Draft Taxation Determination

TD 94/D29

Income tax: who can claim a deduction, under subsection 69(1), for the tax related expense of a trust?

  • Please note that the PDF version is the authorised version of this ruling.
    This document has been finalised by TD 94/91.

FOI status:

draft only - for comment

Preamble

Draft Taxation Determinations (TDs) present the preliminary, though considered, views of the ATO. Draft TDs may not be relied on; only final TDs are authoritative statements of the ATO.

1. Only the trustee is entitled to claim the expense as a deduction in the trust's tax return.

2. Under subsection 69(1),

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such expenditure must be in respect of a tax related matter of the taxpayer ; and
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can only be claimed as a deduction by that taxpayer ;

3. It is the trust's tax related matter on which expenditure has been incurred; as the trustee is the taxpayer for the purposes of subsection 69, only the trustee is entitled to claim a deduction, in the trust's tax return, for the expenditure on the tax related matter.

4. In the instances of a beneficiary or a director of a trustee company, it is not their tax related matter on which expenditure has been incurred; it follows that neither the beneficiary nor the director is entitled to claim, in his/her/its own tax return, a deduction for that expense.

Example 1: B is the trustee for the B family trust. He pays a registered tax agent to prepare the returns for the trust. B may claim a deduction for this expense in the trust's tax return.

Example 2: A family trust has a company as its trustee, of which A is a director. A pays a registered tax agent to prepare the trust return. A is not entitled to a deduction for this expense under subsection 69(1) as he is not the trustee.

Example 3: B Pty Ltd is a beneficiary of a trust. B Pty Ltd pays a registered tax agent for the preparation of a letter of objection to the trust assessment the Commissioner has issued. B Pty Ltd is not entitled to a deduction for the expenditure under subsection 69(1) as it is not the trustee.

Commissioner of Taxation
24/3/94

References


BO UMG77

ISSN 1038 - 8982

Subject References:
tax related expenses
trusts
trustees
trustee company
directors

Legislative References:
ITAA 69