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Edited version of private advice
Authorisation Number: 1051630156354
Date of advice: 28 January 2020
Ruling
Subject: Section 100AA discretion
Question
Will the Commissioner exercise the discretion under subsection 100AA(4) of the Income Tax Assessment Act 1936 (ITAA 1936) to disregard the failure to meet the 'pay or notify' rule?
Answer:
Yes.
Having regard to the factors set out in subsection 100AA(5) of the ITAA 1936, we consider that in the present circumstances it is appropriate to exercise the discretion. Further information on the 'pay or notify' rule and the discretion can be found by searching 'QC 48729' on ato.gov.au.
This ruling applies for the following period:
Year ended 30 June 2019
The scheme commenced on
1 July 2018
Relevant facts and circumstances
The trust is a discretionary trust with 2019 being the first year of operation for the trust.
The trust was established for an individual for investment purposes. From the earnings each year, the trust will be giving a portion to an exempt entity.
For the 2018-19 income year, the trustee resolution was prepared with the first $xx,xxx being allocated to the exempt entity.
However, there was a miscommunication about who was supposed to make the payment to X between the trustee and the financial advisor who looks after the financial affairs of the trust. Consequently the payment was not made within the 2 month period allowed under the 'pay or notify' rule.
As soon as it was discovered the payment had not been made within the required 2 month period, action was taken with the $xx,xxx being paid to the exempt entity on XX/XX/2019.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 100AA