Income Tax Assessment Act 1997



Division 316 - Demutualisation of friendly society health or life insurers  

Subdivision 316-D - Lost policy holders trust  

Effects of CGT events happening to interests and assets in trust

SECTION 316-165   Taking account of some capital gains and losses involving receipt of money by beneficiaries  

This section applies if:

(a) a *CGT event happens to an interest of a beneficiary of the lost policy holders trust in that trust; and

(b) the *capital proceeds from the event include or consist of money received by the beneficiary.

Work out whether the beneficiary makes a *capital gain or *capital loss from the *CGT event, and the amount of the gain or loss, assuming that:

(a) the *capital proceeds from the CGT event were the amount they would be if they did not include any *market value of property other than money; and

(b) the *cost base and *reduced cost base for the interest were the amount worked out using the formula:

* Capital proceeds from the * CGT event × Valuation factor worked out
under section 316-65


Assume that the beneficiary of the lost policy holders trust is paid $50 in money by the trustee to satisfy the beneficiary ' s interest in the trust so that a CGT event happens, and that the valuation factor worked out under section 316-65 is 0.9. The beneficiary makes a capital gain from the event of $5, worked out as follows:

$ 50 - ( $ 50 × 0.9)


Division 114 (Indexation of cost base) is not relevant, because this section provides exhaustively for working out the amount of the cost base.

The *capital gain or *capital loss is not to be disregarded, despite sections 316-55 and 316-160 .


The capital gain is not a discount capital gain: see section 115-55 .


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