INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-25 - PARTICULAR KINDS OF TRUSTS  

Division 275 - Australian managed investment trusts: general  

Subdivision 275-B - Choice for capital treatment of managed investment trust gains and losses  

SECTION 275-100   Consequences of making choice - CGT to be primary code for calculating MIT gains or losses  

275-100(1)  
The modifications in subsection (2) apply if:


(a) a *CGT event happens at a time involving a *CGT asset; and


(b) the CGT asset is owned at that time by an entity that is a *managed investment trust in relation to the income year in which the time occurs; and


(c) the CGT event happens because the managed investment trust *disposes of, ceases to own or otherwise realises the asset; and


(d) the asset is covered by section 275-105 ; and


(e) the entity meets the requirement in section 275-110 at the time; and


(f) a choice under section 275-115 covering the entity is in force for the income year in which the time occurs.

275-100(1A)  


Without limiting paragraph (1)(b), if:


(a) a *VCLP or an *ESVCLP owns a *CGT asset at the time referred to in that paragraph; and


(b) at that time, the *managed investment trust has an interest in the asset as a *limited partner of the VCLP or ESVCLP;

for the purposes of that paragraph, the managed investment trust is taken to own the asset to the extent of that interest.

275-100(2)  
These provisions do not apply to the *CGT event:


(a) sections 6-5 (about *ordinary income), 8-1 (about amounts you can deduct), and 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);


(c) section 118-20 (about reducing capital gains if amount otherwise assessable);


(d) Division 70 and section 118-25 (about trading stock). General exceptions

275-100(3)  
The provisions referred to in subsection (2) can apply to the *CGT event if a *capital gain or *capital loss from the event is disregarded because of one of the provisions in this table:


Where gain or loss disregarded because of CGT provision
Item Provision Brief description
1 Paragraph 104-15(4)(a) Title in a CGT asset does not pass when a hire purchase or similar agreement ends
2 Section 118-13 Shares in a PDF
3 Section 118-60 Certain gifts

Trading stock and profit-making undertakings or plans involving land etc.

275-100(4)  
The provisions referred to in subsection (2) can also apply to the *CGT event if:


(a) where the *CGT asset is land (including an interest in land), or a right or option to *acquire or *dispose of land (including an interest in land):


(i) the CGT asset is *trading stock; or

(ii) the circumstances existing at the time of the event would, disregarding this Subdivision, give rise to an amount being included in the assessable income of the entity under section 15-15 or to a deduction for the entity under section 25-40 (about profit-making undertakings or plans); or


(b) where paragraph (a) does not apply:


(i) the *managed investment trust acquired the CGT asset in an income year for which the choice mentioned in paragraph (1)(f) was not in force; and

(ii) the CGT asset was treated as trading stock in the managed investment trust ' s financial report for the most recent income year ending before the start of the income year in which that choice first came into force; and

(iii) the CGT asset was treated as trading stock in the *income tax return for the managed investment trust for the most recent income year ending before the start of the income year in which that choice first came into force; and

(iv) the CGT asset was treated as trading stock in the managed investment trust ' s financial report for the most recent income year ending before the time of the event; and

(v) the CGT asset was treated as trading stock in the income tax return for the managed investment trust for the most recent income year ending before the time of the event.
Treatment of outgoings to acquire trading stock

275-100(5)  
The modifications in subsection (6) apply if:


(a) an entity that is a *managed investment trust in relation to the income year *acquires a *CGT asset at a time in that income year; and


(b) the CGT asset is an item of *trading stock; and


(c) the CGT asset is not land (including an interest in land), or a right or option to acquire or *dispose of land (including an interest in land); and


(d) the entity incurs an outgoing in connection with acquiring the asset; and


(e) the asset is covered by section 275-105 ; and


(f) the entity meets the requirement in section 275-110 at the time; and


(g) a choice under section 275-115 covering the entity is in force for the income year in which the time occurs.

275-100(6)  
The modifications are as follows:


(a) section 8-1 (about amounts you can deduct) does not apply to the *acquisition;


(b) Division 70 (about trading stock) does not apply in relation to the asset in respect of:


(i) the income year in which the time occurs; and

(ii) any later income year in relation to which the entity is a *managed investment trust and throughout which the entity meets the requirement in section 275-110 .

 

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