Draft Taxation Determination

TD 93/D133

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 draft ruling.
  This document has been finalised by TD 93/171.

FOI status:

draft only - for comment

Preamble

1. The general position covering the capital gains consequences of non-assessable unit trust distributions is set out in TD 93/D131.

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 two consequences will follow:-

(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

The non-assessable distribution does not include any "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
3 June 1993

References

BO (CGTDET 77)

Related Rulings/Determinations:

TD 93/D131
TD 93/D132

Subject References:
Capital gains tax
Unit trust distributions

Legislative References:
ITAA 160ZH
ITAA 160ZM