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Edited version of private advice
Authorisation Number: 1051656184354
Date of advice: 07 April 2020
Ruling
Subject: Commissioner's discretion
Question
Will the Commissioner exercise their discretion under subsection 99A(2) of the Income Tax Assessment Act 1936 (ITAA 1936) to tax the 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 section 99A of the ITAA 1936 should not apply as the trust estate resulted from a court order that varied the provisions of a will and it would be unreasonable the section should apply in relation to the trust estate in the relevant income years. Accordingly section 99 of the ITAA 1936 will apply.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
1July 20XX
Relevant facts and circumstances
You were married to X until your divorce in 20XX.
X died in 20XX, while you were still involved in Family Court proceedings.
X's Will provided for the establishment of testamentary trusts for your children.
The Family Court made orders varying the terms of X's will. You now hold estate funds on trust for the benefit of your children until they reach the age of 25.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 99
Income Tax Assessment Act 1936 Section 99A