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Edited version of your private ruling
Authorisation Number: 1012088738252
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Ruling
Subject: CGT - deceased estate and company
Question and Answer
Will any distribution from the trust to the trustee company be taxed in the hands of the company at company tax rates?
Yes.
This ruling applies for the following period
1 July 2010 to 30 June 2012
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.
Post 20 September 1985 the deceased passed away.
Trust
Pre-CGT, by Deed of Settlement, the Trust was created.
The trust is registered in Australia.
The beneficiaries acquired their beneficial interests at the time of the trusts creation.
There was no consideration paid by the beneficiaries for their respective entitlement in the trust.
The trust is being wound up.
Assets of trust (sold and converted to cash)
Pre-CGT the trust purchased property 1.
Post-CGT property 1 was sold.
Post-CGT the trust purchased property 2.
Post-CGT property 2 was sold.
The Estate
The deceased estate belongs to a non-resident of Australia.
The rulee is the legal Personal Representative for the deceases estate.
Asset of the estate (sold and converted to cash)
Post-CGT property purchase by the deceased's parents transferred to the deceased as a joint tenant.
The property became income producing prior to 20 August 1996 (the property was always a rented property).
The parents passed away.
The income from the property was assigned to The Trust.
The property was sold post-CGT.
The Company
The Company is a beneficiary of The Trust.
The company is registered in Australia.
Beneficiaries
The spouse of the deceased, non-resident of Australia.
Child 1 and 2, which are non-residents of Australia.
Relevant legislative provisions
Income Tax Assessment Act 1936 subsection 98(3)
Income Tax Assessment Act 1936 subsection 99B(1)
Reasons for decision
Rates of tax
Subsection 99B(1) of the Income Tax Assessment Act 1936 (ITAA 1936) provides that where, during a year of income, a beneficiary who was a resident at any time during the year is paid a distribution from a trust, or has an amount of trust property applied for their benefit, that amount is to be included in the assessable income of the beneficiary.
Application to your circumstances
When the trust makes a distribution to the company it is taxable at the company tax rate.