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Edited version of your written advice
Authorisation Number: 1051280668247
Date of advice: 11 September 2017
Ruling
Subject: Income Tax – Trust- Excepted person – minor
Question 1
Is a child an excepted person for the purposes of paragraph 102AC(2)(d) of the Income Tax Assessment Act 1936 (ITAA 1936)?
Answer:
Yes.
This ruling applies for the following periods:
Year ending 30 June 201X
Year ending 30 June 201X
Year ending 30 June 201X
Year ending 30 June 201X
Year ending 30 June 201X
The scheme commences on:
1 July 201X
Relevant facts and circumstances
The child is a minor.
The child was diagnosed with a chronic disease at birth.
A qualified medical practitioner certifying that the child has a disability and is likely to need care and attention either permanently or for an extended period and that they meet the meaning of ‘disabled child’ under the Social Security Act 1991.
Relevant legislative provisions
Income Tax Assessment Act 1936 subsection 102AC(1)
Income Tax Assessment Act 1936 paragraph 102AC(2)(d)
Reasons for decision
Division 6AA of the ITAA 1936 imposes a higher rate of tax on 'eligible taxable income' derived by a person who is less than 18 years of age at the end of the year of income if they are not an 'excepted person'.
An 'excepted person' is defined in paragraph 102AC(2)(d) of the ITAA 1936 when the Commissioner has received a certificate issued by a qualified medical practitioner certifying that the minor is a disabled child within the meaning of Part 2.19 of the Social Security Act 1991 on the last day of the income year.
A disabled child within the meaning of the Social Security Act 1991 is defined as a person aged under 16 who has a physical, intellectual or psychiatric disability and is likely to suffer from that disability permanently or for an extended period of time.
In your circumstances
You have supplied medical certification from a qualified medical practitioner certifying that the person is a child under 16 years who is suffering a disability permanently or for an extended period of time. The Commissioner is satisfied that the child is an excepted person under paragraph 102AC(2)(d) of the ITAA 1936. Accordingly, the special rates of tax under Division 6AA of the ITAA 1936 will not apply to income distributed to Jack Wallace from the trust.
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