Issue
What is the relevant discount percentage under section 115-100 of the Income Tax Assessment Act 1997 (ITAA 1997) that applies to a discount capital gain made by a superannuation fund that is not a complying superannuation fund?
Decision
The discount percentage relevant to a discount capital gain made by a superannuation fund that is a trust and is not a complying superannuation fund is 50% under subparagraph 115-100(a)(ii) of the ITAA 1997.
Facts
During the income year, a non-complying superannuation fund that was constituted as a trust made a capital gain on the sale of shares it acquired after 21 September 1999. The fund had owned the shares for more than 12 months at the time it disposed of them.
Reasons for Decision
Most superannuation funds are constituted as trusts. They have a trustee, a trust deed, trust property which is made up of the fund's investments and members who are beneficiaries.
Subparagraph 115-100(a)(ii) of the ITAA 1997 provides that the discount percentage for a discount capital gain made by a trust other than a trust that is a complying superannuation entity is 50%. The discount percentage for a gain made by a complying superannuation entity is 33 1/3% as provided for in subparagraph 115-100(b)(i) of the ITAA 1997.
'Complying superannuation entity' is defined in subsection 995-1(1) of the ITAA 1997 to mean: a) a complying superannuation fund, b) a complying approved deposit fund, or c) a pooled superannuation trust.
'Complying superannuation fund' is defined in subsection 995-1(1) of the ITAA 1997 to mean a complying superannuation fund within the meaning of section 45 of the Superannuation Industry (Supervision) Act 1993.
As no separate discount percentage has been specified in section 115-100 of the ITAA 1997 for superannuation funds that are not complying superannuation funds, it is considered that the relevant discount percentage for these entities is 50% under subparagraph 115-100(a)(ii) of the ITAA 1997, being the discount percentage that applies for a trust.