Taxation Determination TD 93/169







This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20). | 1. The standard rule for CGT purposes that indexation is available where a capital gain arises, or where there is neither a capital loss nor a capital gain, on the disposal of an asset still applies. Indexation is not available where a taxpayer seeks to claim a capital loss on the disposal. However, the general rules for calculating the indexed cost base or the reduced cost base of the units are modified where non assessable distributions have been received. | 2. The provisions which allow for the calculation of gains or losses in these circumstances are included in section 160ZM of the Income Tax Assessment Act 1936. | 3. Apart from the operation of subsection 160ZM(3) (see TD 93/171), a capital gain or capital loss will only arise on the actual disposal of the units. In order to ascertain whether any such gain or loss has arisen, subsection 160ZM(2) deems the units to have been disposed of and immediately re-acquired each time a non assessable distribution is received. The reason for deeming disposal and re-acquisition is to enable the cost base of the units to be adjusted each time a non assessable unit trust distribution is received. | 4. Paragraph 160ZM(2)(a) is used to determine whether there has been a capital gain on an eventual disposal. Indexation is used in this calculation. | 5. Paragraph 160ZM(2)(b) is used to determine whether there has been a capital loss on an eventual disposal. Indexation is not applicable under this provision as a capital loss is determined having regard to the reduced cost base of the units. | Example: Units acquired on 28 June 1990 for $10,000 | Units sold on 1 July 1992 | Non assessable distributions received 30 June 1991 $1,000 | The non assessable distributions are "adjusted payments" as defined in subsection 160ZM(3A). | Relevant indexation factors 30 June 1990 102.5 | A capital loss will arise if the sale price is less than $8,000. | There will be no capital gains implications if the sale price is more than $7,999 and less than $8,461. | Commissioner of Taxation 2/9/93 | Previously issued as Draft TD 93/D131


Related rulings: TD 93/170 TD 93/171
Legislative references: ITAA 160ZM ITAA 160ZM(2) ITAA 160ZM(2)(a) ITAA 160ZM(2)(b) ITAA 160ZM(3) ITAA 160ZM(3A)
Subject references: Capital gains unit trust distributions