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Edited version of private advice
Authorisation Number: 1051623343043
Date of advice: 16 January 2020
Ruling
Subject: Commissioner's discretion
Question
Will the Commissioner exercise his discretion under subsection 99A(2) of the Income Tax Assessment Act 1936 (ITAA 1936) to tax trustee on income that no beneficiary is presently entitled to under section 99 of the 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 the trustee of the testamentary trust in the relevant income years. Accordingly section 99 of the ITAA 1936 will apply.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The trust was established under the terms of the will of the deceased.
The will provided that the trustee set aside out of the deceased's estate a fund on trust for the deceased's grandchild.
The trustee intends to accumulate rather than distribute any trust income to the beneficiary to increase over time the available capital of the trust fund for the beneficiary's benefit.
The only assets held by the trust were those owned by the deceased. No further capital has been introduced or contributed to the trust. No loans have been made to and from the trust.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 99
Income Tax Assessment Act 1936 Section 99A