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Edited version of private advice
Authorisation Number: 1012652505669
Ruling
Subject: Excepted person
Question 1
Is individual A an excepted person of the trust?
Answer
Yes.
Question 2
If so, will the trust income distributed to individual A be taxed at the general individual income tax rates?
Answer
Yes.
This ruling applies for the following period
Year ending 30 June 2015
The scheme commences on
1 July 2014
Relevant facts and circumstances
Individual A is under 18 years of age.
Individual A has been diagnosed with an illness.
Individual A's carer receives a government allowance in relation to individual A.
Individual A is a resident for tax purposes and a beneficiary of the trust.
Relevant legislative provisions
Income Tax Assessment Act 1936 Division 6AA
Income Tax Assessment Act 1936 subsection 102AC(2)
Income Tax Assessment Act 1936 subparagraph 102AC(2)(c)(i)
Reasons for decision
Question 1 & 2
Individual A is a minor and would normally be subject to the special rules of Division 6AA of the Income Tax Assessment Act 1936 (ITAA 1936).
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 this case, individual A has been diagnosed with an illness. Their carer receives a government allowance.
Based on the information provided, it is considered that the requirements of subparagraph 102AC(2)(c)(i) of the ITAA 1936 are satisfied and that individual A is therefore an excepted person.
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 and any income distributed from a trust will be assessable at general individual income tax rates for residents.