(1) This section applies in relation to a CGT asset of a complying superannuation fund if:
(a) section 294 - 115 applies in relation to the CGT asset; and
(b) as a result of paragraph 294 - 115(3)(a), the fund makes a capital gain in respect of the asset (disregarding this section); and
(c) the trustee of the fund makes a choice for the purposes of this paragraph in respect of the asset in accordance with subsection (2).
(2) A choice made for the purposes of paragraph (1)(c):
(a) is to be in the approved form; and
(b) can only be made on or before the day by which the trustee of the fund is required to lodge the fund's income tax return for the 2016 - 17 income year; and
Disregard initial capital gain
(3) Disregard the capital gain mentioned in paragraph (1)(b).
Recognition of deferred notional gain
(4) The deferred notional gain is the 2016 - 17 non - exempt proportion of the amount of the fund's net capital gain for the 2016 - 17 income year determined on the assumptions that:
(a) subsection (3) of this section does not apply; and
(b) the fund made no capital gains in that income year other than the gain mentioned in paragraph (1)(b); and
(c) the fund made no capital losses in that income year; and
(d) the fund had no previously unapplied net capital losses from earlier income years.
(5) For the purposes of Division 102 of the Income Tax Assessment Act 1997 , if a realisation event happens to the asset in an income year that starts on or after 1 July 2017:
(a) treat the fund as having made a capital gain in that income year equal to the deferred notional gain; and
(b) disregard section 102 - 20 of that Act in respect of that capital gain; and
(c) treat that capital gain as not being a discount capital gain.
(6) Subsection 295 - 390(1) of the Income Tax Assessment Act 1997 does not apply to the amount by which a net capital gain is increased (or comes into existence) as a result of subsection (5).
"2016-17 non-exempt proportion" means 1 minus the proportion mentioned in subsection 295 - 390(3) of the Income Tax Assessment Act 1997 in respect of the fund for the 2016 - 17 income year.
"deferred notional gain" has the meaning given by subsection (4).