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Edited version of private advice
Authorisation Number: 1051705235600
Date of advice: 24 June 2020
Ruling
Subject: Section 99 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. Note: The tax rate for the first three years is the individual rate with a tax-free threshold applied, for the year ended 30 June 20XX the individual rate without a tax-free threshold applies.
This ruling applies for the following period:
Year ended 30 June 20XX
Year ended 30 June 20XX
Year Ended 30 June 20XX
Year ended 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
The deceased) passed away in Spring 20XX. Probate of the will was granted in late 20XX.
The will provided for the establishment of a testamentary trust, which is the subject of this ruling (the Trust).
Under the terms of the Trust, the deceased's child is the primary beneficiary. The other beneficiary of the will had attained the vesting age and therefore is not a beneficiary of this testamentary trust.
The Trustee expects that income will be accumulated in the Trust.
The corpus of the Trust is formed entirely from assets of the deceased at the date of death. 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