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Edited version of private advice
Authorisation Number: 1052363071858
Date of advice: 18 February 2025
Ruling
Subject: Commissioner's discretion - section 99A
Question 1
If the trustee is assessable on income to which no beneficiary is presently entitled, would the Commissioner exercise his discretion not to apply the provisions of section 99A of the Income Tax Assessment Act 1936 (ITAA 1936) and assess the trustee under section 99 of the ITAA 1936?
Answer 1
Yes.
Having considered your circumstances and the relevant factors the Commissioner is satisfied that the estate is not being administered for the purpose of tax avoidance and therefore would exercise his discretion not to apply the provisions of section 99A of the ITAA 1936 and assess the trustee under section 99 of the ITAA 1936
This ruling applies for the following period/s:
Income year ending 30 June 20XX
The scheme commenced on:
XX XXXX 20XX
Relevant facts and circumstances
The deceased passed suddenly on XX XXXX 20XX, at the age of XX.
The deceased's will (the will) appointed the spouse as executor of the estate.
The will named the spouse and their children as beneficiaries.
The spouse/executor entered a period of extreme depression, and the children were unwilling to push the administration of the estate due to the risk of further deterioration of their mental health. This was also the period of the COVID 19 pandemic, when people felt unsure about where the future was heading. In the case of the executor, it drove them to the point of inactivity and indecision.
Prior to their death, the deceased had been operating a business of primary production in partnership with an adult child. The business was operated on land owned by the deceased and the child. This partnership continued to operate after their death, between the child and the estate. The net profits have been accumulated in the partnership bank account.
It was not until a few years after the deceased's death, that the executor took steps to seek legal assistance to obtain a grant of probate and to take steps to wind up matters.
In the 20XX income year, it is expected that the estate will transfer the land to the applicable beneficiaries and all other assets will be converted to cash and distributed to the beneficiaries. This is already underway. During this time, you expect the estate will be finalised.
The estate has only ever consisted of assets that the deceased owned and funds resulting from those assets.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 99
Income Tax Assessment Act 1936 section 99A
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