Edited version of private advice

Authorisation Number: 1051972755384

Date of advice: 1 June 2022

Ruling

Subject: Trust - capital gains

Question 1

Is the XX settlement a 'fixed trust' for the purposes of section 272-65 of Schedule 2F to the Income Tax Assessment Act 1936 (ITAA 1936) and subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes

Question 2

Is the non-resident remainder beneficiary presently entitled to capital gains after the death of XX, who has a life interest in the trust?

Answer

Yes

Question 3

Can a capital gain that a foreign resident remainder individual is presently entitled to, be disregarded if the gain is not on taxable Australian real property?

Answer

Yes

Question 4

Can a capital gain that a foreign resident remainder trust is presently entitled to, be disregarded if the gain is not on taxable Australian real property?

Answer

Yes

This private ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

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

The trust deed you provided was executed on XX March 19XX by XX appointing his daughter XX. She has a life interest in the trust. Upon his daughter's death (XX March 20XX) the remainder of the trust passes to her surviving children or if no children to the settlor XX or his children.

In the deed dated XX March 19XX clause 2(c) nominates the children of XX as residuary beneficiaries in equal shares on her death upon reaching 21 years of age with default clause 2(d) in the event of XX having no children.

XX died on XX March 20XX with no surviving children.

In your application you state that this leaves the remainder of the trust distributable under clause 2(d) to XX who having died XX July 20XX thereby relinquished his share to his three surviving children, Child 1, Child 2 and Child 3.

All three remaindermen have satisfied the 21 year age requirement and are each presently entitled to one third of the income and corpus of the residual estate, including an E5 capital gain upon vesting date XX March 20XX.

All children are New Zealand tax residents. Child 1 died X December 20XX and having survived her father XX, her share is now payable to her estate (that is a non-resident trust).

The assets of the trust consist of listed equities on the ASX and unlisted managed funds.

Relevant legislative provisions

Subsection 6(1) Income Tax Assessment Act 1936 (ITAA 1936)

Section 272-65 of Schedule 2F ITAA 1936

Section 855-40 of the Income Tax Assessment Act 1997 (ITAA 1997)

Section 98 ITAA 1936

Subsection 995-1(1) ITAA 1997

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