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Edited version of private advice
Authorisation Number: 1051872420428
Date of advice: 30 July 2021
Ruling
Subject: Loan interest
Question 1
Will Z Trust and X Trust be "trading trusts" for the purposes of Division 6C of the Income Tax Assessment Act 1936?
Answer
No
Question 2
In the event that Z Trust qualifies as a withholding managed investment trust (withholding MIT), will the distributions by Z Trust attributable to the loan interest be "fund payments" for the purposes of section 12-405 of Schedule 1 of the Taxation Administration Act 1953 that are not attributable to "non-concessional MIT income" for the purpose of section 12-435 of Schedule 1 of the Taxation Administration Act 1953?
Answer
Yes
Question 3
Will the accruals/realisation methods under the Taxation of Financial Arrangements (TOFA) regime as set out in Subdivision 230-B of the Income Tax Assessment Act 1997 apply to the loan interest derived by X Trust from the Loans?
Answer
No
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
Z Trust (an Australian unit trust which hold 100% of the units in X Trust) applied for a private binding ruling in respect of loans held by X Trust (an Australian unit trust).
Relevant legislative provisions
Income Tax Assessment Act 1936 Division 6C
Income Tax Assessment Act 1997 Subdivision 230-B
Taxation Administration Act 1953 Section 12-405
Taxation Administration Act 1953 section 12-435