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This edited version has been archived due to the length of time since original publication.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 your private ruling

Authorisation Number: 1012169074140

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Ruling

Subject: Unit Trust- State Territory Body (STB)

This ruling applies to the beneficiaries of the trust and to the trustee and to any future trustees, for as long as the ruling remains current.

Question 1

Does the Taxpayer as Trustee for the Unit Trust satisfy the conditions of section 24AS of the Income Tax Assessment Act 1936 (ITAA 1936) so as to constitute an STB?

Answer

Yes

Question 2

Is the Unit Trust an excluded STB in terms of section 24AT of the ITAA 1936?

Answer

No

This ruling applies for the following periods:

Years ended 30 June 2011 to 30 June 2016

The scheme commenced on

1 July 2010

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

Entity A is a body corporate and its constitution and rules cannot be altered or revoked without the approval of its head. It has perpetual succession, with a common seal capable of holding real and personal property among other things, and with the objects and powers prescribed by its constitution and rules.

Entity A is currently the sole unit holder of all issued units in the Unit Trust. The Unit Trust was established by a deed (Trust Deed). The Trustee is the trustee of the Unit Trust and was incorporated with a constitution. The sole shareholder of the Trustee is Entity A. The Trustee as trustee of the Unit Trust acts as a group procurement body for several entities.

Relevant legislative provisions

Income Tax Assessment Act 1936 section 24AM,

Income Tax Assessment Act 1936 section 24AS,

Income Tax Assessment Act 1936 section 24AN, and

Income Tax Assessment Act 1936 section 24AT

Reasons for decision

These reasons for decision accompany the Notice of private ruling for the taxpayer.

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

Question 1

Summary

The Unit Trust is a STB as it satisfies section 24AS of the ITAA 1936.

Detailed reasoning

Section 24AM in Division 1AB of the ITAA 1936 provides that the income of a STB is exempt from income tax unless section 24AN of the ITAA 1936 applies to the STB.

Section 24AN of the ITAA 1936 provides that the income derived by a STB is not exempt from income tax if, at the time that it is derived, the STB is an excluded STB.

In this Division section 24AT of the ITAA 1936 provides a definition of an excluded STB as a STB that:

Pursuant to section 24AS of the ITAA 1936, a body is an STB if:

Section 24AT of the ITAA 1936 defines a government entity to include another STB that is not an excluded STB.

Section 24AQ of the ITAA 1936 provides that a body is an STB if:

Entity A satisfies the conditions set out in section 24AQ of the ITAA 1936 in that:

The legislation gives the power to appoint or dismiss its governing body to its constituent councils that are local governing bodies, and accordingly government entities.

Further, Entity A is not an excluded STB in terms of section 24AT of the ITAA 1936 as:

As Entity A is a STB because it satisfies the conditions provided for by section 24AQ of the ITAA 1936, and it is not an excluded STB in terms of section 24AT of the ITAA 1936, it is a government entity as defined in section 24AT of the ITAA 1936.

The Unit Trust satisfies the conditions of section 24AS of the ITAA 1936 in that:

All the legal and beneficial interests (including, but not limited to, interests as to income, profits, dividends, capital and distributions of capital) in it are held by Entity A.

All the rights or powers (if any) to vote, appoint or dismiss its governing person or body and direct its governing person or body as to the conduct of its affairs are held by Entity A.

Question 2

Summary

The Unit Trust is not an excluded STB in terms of 24AT of the ITAA 1936.

Detailed reasoning

The Unit Trust is not an excluded STB in terms of section 24AT of the ITAA 1936 as:

Conclusion:

The Unit Trust is a STB because it satisfies the conditions set out in section 24AS of the ITAA 1936.

Further, the conditions set out in section 24AT of the ITAA 1936 do not apply to the Unit Trust. Therefore, it is not an excluded STB in terms of section 24AT of the ITAA 1936.

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