Income Tax Assessment Act 1936

PART III - LIABILITY TO TAXATION

Division 6 - Trust income

SECTION 95AAA

95AAA SIMPLIFIED OUTLINE OF THE RELATIONSHIP BETWEEN THIS DIVISION, DIVISION 6E AND SUBDIVISIONS 115-C AND 207-B OF THE INCOME TAX ASSESSMENT ACT 1997

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The following is a simplified outline of the relationship between this Division, Division 6E and Subdivisions 115-C and 207-B of the Income Tax Assessment Act 1997 .

This Division sets out the basic income tax treatment of the net income of the trust estate. Generally:

(a) it has the result of assessing beneficiaries on a share of the net income of the trust estate based on their present entitlement to a share of the income of the trust estate; and

(b) it has the result of assessing the trustee directly on any residual net income; and

(c) as a collection mechanism, it has the result of assessing the trustee in respect of some beneficiaries, such as non-residents or those under a legal disability.

If the trust estate has capital gains, franked distributions or franking credits, this basic treatment is modified as described below.

Division 6E modifies the operation of this Division for the purpose of excluding amounts relevant to capital gains, franked distributions and franking credits from the calculations of assessable amounts under sections 97 , 98 , 99 , 99A and 100 .

Division 6E does not modify the operation of this Division (or any other provision of this Act) for any other purpose. For example:

(a) it does not modify the operation of this Division for the purposes of applying section 100A ; and

(b) it does not modify amounts taxed in the hands of the trustee under Subdivisions 115-C and 207-B of the Income Tax Assessment Act 1997 .

Subdivisions 115-C and 207-B of the Income Tax Assessment Act 1997 provide the corresponding taxation treatment for those capital gains, franked distributions and franking credits. Specifically:

(a) Subdivision 115-C of that Act has the effect that an amount corresponding to each of those capital gains is taxed in the hands of the beneficiaries of the trust (as a capital gain) and, if necessary, assessed to the trustee.

(b) Subdivision 207-B of that Act has the effect that an amount corresponding to each of those franked distributions is taxed in the hands of the beneficiaries of the trust and, if necessary, the trustee. It also has the effect that the entity in whose hands those distributions are taxed can take advantage of the relevant amount of related franking credits.

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History

S 95AAA inserted by No 62 of 2011, s 3 and Sch 2 item 1, effective 29 June 2011. No 62 of 2011, s 3 and Sch 2 item 51 (as amended by No 84 of 2013 and No 53 of 2016) contains the following application provisions:

51 Application provision
(1)
Subject to this item, the amendments made by this Schedule apply to assessments for the 2010-11 income year and later income years.

Early balancers and the 2010-11 income year

(2)
Subitems (3) and (4) apply in relation to a trust whose 2010-11 income year started before 1 July 2010.

(3)
The amendments made by this Schedule do not apply to an assessment for the 2010-11 income year unless the trustee of the trust makes a choice in accordance with subitem (4).

(4)
A choice mentioned in subitem (3):

(a) can only be made before the end of 2 months after the commencement of this item; and

(b) can only be made in writing.

MITs and the 2010-11, 2011-12, 2012-13, 2013-14, 2014-15, 2015-16 and 2016-17 income years

(5)
Subitems (6) and (7) apply in relation to an entity that:

(a) is a managed investment trust in relation to an income year; or

(b) is treated in the same way as a managed investment trust in relation to an income year for the purposes of Division 275 of the Income Tax Assessment Act 1997 .

(6)
The amendments made by this Schedule do not apply to an assessment for an income year mentioned in paragraph (7)(c) unless the trustee of the entity makes a choice in accordance with subitem (7) in relation to the income year or an earlier income year.
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History

S 51(6) substituted by No 84 of 2013, s 3 and Sch 4 item 2, effective 28 June 2013. S 51(6) formerly read:

(6)
If the income year is the 2010-11 or 2011-12 income year, the amendments made by this Schedule do not apply to an assessment for the income year unless:

(a) the trustee of the entity makes a choice in accordance with subitem (7) in relation to the income year; or

(b) in the case of the 2011-12 income year - the trustee of the entity made a choice in accordance with subitem (7) in relation to the 2010-11 income year.

(7)
A choice mentioned in subitem (6):

(a) can only be made before the end of 2 months after the later of:

(i) the end of the income year in relation to which the choice is made; and

(ii) the commencement of:

(A) if that income year is the 2010-11, 2011-12, 2012-13 or 2013-14 income year - Schedule 2 to the Tax Laws Amendment (2011 Measures No 5) Act 2011 ; or

(B) if that income year is the 2014-15, 2015-16 or 2016-17 income year - Schedule 8 to the Tax Laws Amendment (New Tax System for Managed Investment Trusts) Act 2016 ; and

(b) can only be made in writing; and

(c) can only be made in relation to the following income years:

(i) the 2010-11 income year;

(ii) the 2011-12 income year;

(iii) the 2012-13 income year;

(iv) the 2013-14 income year;

(v) the 2014-15 income year;

(vi) the 2015-16 income year;

(vii) the 2016-17 income year.

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History

S 51(7) substituted by No 53 of 2016, s 3 and Sch 8 item 5, effective 5 May 2016. S 51(7) formerly read:

(7)
A choice mentioned in subitem (6):

(a) can only be made before the end of 2 months after the later of:

(i) the end of the income year in relation to which the choice is made; and

(ii) the commencement of this item; and

(b) can only be made in writing; and

(c) can only be made in relation to the following income years:

(i) the 2010-11 income year;

(ii) the 2011-12 income year;

(iii) the 2012-13 income year;

(iv) the 2013-14 income year.

S 51(7) amended by No 84 of 2013, s 3 and Sch 4 item 3, by inserting para (c), effective 28 June 2013.

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