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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012595754784

Disclaimer

You cannot rely on the rulings in the Register of private binding rulings in your tax affairs. You can only rely on a private ruling that we have given to you or to someone acting on your behalf.

The Register of private binding rulings is a public record of private rulings issued by the ATO. The register is an historical record of rulings, and we do not update it to reflect changes in the law or our policies.

The rulings in the register have been edited and may not contain all the factual details relevant to each decision. Do not use the register to predict ATO policy or decisions.

Ruling

Subject: trust distribution

Questions

    1. Is the trustee of a testamentary trust liable to pay tax on interest income of the trust estate earned in the 2013-14 financial year where the beneficiary is presently entitled and not under a legal disability?

    Answer: No

    2. Is the beneficiary of a testamentary trust liable to pay tax on a distribution of interest income earned in the 2013-14 financial year when the beneficiary is presently entitled and not under a legal disability?

    Answer: Yes

    3. Is the trustee or beneficiary of a testamentary trust liable to pay tax on a distribution of corpus to the beneficiary?

    Answer: No

This ruling applies for the following period:

Year ended 30 June 2014

The scheme commenced on:

July 2013

Relevant facts and circumstances

The trustee intends on distributing income and corpus to the beneficiary.

The beneficiary is presently entitled and not under a legal disability.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 97.

Income Tax Assessment Act 1997 Subsection 6-5(2)

Income Tax Assessment Act 1936 Subsection 95(1)

Reasons for decision

The liability to taxation on the net income of a trust is determined under the following sections of the Income Tax Assessment Act 1936 (ITAA1936):

    • section 97 applies where a beneficiary is presently entitled to a share of the net income and is not under a legal disability

    • section 98 applies where a beneficiary is presently entitled but is under a legal disability, and

    • sections 99A and 99 apply where there is an absence of present entitlement of the beneficiary to all or some of the net income of a trust estate.


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