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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of private ruling

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Ruling

Subject: Fixed trust for the purposes of section 272-65 of Schedule 2F to the ITAA 1936

Question 1

Is the Trust a fixed trust for the purposes of section 272-65 of Schedule 2F to the Income Tax Assessment Act 1936 (ITAA 1936)?

Answer

Yes

This ruling applies for the following period:

Year ended 30 June 2009

Year ended 30 June 2010

Year ending 30 June 2011

Year ending 30 June 2012

Year ending 30 June 2013

The scheme commences on:

1 July 2008

Relevant facts and circumstances

The scheme, the subject of this ruling, has been ascertained from the following documents;

Relevant legislative provisions

Income Tax Assessment Act 1936 Section Schedule 2F 272-5

Income Tax Assessment Act 1936 Subsection Schedule 2F 272-5(1)

Income Tax Assessment Act 1936 Subsection Schedule 2F 272-5(3)

Income Tax Assessment Act 1936 Section Schedule 2F-272-65

Income Tax Assessment Act 1997 Section 995-1

Does Part IVA apply to this ruling?

Part IVA of the Income Tax Assessment Act 1936 is a general anti-avoidance rule that can apply in certain circumstances if you or another taxpayer obtains a tax benefit in connection with an arrangement and it can be concluded that the arrangement, or any part of it, was entered into or carried out by any person for the dominant purpose of enabling a tax benefit to be obtained. If Part IVA applies the tax benefit can be cancelled, for example, by disallowing a deduction that was otherwise allowable.

We have not fully considered the application of Part IVA to the arrangement you asked us to rule on, or to an associated or wider arrangement of which that arrangement is part.

If you want us to rule on whether Part IVA applies we will first need to obtain and consider all the facts about the arrangement which are relevant to determining whether Part IVA may apply.

For more information on Part IVA, go to our website www.ato.gov.au and enter 'part iva general' in the search box on the top right of the page, then select: Part IVA: the general anti-avoidance rule for income tax.

Reasons for decision

Section 272-65 of Schedule 2F to the ITAA 1936 states that a trust is a fixed trust if persons have fixed entitlements to all of the income and capital of the trust.

The Constitution of the Trust contains certain clauses under which a unit holder's interest in a share of income, or of the capital, of the Trust may be rendered defeasible. Therefore, the Commissioner considers it reasonable to conclude, pursuant to the definition of 'fixed entitlement' under subsection 272-5(1) of Schedule 2F to the ITAA 1936, that the unit holders (or beneficiaries) do not have fixed entitlements to all of the income and capital of the Trust.

In relation to the scheme described in the ruling, the Commissioner has given consideration to the requirements of subsection 272-5(3) of Schedule 2F to the ITAA 1936 and submission from the applicant, and there is a reasonable case under subsection 272-5(3) to treat unit holders (or beneficiaries) of the Trust as having fixed entitlements to all of the income and capital of the Trust such that the Trust is a fixed trust for the income years ended 30 June 2009 to 30 June 2013.

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