Taxation Determination

TD 93/186

Income tax: where a trustee is assessed under subsection 98(1) of the Income Tax Assessment Act 1936, in respect of a resident individual beneficiary under a legal disability, is the imputation rebate on dividends allowed in both the trustee's assessment and the individual's assessment?

Please note that the PDF version is the authorised version of this ruling.

This ruling contains references to repealed provisions, some of which may have been rewritten. The ruling still has effect. Paragraph 32 in TR 2006/10 provides further guidance on the status and binding effect of public rulings where the law has been repealed or repealed and rewritten. The legislative references at the end of the ruling indicate the repealed provisions and, where applicable, the rewritten provisions.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

FOI status:

may be releasedFOI number: I 121682

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

1. Yes. Where a beneficiary derives other income and is required to include the trust distribution by virtue of subsection 100(1), both the trustee (section 160AQY) and the beneficiary (section 160AQX) receive the imputation rebate. However, the benefit is not actually allowed twice.

2. Under subsection 100(2), a beneficiary who is under a legal disability receives a credit for the tax paid or payable by the trustee on that beneficiary's share of the income entitlement. To calculate this credit the gross tax payable by the trustee under subsection 98(1) is reduced by the beneficiary's share of the trust's imputation rebate. This reduced amount is the credit allowed under subsection 100(2) in the beneficiary's assessment.

Example :-

During the year ended 30 June 1993 the ABC Trust derived a net income of $5,000, consisting of a fully franked dividend of $3,050 and the attached imputation amount of $1,950. The sole beneficiary "X" is presently entitled to the trust income, but as a minor, is under a legal disability. In addition to the entitlement to the trust distribution X derived $2,000 of interest during the year. All income is assessable under the provisions of Division 6AA.

TRUSTEE BENEFICIARY

The ABC Trust would be assessed under subsection 98(1) on a taxable income of $5,000. The tax assessed would be:- The beneficiary "X" would be assessed as-follows:-

Franked dividend, s44(1) $3,050 Interest, s25(1) $2,000

Imputation amount, s160AQT(1) $1,950 Trust distribution, s100(1)

Taxable Income $5,000 Franked dividend $3,050

Imputation amount $1,950 $5,000

Taxable Income $7,000

TRUSTEE BENEFICIARY

Tax Payable on $5,000 @ 47% $2,350 Tax payable on $7,000 @ 47% $3,290

Less Less

Imputation rebate, s160AQY $1,950 Imputation rebate, s160AQX $1,950

Tax payable by trustee, s98(1) $400 Section 100(2) credit $400 $2,350

Net Tax payable by Beneficiary $940

TRUSTEE	BENEFICIARY
The ABC Trust would be assessed under subsection 98(1) on a taxable income of $5,000. The tax assessed would be:-	The beneficiary "X" would be assessed as-follows:-
Franked dividend, s44(1) $3,050	Interest, s25(1) $2,000
Imputation amount, s160AQT(1) $1,950	Trust distribution, s100(1)
Taxable Income $5,000	Franked dividend $3,050
	Imputation amount $1,950 $5,000
	Taxable Income $7,000
TRUSTEE	BENEFICIARY
Tax Payable on $5,000 @ 47% $2,350	Tax payable on $7,000 @ 47% $3,290
Less	Less
Imputation rebate, s160AQY $1,950	Imputation rebate, s160AQX $1,950
Tax payable by trustee, s98(1) $400	Section 100(2) credit $400 $2,350
	Net Tax payable by Beneficiary $940

Note :-

The combined tax paid by the trustee and the individual is $1,340, being 47% of the total income of $7,000 less the imputation rebate of $1,950.

Commissioner of Taxation
16/9/93

Previously issued as Draft TD 93/D152

References

ATO references:
NO BANTD30

ISSN 1038 - 8982

Related Rulings/Determinations:

TD 92/159

Subject References:
beneficiary
franked dividend
imputation system

Legislative References:
ITAA 25(1)
ITAA 44(1)
ITAA 98(1)
ITAA 100
ITAA 160AQT(1)
ITAA 160AQX
ITAA 160AQY

TD 93/186 history

	Date:	Version:	Change:
	16 September 1993	Original ruling
You are here	29 November 2006	Original ruling + note	Repeal provision note

Copyright notice

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).