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Edited version of private advice
Authorisation Number: 1051673105686
Date of advice: 7 May 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 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 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 ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The deceased's Will provided for the establishment of testamentary trusts, one of which is the subject of this ruling (the Trust).
Under the terms of the Trust, the deceased's child is the Trustee and primary beneficiary.
The Trustee expects that some distributions of income will be made to a minor grandchild of the deceased and to the Trustee in their capacity as primary beneficiary. Apart from these distributions, income will be accumulated in the Trust.
The corpus of the Trust is formed entirely from assets of the deceased at the date of their death, which include real property, personal property, cash at bank and ordinary shares with no special rights attached. No other funds or property will be transferred to the Trust.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 99
Income Tax Assessment Act 1936 Section 99A