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Edited version of private advice
Authorisation Number: 1052163776805
Date of advice: 1 September 2023
Ruling
Subject: Commissioner's discretion - section 99A
Question
Will the Commissioner exercise the discretion under subsection 99A(2) of the Income Tax Assessment Act 1936 (ITAA 1936) to tax the net income of the trust to which no beneficiary is presently entitled under section 99 of the ITAA 1936?
Answer
Yes.
After consideration of the relevant factors, the Commissioner is of the opinion that it would be unreasonable to apply section 99A of the ITAA 1936 to the net income of the trust for the relevant income years. Accordingly, section 99 of the ITAA 1936 will apply.
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
Several years ago, the deceased passed away.
The deceased's will directed that any death benefit be kept in a separate account to the other property in their estate.
Trust A was formed to receive the deceased's death benefit payment.
Trust A received the death benefit payment as an in-specie transfer of shares and cash directly from the deceased's superannuation fund. This amount represents the corpus of Trust A.
The death benefit was paid for the purpose of benefiting the deceased's surviving spouse.
The deceased had other assets, none of which are income producing assets. Other beneficiaries of the deceased estate are eligible to benefit from those assets under the will.
The deceased estate is yet to be fully administered and the executor has not yet made any distributions of income.
Trust A will be established when the deceased estate is fully administered.
There is some of the net income of Trust A to which no beneficiary is presently entitled.
Trust A holds no investments in private companies or closely held trusts.
There have been no further injections of capital (additional to its corpus) into Trust A.
No person, other than in a purely commercial transaction at arm's length, has directly or indirectly transferred money or property to Trust A, conferred benefits on Trust A, or conferred special privileges on the property of Trust A.
There are no loans to or from Trust A.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 99
Income Tax Assessment Act 1936 section 99A
Income Tax Assessment Act 1997 section 302-10
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