EXPOSURE DRAFT

Inserts for
Tax and Superannuation Laws Amendment Bill: CGT exemption for compensation and insurance

Commencement information	
Column 1	Column 2	Column 3	
Provisions	Commencement	Date/Details	
1.  			
2.  Schedule ??	The day this Act receives the Royal Assent.		
3.  			
4  Amendment of assessments
		Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment if:
	(a)	the assessment was made before the commencement of Schedule ?? (about CGT exemption for compensation and insurance) to this Act; and
	(b)	the amendment is made for the purpose of giving effect to that Schedule; and
	(c)	the amendment is made within 2 years after the day that Schedule commences.
Note:	The 2‑year period in paragraph (c) can be extended (see section 170A of the Income Tax Assessment Act 1936).
Schedule ??—CGT exemption for compensation and insurance
  
Income Tax Assessment Act 1997
1  After paragraph 104‑71(1)(d)
Insert:
	(da)	a payment to which paragraph 118‑37(1)(ba) applies (about compensation paid through a trust); or
2  Before paragraph 104‑71(1)(e)
Insert:
	(db)	a payment to which subsection 118‑300(1A) applies (about insurance and annuity payments paid through a trust); or
3  Paragraphs 118‑37(1)(a) and (b)
Repeal the paragraphs, substitute:
	(a)	compensation or damages you receive for:
	(i)	any wrong or injury you suffer in your occupation; or
	(ii)	any wrong, injury or illness you or your *relative suffers personally;
	(b)	compensation or damages you receive as the trustee of a trust (other than a trust that is a *complying superannuation entity) for:
	(i)	any wrong or injury a beneficiary of the trust suffers in his or her occupation; or
	(ii)	any wrong, injury or illness a beneficiary of the trust, or the beneficiary’s relative, suffers personally;
	(ba)	a *CGT asset you receive, as a beneficiary of a trust, from the trustee of the trust to the extent that the CGT asset is attributable to compensation or damages that the trustee receives as described in paragraph (b) for:
	(i)	any wrong or injury you suffer in your occupation; or
	(ii)	any wrong, injury or illness you or your relative suffers personally;
4  Subsection 118‑300(1) (table item 3)
Repeal the item, substitute:
3	A policy of insurance on the life of an individual or an *annuity instrument	the original owner of the policy or instrument (other than the trustee of a *complying superannuation entity)	
5  Subsection 118‑300(1) (at the end of the table)
Add:
7	A policy of insurance against an individual suffering an illness or injury	the trustee of a *complying superannuation entity for the income year in which the *CGT event happened	
6  After subsection 118‑300(1)
Insert:
Payment to trust beneficiary (or representative) if trustee owns the policy or instrument
	(1A)	A *capital gain or *capital loss you make from a *CGT event happening because you receive a *CGT asset from the trustee of a trust is disregarded if:
	(a)	you receive the CGT asset as:
	(i)	a beneficiary of the trust; or
	(ii)	a *legal personal representative of a beneficiary of the trust; and
	(b)	the CGT asset is attributable to another CGT event and CGT asset to which table item 3 in subsection (1) applies for the trustee.
7  Subsection 295‑85(4) (table item 10)
Repeal the item, substitute:
10	Subsection 118‑300(1), other than table item 7 in that subsection	Insurance policies	
8  Application of amendments
(1)	The amendments made by this Schedule apply in relation to CGT events happening in the 2005‑06 income year and later income years.
(2)	However, the amendments made by items 2 and 6 apply in relation to CGT events happening after the day this Act receives the Royal Assent.