ATO Interpretative Decision

ATO ID 2002/922 (Withdrawn)

Income Tax

Commissioner's discretion under subsection 99A(2) of the Income Tax Assessment Act 1936 - Receiver and manager appointed to unit trust
FOI status: may be released

This ATOID is a simple restatement of the law and does not contain an interpretative decision.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Can the Commissioner exercise his discretion, under subsection 99A(2) of the Income Tax Assessment Act 1936 (ITAA 1936), not to apply section 99A of the ITAA 1936, where a receiver and manager has been appointed to the unit trust other than under the Bankruptcy Act 1966?

Decision

No. The Commissioner does not the discretion under subsection 99A(2) of the ITAA 1936 not to apply section 99A of the ITAA 1936 to the net income of the unit trust where a receiver and manager has been appointed to the unit trust other than under the Bankruptcy Act.

Facts

The unit trust operated a business. A receiver and manager was appointed to carry on and arrange the sale of the business. The appointment was not made under the Bankruptcy Act.

The disposal of the business will give rise to a net capital gain which will be included in the net income of the unit trust. The proceeds of the sale, net of tax, must be used to pay outstanding creditors.

The beneficiaries of the unit trust will not be presently entitled to the net capital gain.

Reasons for Decision

Paragraph 99A(2)(b) of the ITAA 1936 allows the Commissioner not to apply section 99A of the ITAA 1936 in relation to a trust estate:

'that consists of the property of a person who has become bankrupt, being property that has vested in The Official Receiver in Bankruptcy, or in a registered trustee, under the Bankruptcy Act 1966.'

As the receiver and manager was not appointed under the Bankruptcy Act, the Commissioner does not have any discretion to disregard the application of section 99A of the ITAA 1936 to this unit trust. The trustee is assessable under section 99A of the ITAA 1936 on the unit trust's net income to which no beneficiary is presently entitled.

Date of decision: 30 July 2002

Year of income: Year ended 30 June 2001 Year ended 30 June 2002

Legislative References:
Income Tax Assessment Act 1936
   section 99A
   subsection 99A(2)
   paragraph 99A(2)(b)

Keywords
Commissioner's discretion
Net Income of a trust
Receivership
Receivers and managers
Trustees
Unit trusts

Business Line: Centres of Expertise Capital Gains Tax

Date of publication: 26 September 2002

ISSN: 1445-2782

history

	Date:	Version:
	30 July 2002	Original statement
You are here	5 April 2007	Archived

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