| Disclaimer You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1052255103265
Date of advice: 27 May 2024
Ruling
Subject: Payments to a trust
Question 1
Is Company A entitled to claim a deduction for payments to Trust A, under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
Question 2
Is Company A required to include in its assessable income under section 6-5 of the ITAA 1997, amounts derived from its related entities in respect of payments to Trust A?
Answer
Yes.
Relevant facts and circumstances
Company A is an Australian resident company. Trust A is a fixed trust settled in Australia.
Company A makes certain payments to Trust A with contributions received from several related entities.
Relevant legislative provisions
Section 6-5 of the ITAA 1997
Section 8-1 of the ITAA 1997
Reasons for decision
Company A is entitled to claim a deduction for payments to Trust A under section 8-1 of ITAA 1997 because the payments are incurred in gaining or producing assessable income of Company A and they not considered to be capital or of a capital nature.
The amounts derived by Company A from the related entities are ordinary income. Therefore, they are assessable to Company A under section 6-5 of the ITAA 1997.