Document ID: chunk:federal_register_of_legislation:C2010C00612:clause:1_42:p2
Version: federal_register_of_legislation:C2010C00612
Segment Type: clause
Provision Reference: sch 1 cl 42 (pt 2/4)
Character Range: 57382–60015

to ensure that appropriate amounts of the trust estate's net income attributable to the trust estate's *capital gains are treated as a beneficiary's capital gains when assessing the beneficiary, so:
 (a) the beneficiary can apply *capital losses against gains; and
 (b) the beneficiary can apply the appropriate *discount percentage (if any) to gains.

Application

 (2) This section treats you as having certain extra *capital gains, and gives you a deduction, if:
 (a) you are the beneficiary of the trust estate; and
 (b) your assessable income for the income year includes an amount (the trust amount):
 (i) under paragraph 97(1)(a) of the Income Tax Assessment Act 1936; or
 (ii) under subsection 98A(1) of that Act because you are a beneficiary described in subsection 98(4) of that Act; or
 (iii) under subsection 100(1) of that Act.

Extra capital gains

 (3) For each *capital gain (the trust gain) of the trust estate, Division 102 applies to you as if you had:
 (a) if the trust gain was not reduced under either step 3 of the method statement in subsection 102‑5(1) (*discount capital gains) or Subdivision 152‑C (small business 50% reduction)—a capital gain equal to the part (if any) of the trust amount that is attributable to the trust gain; and
 (b) if the trust gain was reduced under either step 3 of the method statement or Subdivision 152‑C but not both (even if it was further reduced by the other small business concessions)—a capital gain equal to twice the part (if any) of the trust amount that is attributable to the trust gain; and
 (c) if the trust gain was reduced under both step 3 of the method statement and Subdivision 152‑C (even if it was further reduced by the other small business concessions)—a capital gain equal to 4 times the part (if any) of the trust amount that is attributable to the trust gain.

 (4) For each *capital gain of yours mentioned in paragraph (3)(b) or (c):
 (a) if the relevant trust gain was reduced under step 3 of the method statement in subsection 102‑5(1)—Division 102 also applies to you as if your capital gain were a *discount capital gain, if you are the kind of entity that can have a discount capital gain; and
 (b) if the relevant trust gain was reduced under Subdivision 152‑C—the capital gain remaining after you apply step 3 of the method statement is reduced by 50%.

Note: This ensures that your share of the trust estate's net capital gain is taxed as if it were a capital gain you made (assuming you made the same choices about cost bases including indexation as the trustee).

Section 118‑20 does not reduce extra capital gains

 (5) To avoid doubt,