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Edited version of your written advice
Authorisation Number: 1051193382396
Date of advice: 28 March 2017
Ruling
Subject: Whether any of the Trust income should be included in your assessable income
Question 1
Is any of the net income of the X Trust included in your assessable income?
Answer
No
This ruling applies for the following periods:
Year ended 30 June 2013
Year ended 30 June 2014
Year ended 30 June 2015
Year ended 30 June 2016
The scheme commences on:
1 July 2012
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.
● The trustee of the X Trust operates a retirement village, where you are a resident.
● As a lessee of a residential unit at the village, you are a beneficiary under the trust.
● Under the trust's deed, you can become entitled to the assets of the trust in the following ways:
● if the trustee, after obtaining the necessary approvals, distributes surplus cash under clause Y;
● upon the vesting of the trust, under clause Z.
● In any case your entitlement would be pro rata with the other residents in accordance with the 'unit entitlement' allocated to the residential unit you lease. Each residential unit's 'unit entitlement' is specified in the trust deed.
● No distribution of surplus has been made under clause 4 of the trust deed.
● The assets of the trust, including accumulated income, are deployed in the operation of the retirement village. You benefit in an indirect sense from some of this expenditure because you are a resident of the retirement village, but none of the expenditure is specifically for your benefit.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 97(1).
Reasons for decision
In broad terms, Division 6 of Part III of the Income Tax Assessment Act 1936 (Cth) ('ITAA36') determines who will be assessed for income tax purposes on which parts of the net income of a trust.
Where a beneficiary is presently entitled to a share of the trust's income, that beneficiary is assessable on a corresponding share of the trust's net income for tax purposes: subsection 97(1).
In the present case, the trustee has not exercised any power to distribute any of the income to the beneficiaries of the trust. Therefore you cannot be said to have any interest in a share of the income of the trust. Accordingly, you are not presently entitled to any share of income of the trust for a particular year, and no share of the corresponding net income of the trust is included in your assessable income under Division 6.
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