ATO Interpretative Decision

ATO ID 2003/101 (Withdrawn)

income tax

Capital gains tax: meaning of 'resident trust for CGT purposes'
FOI status: may be released
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Is a trust a 'resident trust for CGT purposes' as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

Yes. As the trust is not a unit trust it will be a 'resident trust for CGT purposes' as defined in subsection 995-1(1) of the ITAA 1997 because the trustee is a resident of Australia.

Facts

A trust is established. Interests in the trust are not denominated in units.

The trustee of the trust is an individual.

At all times the trustee has resided in Australia.

Reasons for Decision

The expression 'resident trust for CGT purposes' is defined in subsection 995-1(1) of the ITAA 1997. There are separate tests for unit trusts and other trusts:

'A trust is a resident trust for CGT purposes for an income year if, at any time during the income year:

a)
for a trust that is not a unit trust, a trustee is an Australian resident or the central management and control of the trust is in Australia, or
b)
for a unit trust...'

The test in paragraph (a) is relevant in these circumstances because the trust is not a unit trust. Consideration therefore needs to be given to the residence of the trustee or to the place of central management and control of the trust.

Subsection 995-1(1) of the ITAA 1997 provides that an Australian resident is a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936).

A person is a resident of Australia for the purposes of the ITAA1936 if the definition in subsection 6(1) of the ITAA 1936 is satisfied. There are four tests for determining whether an individual is a resident in Australia. The main test is that the individual resides in Australia according to ordinary concepts.

In this situation, the trustee has always resided in Australia according to ordinary concepts and is therefore an Australian resident. Because the trustee is an Australian resident the trust is a resident trust for CGT purposes.

Date of decision:  25 October 2002

Year of income:  Year ending 30 June 2002

Legislative References:
Income Tax Assessment Act 1936
   subsection 6(1)

Income Tax Assessment Act 1997
   subsection 995-1(1)

Related Public Rulings (including Determinations)
TD 1999/83

Related ATO Interpretative Decisions
ATO ID 2003/99
ATO ID 2003/100

Keywords
Capital gains tax
Trusts
Resident trusts
Trustees

Business Line:  Losses and CGT Centre of Expertise

Date of publication:  15 March 2003

ISSN: 1445-2782

history
  Date: Version:
  25 October 2002 Original statement
You are here 11 December 2009 Archived

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