Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (49 of 2026)

Schedule 1   CGT adjustments

Part 1   Main amendments

Income Tax Assessment Act 1997

44   After Subdivision 115-C

Insert:

Subdivision 115-CA - Extended application of rules about trusts with net capital gains (disregarding indexation)

Guide to Subdivision 115-CA

115-250 What this Subdivision is about

This Subdivision extends the application of Subdivision 115-C in certain circumstances where indexation is used in working out the cost base for trust estate capital gains, and Subdivision 115-C does not otherwise apply because the trust estate does not have a net capital gain.

Table of sections

Operative provisions

115-255 Extended application of Subdivision 115-C - disregarding indexation

Operative provisions

115-255 Extended application of Subdivision 115-C - disregarding indexation

(1) In addition to its application under subsection 115-210(1), Subdivision 115-C applies as set out in this section if:

(a) a trust estate has one or more *capital gains that have been worked out using a *cost base that includes indexation because of subsection 110-36(1A); and

(b) that Subdivision does not apply under subsection 115-210(1) in relation to the trust estate for an income year; and

(c) that Subdivision would so apply if, in working out whether the trust estate has a *net capital gain for the income year, the following assumptions applied in relation to each of those capital gains:

(i) in working out the amount of the capital gain before any reductions under the method statement in subsection 102-5(1) were applied, the *cost base was adjusted to remove the effect of indexation on its calculation;

(ii) the assumption in subparagraph (i) did not result in any changes to the application of *capital losses, previously unapplied *net capital losses or quarantined amounts (including how much of each of those was applied) under that method statement to reduce the capital gain.

(2) Subdivision 115-C applies under this section as follows in relation to such a *capital gain of the trust estate (the trust gain ):

(a) that Subdivision applies for the purposes of treating a beneficiary of the trust estate as having a related capital gain under subsection 115-215(3) in circumstances where subsection 115-225(5) would apply for working out the amount of the trust gain;

(b) if paragraph (a) applies - section 115-235 applies for such a related capital gain;

(c) that Subdivision applies for the purposes of increasing the trustee's assessable amount under subsection 115-220(2) or 115-222(4) in circumstances where subsection 115-225(5) would apply for working out the amount of the trust gain.

(3) The reference to the trust estate's net income in subsection 115-215(1) does not limit the application of section 115-215 for those purposes.

(4) To avoid doubt, subsection 115-210(2) applies in relation to the application of Subdivision 115-C under this section.

(5) To avoid doubt, a reference in a *taxation law to Subdivision 115-C or a provision of that Subdivision includes a reference to that Subdivision, or that provision (as the case requires), as it applies because of this section.