of the ITAA 1997.

Note 2: Tax Laws Amendment (2004 Measures No.2) Act 2004 inserted the new Subdivision 713-C of the ITAA 1997 effective from 1 July 2002. This subdivision allows a public trading trust or a corporate unit trust to form a consolidated group as if the trust were a company.

Once a public trading trust or a corporate unit trust has made the choice, it will continue to be treated like a company for income tax and related purposes for the rest of its existence. A company is not one of the entities that can make a discount capital gain as specified at section 115-10 of the ITAA 1997.

Date of decision: 18 July 2003

Year of income: Year ended 30 June 2003

Legislative References:
Income Tax Assessment Act 1936
section 102J
section 102R

Income Tax Assessment Act 1997
   Division 115
   section 115-5
   section 115-10
   paragraph 110-10(c)
   section 115-15
   section 115-20
   section 115-25
   section 115-40
   section 115-45
   section 115-215
   section 703-50
   Subdivision 713-C

Tax Laws Amendment (2004 Measures No.2) Act 2004
The Act

Keywords
Capital gains tax
CGT discount
CGT trust distribution
Consolidated group
Consolidation
Corporate unit trusts
Head entity
Public trading trusts

Business Line: Losses and CGT Centre of Expertise

Date of publication: 1 August 2003

ISSN: 1445-2782

history

	Date:	Version:
	18 July 2003	Original statement
You are here	19 March 2010	Archived

Copyright notice

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).