Edited version of private advice

Authorisation Number: 1051879912743

Date of advice: 4 August 2021

Ruling

Subject: Commissioner discretion in subsection 100AA(4) of the Income Tax Assessment Act 1936

Question

Will the Commissioner exercise the discretion in subsection 100AA(4) of the ITAA 1936 to disregard the failure of the Trustee to notify the tax exempt beneficiary of their present entitlement to a share of the trust fund at the end of two months after the end of the relevant income year as required in paragraph 100AA(1)(c) of the ITAA 1936?

Answer

Yes. Having considered your circumstances, the Commissioner will exercise the discretion in subsection 100AA(4) of the ITAA 1936 to disregard the failure of the Trustees to notify the tax exempt entity of its present entitlement.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

XXXX Pty Ltd is Trustee of the XXXX Trust.

The XXXX Trust is a family discretionary trust.

On XXXX 20XX, the Trustee resolved to distribute $XXXX of its income of the Trust for the year ending 30 June 20XX to the XXXX. The Trust 20XX Income Tax Return reflects the XXXX being presently entitled to $XXXX of income.

The XXXX is a tax exempt entity for the purposes of section 100AA.

On XXXX 20XX the Trustee entered a payment of $XXXX into its online banking software to pay to the XXXX. On XXXX 20XX this payment was reversed by the bank as the Trustee had entered incorrect bank account details.

The Trustee was not immediately aware the payment had been reversed. On XXXX 20XX, using the correct bank account details, the Trustee successfully paid $XXXX to the XXXX.

The failure to satisfy the two month requirement in relation to the $XXXX was initially due to some confusion over the 31 August deadline. The XXXX 20XX fell on a Monday and was the first working day after 31 August, the Trustee thinking that where the due date falls on a weekend, payment could be made on the next business day.

The remaining $XXXX has not been paid by the Trust to the XXXX.

The Commissioner has not previously applied this discretion to the taxpayer.

Relevant legislative provisions

Income Tax Assessment Act 1936 section 100AA subsections (1), (2), (3), (4) and (5).