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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 104-80  Disposal to beneficiary to end income right: CGT event E6  

104-80(1)  

 ITAA 36
CGT event E6 happens if the trustee of a trust (except a unit trust or a trust to which Division 128 applies) *disposes of a *CGT asset of the trust to a beneficiary in satisfaction of the beneficiary's right, or part of it, to receive *ordinary income or *statutory income from the trust.

Note:

Division 128 deals with the effect of death.

104-80(2)  

 ITAA 36
The time of the event is when the disposal occurs.

Trustee makes a capital gain or loss

104-80(3)  

 View history reference ITAA 36
The trustee makes a capital gain if the *market value of the asset (at the time of the disposal) is more than its *cost base. It makes a capital loss if that market value is less than the asset's *reduced cost base.

Exception for trustee

104-80(4)  

 ITAA 36
A *capital gain or *capital loss the trustee makes is disregarded if it *acquired the asset before 20 September 1985.

Beneficiary makes a capital gain or loss

104-80(5)  

 View history reference ITAA 36
The beneficiary makes a capital gain if the *market value of the asset (at the time of the disposal) is more than the *cost base of the right, or the part of it. The beneficiary makes a capital loss if that market value is less than the *reduced cost base of the right or part.

Note:

If the beneficiary did not pay anything for the right, the market value substitution rule does not apply: see section 112-20.

Exception for beneficiary

104-80(6)  

 ITAA 36
A *capital gain or *capital loss the beneficiary makes is disregarded if it *acquired the *CGT asset that is the right before 20 September 1985.


 



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