Document ID: chunk:federal_register_of_legislation:C2010C00635:clause:3_1:p1
Version: federal_register_of_legislation:C2010C00635
Segment Type: clause
Provision Reference: sch 3 cl 1 (pt 1/3)
Character Range: 14719–17296

1  Sections 104‑70, 104‑71 and 104‑72
Repeal the sections, substitute:

104‑70  Capital payment for trust interest: CGT event E4

 (1) CGT event E4 happens if:
 (a) the trustee of a trust makes a payment to you in respect of your unit or your interest in the trust (except for *CGT event A1, C2, E1, E2, E6 or E7 happening in relation to it); and
 (b) some or all of the payment (the non‑assessable part) is not included in your assessable income.
To avoid doubt, in applying paragraph (b) to work out what part of the payment is included in your assessable income, disregard your share of the trust's net income that is subject to the rules in subsection 115‑215(3).

Note 1: Subsections 104‑71(1) (tax‑exempted amounts), 104‑71(3) (tax‑free amounts) and 104‑71(4) (CGT concession amounts) can affect the calculation of the non‑assessable part.

Note 2: The non‑assessable part includes amounts (tax‑deferred amounts) associated with the small business 50% reduction, frozen indexation, building allowance and accounting differences in income.

Note 3: A payment made to you after you stop owning the unit or interest in the trust forms part of the capital proceeds for the CGT event that happened when you stopped owning it.

 (2) The payment can include giving property (see section 103‑5).

 (3) The time of the event is:
 (a) just before the end of the income year in which the trustee makes the payment; or
 (b) if another *CGT event (except CGT event E4) happens in relation to the unit or interest or part of it after the trustee makes the payment but before the end of that income year—just before the time of that other CGT event.

 (4) You make a capital gain if the sum of the amounts of the non‑assessable parts of the payments made in the income year made by the trustee in respect of the unit or interest is more than its *cost base.

Note: You cannot make a capital loss.

 (5) If you make a *capital gain, the *cost base and *reduced cost base of the unit or interest are reduced to nil.

Note: A capital gain under section 160ZM of the Income Tax Assessment Act 1936 is also taken into account for the purposes of this subsection: see subsection 104‑70(3) of the Income Tax (Transitional Provisions) Act 1997.

 (6) However, if that sum is not more than the *cost base:
 (a) the cost base is reduced by that sum; and
 (b) the *reduced cost base is reduced by that sum (without the adjustment in subsection 104‑71(3)).

Example: Mandy owns units in a unit trust that she bought on 1 July 1998 for $10 each. During the 1999‑2000 income year the trustee makes 4