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Edited version of private advice
Authorisation Number: 1052342126330
Date of advice: 13 December 2024
Ruling
Subject: Excepted trust income
Question 1
Will the income derived by the trustee of the minor's trust, from the investment of both the superannuation death benefit amount and the property from the deceased's estate that are transferred into the minor's trust, be excepted trust income under section 102AG of the Income Tax Assessment Act 1936 (ITAA 1936)?
Answer 1
Yes.
Based on the information provided to the Commissioner the income derived by the trustee from the investment of the superannuation death benefit amount and the property received from the deceased's estate will be excepted trust income under subparagraphs 102AG(2)(c)(v) and 102AG(2)(d)(i) of the ITAA 1936, respectively.
This ruling applies for the following periods:
Year ended 30 June 20XX to Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
The deceased died intestate in a prior year.
The deceased was divorced and had one minor child.
Letters of Administration were granted a few months after death to the deceased's ex-spouse, as Guardian for the child, until such time as they reach the age of majority and applies personally.
As the deceased died with no spouse, the child is entitled to the entirety of the estate under the relevant intestacy provisions.
The superannuation death benefit is currently held on trust for the child, having been paid to a bank account (the minor's trust).
The minor's trust has no instrument, as such, arising purely from the facts of the deceased's death by intestacy.
As a result, the current position is that the child is both the sole beneficiary of the estate and of the minor's trust over superannuation death benefits.
The child will turn 18 and attain the age of majority in a number of years, and will then cease to be a "prescribed person" for the purposes of Division 6AA Income Tax Assessment Act 1936.
The superannuation death benefit will be combined with the estate funds in the minor's trust, so that there is only one trust going forward.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 102AG
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