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INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 104 - CGT events  

Subdivision 104-E - Trusts  

SECTION 104-55  Creating a trust over a CGT asset: CGT event E1  

104-55(1)  

 ITAA 36
CGT event E1 happens if you create a trust over a *CGT asset by declaration or settlement.

Note:

A change in the trustee of a trust does not constitute a change in the entity that is the trustee of the trust (see subsection 960-100(2)). This means that CGT event E1 will not happen merely because of a change in the trustee.

104-55(2)  

 ITAA 36
The time of the event is when the trust over the asset is created.

104-55(3)  

 View history reference ITAA 36
You make a capital gain if the *capital proceeds from the creation are more than the asset's *cost base. You make a capital loss if those capital proceeds are less than the asset's *reduced cost base.

Cost base rule

104-55(4)  

 View history reference ITAA 36
If you are the trustee of the trust and no beneficiary is absolutely entitled to the asset as against you (disregarding any legal disability), the first element of the asset's *cost base and *reduced cost base in your hands is its *market value when the trust is created.

Exceptions

104-55(5)  

 View history reference ITAA 36
CGT event E1 does not happen if you are the sole beneficiary of the trust and:


(a) you are absolutely entitled to the asset as against the trustee (disregarding any legal disability); and


(b) the trust is not a unit trust.

104-55(6)  

 View history reference ITAA 36
A *capital gain or *capital loss you make is disregarded if you *acquired the asset before 20 September 1985.


 



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