Draft Taxation Determination

TD 93/D233

Income tax: in 'section 99 assessments' of resident trust estates, other than deceased estates, is the trustee taxed at the resident individual rates?

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FOI status:

Preamble

1. No. Tax is payable when the net trust income exceeds $416.

2. If the net income of the resident trust estate does not exceed $416, subsection 14 (1) of the Income Tax Rates Act 1986 (ITRA) provides that no tax is payable.

3. If the net income of the resident trust estate exceeds $416, but does not exceed $693, subsection 14 (2) of the ITRA provides that the tax payable is 50% of the excess of the net income over $416.

4. If the net income of the resident trust estate exceeds $693, Schedule 10 (part 1, clause 2) of the ITRA provides that the rate of tax is the resident individual rates set out in Schedule 7 (part 1, clause 1), except that no tax-free threshold is available.

Example

The ABC trust was established directly from the proceeds of a workers' compensation claim. For the year ended 30 June 1993 the net income of the trust to which no beneficiary was presently entitled was $1,000. As the net income of the trust exceeds $416 the trustee will have a tax liability. Tax payable will be $200 (ie 20% of $1,000) calculated under schedule 7 (part 1, clause 1) as modified by Schedule 10 (part 1, clause 2).

Commissioner of Taxation
9 September 1993

References

BO BANTD31

Related Rulings/Determinations:

TD 92/192

Subject References:
tax free threshold
trusts

Legislative References:
ITAA 99
ITAA 99A(2)
ITRA 14(1)
ITRA 14(2)
Sch 7 (part 1, cl. 1)
Sch 10 (part 1, cl. 2)