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Edited version of private advice
Authorisation Number: 1052089363397
Date of advice: 8 June 2023
Ruling
Subject: Trading trust
Question
Will X Trust be a 'trading trust' as defined in section 102N of the Income Tax Assessment Act 1936 (ITAA 1936), so as to be a trust covered by subsection 275-10(4) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
No.
This ruling applies for the following period:
1 July 2022 to 30 June 2023
The scheme commenced
In the income year ending 30 June 2023
Relevant facts and circumstances
X Trust is a unit trust which invests (through subsidiary trusts) in land which is leased to tenants for rent.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 102M
Income Tax Assessment Act 1936 section 102N
Income Tax Assessment Act 1997 subsection 275-10(4)
Reasons for decision
Having regard to all the relevant facts and circumstances, the Commissioner is satisfied that the Trustee of X Trust only invests in units in unit trusts (satisfying subparagraph (b)(i) of the definition of 'eligible investment business in section 102M of the ITAA 1936), and the trustee of each of those subsidiary unit trusts invests in land primarily for the purpose of deriving rent (satisfying paragraph (a) of the definition of 'eligible investment business' in section 102M of the ITAA 1936).
Therefore, X Trust is not a 'trading trust' as defined in section 102N of the ITAA 1936 and will not be a trust covered by subsection 275-10(4) of the ITAA 1997.
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