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Edited version of your private ruling
Authorisation Number: 1012580321106
Ruling
Subject: The recognition of the ABC Trust as a PST
Question 1
Will the process by which the ABC trust becomes recognised as a pooled superannuation trust (PST) affect the continuity of the trust estate of the ABC trust or result in the creation of a new trust estate for tax purposes?
Answer
No.
Question 2
Will the carry forward losses of the ABC trust as at 30 June 2013 continue to be available when calculating the taxable income of the ABC trust as a PST under the method statement contained in section 295-10 of the Income Tax Assessment Act 1997 (ITAA 1997), and disregarding the operation of the trust loss rules in Schedule 2F of the Income Tax Assessment Act 1936 (ITAA 1936) on the basis that the ABC trust will be an excepted trust for the purposes of paragraph 272-100(b) from the year in which it is recognised as a PST?
Answer
Yes.
Question 3
For so long as the ABC Trust remains a PST, will the trustee of the ABC Trust be liable for tax on the taxable income of the PST in accordance with subsection 295-5(3) of the ITAA 1997?
Answer
Yes.
Question 4
For so long as the ABC Trust is a PST, will certain assets be taxed primarily under the Capital Gains Tax provisions in accordance with section 295-85 of the ITAA 1997?
Answer
Yes.
Question 5
Are the tax consequences for the ABC Trust of the ABC Trust being recognised as a PST the result of a declaration or the giving of a notice expressly provided for by the ITAA 97, being the notice given by APRA in accordance with section 48 of the Superannuation Industry (Supervision) Act 1993, and therefore not tax benefits for the purposes of Part IVA of the ITAA 1936?
Answer
Yes.
This ruling applies for the following periods:
The year ended 30 June 2014, and each subsequent income year.
Relevant facts and circumstances
1. ABC Trust was established as a unit trust in 199X with X, Y and Z as unit holders.
2. Y and Z redeem their units in the ABC Trust leaving X, a superannuation fund, the sole unit holder.
3. The ABC Trust has carried forward losses.
4. ABC trust then proposes a transaction under which it will become a pooled superannuation trust (PST)
Relevant legislative provisions
Income Tax Assessment Act 1936 section 177C
Income Tax Assessment Act 1936 section 177CB
Income Tax Assessment Act 1936 section 177D
Income Tax Assessment Act 1936 section 265-5
Income Tax Assessment Act 1936 section 272-100
Income Tax Assessment Act 1997 section 118-20
Income Tax Assessment Act 1997 section 275-120
Income Tax Assessment Act 1997 section 295-5
Income Tax Assessment Act 1997 section 295-85
The Superannuation Industry (Supervision) Act 1993 section10
The Superannuation Industry (Supervision) Act 1993 section 40
The Superannuation Industry (Supervision) Act 1993 section 48
The Superannuation Industry (Supervision) Act 1993 section 52
Reasons for decision
Question 1
The process by which the ABC Trust becomes recognised as a PST will not affect the continuity of the trust estate of the ABC Trust or result in the creation of a new trust estate for income tax purposes.
Question 2
Section 265-5 of Schedule 2F to the Income Tax Assessment Act 1936 (ITAA 1936) provides that the Schedule 2F rules regarding trust losses and other deductions do not apply to an excepted trust.
The ABC Trust will be an excepted trust when it becomes a PST (as defined in section 48 of the Superannuation Industry (Supervision) Act 1993). As a PST, the ABC Trust will be exempted from the tests in Schedule 2F to the ITAA 1936.
Question 3
Subsection 295-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) states that the trustee of a PST is liable to pay tax on the taxable income of the trust.
Question 4
Whilst the ABC Trust remains a PST, subsection 295-85(2) of the ITAA 1997 will apply to make CGT the primary method of taxation for certain assets of the ABC Trust.
Question 5
Based on the facts and circumstances it has been determined that Part IVA does not apply.