Edited version of private ruling

Authorisation Number: 1011853785822

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Ruling

Subject: Income for a minor - Excepted Person

Question 1

Is the Australian resident minor taxpayer an excepted person for the purposes of Division 6AA of the Income Tax Assessment Act 1936 (ITAA 1936) and therefore assessable at general individual income tax rates for residents on income distributed from an Australian resident discretionary trust?

Answer

Yes.

This ruling applies for the following periods:

1 July 2010 to 30 June 2011
1 July 2011 to 30 June 2012
1 July 2012 to 30 June 2013
1 July 2013 to 30 June 2014
1 July 2014 to 30 June 2015
1 July 2015 to 30 June 2016

The scheme commences on:

1 July 2010

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

The taxpayer is under 18 for the period to which this ruling applies.

The taxpayer has been diagnosed with a disability.

A Carer Allowance is being paid in respect of the taxpayer and the taxpayer will continue to be the subject of a Carer's Allowance from Centrelink for the duration of the ruling.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 102AC
Income Tax Assessment Act 1936 Division 6AA

Reasons for decision

These reasons for decision accompany the Notice of private ruling for the taxpayer.

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

Detailed reasoning

Division 6AA of the ITAA 1936 ensures that special rates of tax and a lower tax free threshold apply in working out the basic income tax liability on taxable income, other than excepted income, derived by a prescribed person.

A prescribed person is defined in subsection 102AC(1) of the ITAA 1936 to include any person, other than an excepted person (as defined in subsection 102AC(2) of the ITAA 1936), and under 18 years of age at the end of the income year.

Subsection 102AC(2) of the ITAA 1936 states that a minor is an excepted person in relation to a year of income if:

(c) the minor is a person -

(i) in respect of whom a carer allowance under the Social Security Act 1991 was payable in respect of a period that included the last day of the year of income; 

In your case, the taxpayer has been diagnosed with a medical condition. A Carer Allowance is being paid by Centrelink in respect of this.

Based on the information provided, it is considered that the requirements of subsection 102AC(2)(c)(i) of the ITAA 1936 are satisfied and that the taxpayer is therefore an excepted person, provided that the Carer Allowance will continue to be paid in respect of the taxpayer for the duration of the period to which this ruling applies and that those payments will be payable in respect of the period that includes the last day of each year of income. Accordingly, the special rates of tax under Division 6AA of the ITAA 1936 will not apply to income derived by the taxpayer during the period to which this ruling applies.