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Edited version of your written advice
Authorisation Number: 1051452191542
Date of advice: 7 November 2018
Ruling
Subject: GST and a cash distribution from a trust
Question
Are you, as a beneficiary of a family trust, liable to pay GST on the cash distribution you received from the trust?
Answer
No. You are not liable to pay GST on the cash distribution you received as a beneficiary of the family trust because a cash distribution from a trust is not regarded as consideration for a supply by a beneficiary to the trust.
This ruling applies for the following periods:
1 July 20XX to 30 June 20XX
Relevant facts and circumstances
You are registered for GST from 1 July 20XX and a beneficiary of a family trust.
In the financial years 20XX and 20XX, you received a cash distribution from the family trust.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 sections 9-40, 9-5, 40-5
Reasons for decision
Section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that an entity must pay GST on any taxable supply that it makes.
Section 9-5 of the GST Act provides, amongst other things, that an entity makes a taxable supply if the entity makes a supply for consideration.
However, a supply is not a taxable supply to the extent that it is GST-free or input taxed.
Section 40-5 of the GST Act provides that a financial supply is input taxed.
The Commissioner has set out his views on the GST treatment of financial supplies in Goods and Services Tax Ruling GSTR 2002/2. At line D17 in Schedule 2 of GSTR 2002/2, it states that cash distributions from a trust are not subject to GST because there is no provision, acquisition or disposal of an interest in such transactions. A cash distribution from a trust is not regarded as consideration for a supply that a beneficiary makes to the trust.
Application of the law to your case
You received a cash distribution from the family trust in the financial years 20XX and 20XX. The cash distribution you received is not consideration for a supply that you make. As such, you are not making a taxable supply and are not liable to pay GST on the cash distribution you received.