Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) CGT event E7 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 interest, or part of it, in the trust capital.
Note: Division 128 deals with the effect of death.
(2) The time of the event is when the disposal occurs.
Trustee makes a capital gain or loss
(3) 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
(4) 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
(5) 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 interest, or the part of it, being satisfied. The beneficiary makes a capital loss if that market value is less than the * reduced cost base of that interest or part.
Exceptions for beneficiary
(6) A * capital gain or * capital loss the beneficiary makes is disregarded if:
(a) the beneficiary * acquired the * CGT asset that is the interest (except by way of an assignment from another entity) for no expenditure; or
(b) the beneficiary acquired it before 20 September 1985; or
(c) all or part of the capital gain or capital loss the trustee makes from the * CGT event is disregarded under Subdivision 118 - B (about main residence).
Expenditure can include giving property: see section 103 - 5.
Note 1: For provisions affecting the application of Subdivision 118 - B to the trustee, see sections 118 - 215 to 118 - 230.
Note 2: There is also an exception for employee share trusts: see section 130 - 90.