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Edited version of your written advice
Authorisation Number: 1051229041937
Date of Advice: 26 May 2017
Ruling
Subject: Income of an excepted person
Question
Are the distributions made to an excepted person for the purposes of paragraph 102AC(2)(d) of the Income Tax Assessment Act 1936 (ITAA 1936)?
Answer
Yes.
This ruling applies for the following periods:
Year ended 30 June 2017
Year ended 30 June 2018
Year ended 30 June 2019
Year ended 30 June 2020
Year ended 30 June 2021
The scheme commenced on:
1 July 20XX
Relevant facts:
A trust wishes to make trust distributions to a disabled minor who is a beneficiary of the trust.
The beneficiary has a number of serious and life shortening disabilities.
The beneficiary's age is less than 18.
You have provided medical certification from a legally qualified medical practitioner certifying that the person has a disability and is likely to need care and attention either permanently or for an extended period and that they meet the meaning of 'disabled child' under the Social Security Act 1991.
Relevant Legislation:
Income Tax Assessment Act 1936 paragraph 102AC(2)(d)
Reasons for decision
Summary
The beneficiary is an excepted person under paragraph 102AC(2)(d) of the Income Tax Assessment Act 1936 (ITAA 1936)
Detailed Reasoning
Division 6AA of the ITAA 1936 imposes a higher rate of tax on 'eligible taxable income' derived by a person who is less than 18 years of age at the end of the year of income if they are not an 'excepted person'.
An 'excepted person' is defined in subsection 102AC(2) of the ITAA 1936 and includes a person in respect of whom the Commissioner has received a certificate issued by a legally qualified medical practitioner certifying that they are a disabled child, or a disabled adult, within the meaning of Part 2.19 of the Social Security Act 1991 (sub subparagraph 102AC(2)(d)(i)(A) of the ITAA 1936).
A disabled child within the meaning of the Social Security Act 1991 is defined as a person aged under 18 who has a physical, intellectual or psychiatric disability and is likely to suffer from that disability permanently or for an extended period of time.
In your circumstances
You have supplied medical certification from a qualified medical practitioner certifying that the beneficiary is a child less than 18 years who is suffering a disability and who has ongoing symptoms from their condition. The Commissioner is satisfied that they are an excepted person under the paragraph 102AC(2)(d) of the ITAA 1936.