TAXATION ADMINISTRATION ACT 1953

SCHEDULE 1 - COLLECTION AND RECOVERY OF INCOME TAX AND OTHER LIABILITIES  

Note: See section 3AA .

Chapter 2 - Collection, recovery and administration of income tax  

PART 2-5 - PAY AS YOU GO (PAYG) WITHHOLDING  

Division 12 - Payments from which amounts must be withheld  

Subdivision 12-H - Distributions of withholding MIT income  

Operative provisions

SECTION 12-405   MEANING OF FUND PAYMENT - GENERAL CASE  

12-405(1)  
The object of this section is to ensure that the total of the *fund payments that the trustee of a trust makes in relation to an income year equals, as nearly as practicable, the net income of the trust for the income year, disregarding these amounts ( excluded amounts ):


(a) a dividend (as defined in Division 11A of Part III of the Income Tax Assessment Act 1936 ) that is subject to, or exempted from, a requirement to withhold under Subdivision 12-F ;


(b) interest (as so defined) that is subject to, or exempted from, such a requirement;


(c) a *royalty that is subject to, or exempted from, such a requirement;


(d) a *capital gain or *capital loss from a *CGT event that happens in relation to a *CGT asset that is not *taxable Australian property;


(e) amounts that are not from an *Australian source;

and disregarding deductions relating to excluded amounts.

12-405(1A)  


This section applies to a trust that is not an *AMIT for an income year.
Note:

For the definition of fund payment in respect of a trust that is an AMIT for an income year, see section 12A-110 .

12-405(2)  


Work out as follows how much of a payment (the actual payment ) made by the trustee of a trust in relation to an income year is a fund payment in relation to that year: Method statement

Step 1.

Reduce the actual payment by so much of it that is attributable to excluded amounts, and increase it by any amounts to which subsection (2A) or (2B) applies for the income year (except to the extent that capital gains against which those amounts are applied are included in the actual payment made in relation to the income year).


Step 2.

Work out what it is reasonable to expect will be the *net income of the trust for the income year:

  • (aa) increasing the net income by any amounts to which subsection (2A) or (2B) applies for the income year; and
  • (a) disregarding (except to the extent that they are amounts to which subsection (2A) or (2B) applies for the income year) excluded amounts, expected excluded amounts and deductions relating to those amounts; and
  • (b) on the basis that a *capital gain from *taxable Australian property of the trust that was or would be reduced under step 3 of the method statement in subsection 102-5(1) of the Income Tax Assessment Act 1997 were double the amount it actually is.

  • Step 3.

    The fund payment is so much of the step 2 amount as is reasonable having regard to:

  • (a) the object of this section; and
  • (b) the step 1 amount; and
  • (c) the amounts of any earlier fund payments made by the trustee in relation to the income year; and
  • (d) the expected amounts of any later fund payments the trustee expects to make in relation to the income year.
  • 12-405(2A)  


    If:


    (a) during an income year, a *capital loss from a *CGT event happens in relation to a *CGT asset that is not *taxable Australian property; and


    (b) in relation to that income year, some or all of the capital loss is applied against a *capital gain from a CGT event that happens in relation to a CGT asset that is taxable Australian property;

    this subsection applies, for that income year, to the amount that is so applied.

    12-405(2B)  


    If:


    (a) the trust has a *net capital loss for an income year; and


    (b) one or more of the *capital losses the trust made during that income year were from *CGT events that happened in relation to *CGT assets that were not *taxable Australian property; and


    (c) in relation to a later income year, some or all of the net capital loss is applied against a *capital gain from a CGT event that happens in relation to a CGT asset that is taxable Australian property;

    this subsection applies, for the later income year, to an amount equal to so much of the net capital loss that is so applied as related to capital losses mentioned in paragraph (b).

    12-405(3)  
    The expected *net income of the trust and the expected amounts of future *fund payments are to be worked out on the basis of the trustee ' s knowledge when the actual payment is made.

    12-405(4)  
    However, an amount is not a fund payment in relation to the income year unless it is paid:


    (a) during the income year; or


    (b) within 3 months after the end of the income year; or


    (c) within a longer period (starting at the end of the period referred to in paragraph (b) and not exceeding 3 months) allowed by the Commissioner.

    12-405(5)  
    The Commissioner may allow a longer period as mentioned in paragraph (4)(c) only if the Commissioner is of the opinion that the trustee was unable to make the payment during the income year, or within 3 months after the end of the income year, because of circumstances beyond the influence or control of the trustee.




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