Section 2 - Do you have to pay an interest charge?



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If you are an Australian resident beneficiary of a non-resident trust estate and section 99B includes a distribution of accumulated income from the non-resident trust estate in your assessable income, you may be liable to pay additional tax in the nature of an interest charge on the distribution.

The interest charge does not apply if the amount included in your assessable income was paid from profits that have previously been taxed on an accruals basis under the transferor trust measures.

The charge is also not applicable for distributions from a public unit trust unless it is a controlled foreign trust.

The interest charge may apply to a distribution of profits from a non-resident trust estate to the extent the distribution was made from profits that:

  • are referable to eligible designated concession income derived in an income year when the trust was a resident of a broad-exemption listed country or
  • were not subject to tax in a broad-exemption listed country and were derived in an income year when the trust was a resident of a non-broad-exemption listed country.

Listed countries are to be treated as broad-exemption listed countries for this purpose if the trust estate's income year commences before 1 July 1997.

Last modified: 05 Dec 2006QC 17522