Edited version of private advice

Authorisation Number: 1052321687067

Date of advice: 31 October 2024

Ruling

Subject: Trust residency

Question 1

Will the Trustee for the Trust be a resident for CGT purposes in accordance with section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer 1

Yes, until DD MM YYYY being the date the last remaining Australian trustee ceased their Australian residency status. From this date the Trust will be a foreign trust.

A trust is a resident trust for CGT purposes where at any time during the income year, a trustee is an Australian resident and the trust is not a unit trust.

This ruling applies for the following period:

30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

The Trust is a discretionary trust established in 20XX in a foreign country.

The trustees of the Trust are:

Taxpayer A, an Australian tax resident until DD MM YYYY,

Taxpayer B is a tax resident and citizen of a foreign country only, and

Company A - a foreign country resident company controlled by the Trust's legal advisers.

Taxpayer A became one of the appointers of the trust in the deed of variation dated DD MM YYYY. Taxpayer A was an Australian tax resident until DD MM YYYY. Taxpayer A relocated to a foreign country in MM YYYY.

The Trust is contemplating to sell an asset being a real property in a foreign country. The trust has not taken any steps to sell the property as at the date of this ruling.

The Trust has not made any distributions to the beneficiaries since its inception. The Trust profits were retained in the trust, and the trustee paid foreign income tax on the property.

X of X trustees are located in a foreign country, and decisions relating to the Trust are generally discussed and agreed unanimously. All accounting matters (including financial statements and tax returns) relating to the Trust are performed by a foreign country based accountancy firm and filed in that foreign country.

The real property of the Trust was purchased in a foreign country and financed by a foreign country bank. The real property of the Trust was purchased X years prior to Taxpayer A moving to Australia and becoming a citizen and Australian Tax Resident. Taxpayer A become Australian resident for tax purposes in MM YYYY and became an Australian Citizen MM YYYY. The real property of the Trust is managed within a foreign country by a foreign country based property manager and relevant decisions are handled by them.

Relevant legislative provisions

Income Tax Assessment Act 1936 subsection 95(2)

Income Tax Assessment Act 1997 subsection 995-1(1)