ATO Interpretative Decision
ATO ID 2002/238
Income Tax
Assessment of minor beneficiary's share of the net trust incomeFOI status: may be released
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This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Are both the trustee and the minor beneficiary assessable on a minor beneficiary's share of the net trust income under subsection 98(1) and subsection 100(1) of the Income Tax Assessment Act 1936 (ITAA 1936) respectively?
Decision
Yes, both the trustee and minor beneficiary are assessable on the minor beneficiary's share of the net trust income under subsection 98(1) and subsection 100(1) of the ITAA 1936 respectively.
Facts
A beneficiary, who was 16 years of age at the end of the income year, was presently entitled to a share of trust income from an Australian resident trust.
The beneficiary also received income from other sources.
Reasons for Decision
Subsection 98(1) of the ITAA 1936 provides that where a beneficiary who is under a legal disability is presently entitled to a share of trust income, the trustee is assessed and liable to pay tax on that share in respect of:
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- so much of the share of the net trust income as is attributable to a period when the beneficiary was a resident; and
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- so much of the share of the net trust income as is attributable to a period when the beneficiary was not a resident and is also attributable to Australian sources.
As the beneficiary was less than 18 years of age (a minor) and, therefore, under a legal disability at the end of the income year, the trustee is assessable on the beneficiary's share of the net trust income under subsection 98(1).
In addition, subsection 100(1) of the ITAA 1936 provides that the minor beneficiary is also assessable on their share of the net trust income because the beneficiary was in receipt of income from other sources.
A credit for the tax payable by the trustee, in respect of the beneficiary's share of the net trust income, is allowed to the beneficiary under subsection 100(2) of the ITAA 1936.
Amendment History
| Date of Amendment | Part | Comment |
|---|---|---|
| 27 February 2015 | Issue, Decision and Reasons for Decision | Amended for clarity |
| Keywords | Updated keywords |
Year of income: Year ended 30 June 2000
Legislative References:
Income Tax Assessment Act 1936
subsection 98(1)
subsection 100(1)
subsection 100(2)
Keywords
Legal disability
Minor beneficiaries
Trusts
Trust beneficiaries
Trust income
Trust distributions
Date reviewed: 12 June 2018
ISSN: 1445-2782
| Date: | Version: | |
| 21 January 2002 | Original statement | |
| You are here | 27 February 2015 | Updated statement |