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Edited version of private advice
Authorisation Number: 1051618968969
Date of advice: 10 December 2019
Ruling
Subject: Income Tax - Trust Income
Question 1
Will the Commissioner extend the period for making a choice by the trustee under section 115-230 of the Income Tax Assessment Act 1997 until XX 20XX?
Answer
Yes. After consideration of the relevant facts, the Commissioner is satisfied the trust property representing all or part of the capital gain has not been paid to or applied for the benefit of a beneficiary by the end of two months after the end of the income year. The Commissioner will allow an extension of time for the trustee to choose to be specifically entitled to the capital gain.
Question 2
Will the Commissioner assess the trustee under section 99 of the Income Tax Assessment Act 1936 (ITAA 1936)?
Answer
Yes. After consideration of the relevant factors, the Commissioner is of the opinion that it would be unreasonable that section 99A of the ITAA 1936 should apply in relation to that trust estate in relation to the relevant year of income. Accordingly section 99 of the ITAA 1936 will apply.
This ruling applies for the following periods:
Year ending 30 June 2019
Year ending 30 June 2020
The scheme commences on:
1 July 2019
Relevant facts and circumstances
The deceased passed away on in 20XX.
The deceased left a will and appointed two trustees.
The deceased's will created a testamentary trust which held a joint life interest for the two trustees and the remainder is to benefit the trustee's children (the deceased's X grandchildren).
At the date of death, the deceased estate held two properties. One of the properties was the deceased's main residence.
In 20XX the trustees and the X grandchildren entered into an agreement that varied the terms of the testamentary trust.
The deceased's main residence was transferred to one of the trustees' children and adjustments were made to reflect the remaining interest holders.
The property was sold in the year ended 30 June 20XX but settlement occurred in the next income year ending 30 June 20XX.
A capital gain arose. No property representing the gain was paid to or applied for the benefit of a beneficiary within two months of the end of the income year, being 30 June 20XX.
The trustees would like to make a choice to choose to be specifically entitled to the capital gain.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 99
Income Tax Assessment Act 1936 section 99A
Income Tax Assessment Act 1997 section 115-230