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Edited version of private advice
Authorisation Number: 1052344379044
Date of advice: 17 December 2024
Ruling
Subject: Foreign trust - final distribution
Question 1
Does the Commissioner agree that the Originally Contributed Capital of the Trust represents corpus for the purposes of paragraph 99B(2)(a) of the ITAA 1936 and is an amount not less than XX (Current Exempt Corpus)?
Answer 1
Yes.
Question 2
Does the Commissioner agree that if the draft Resolution proposing to pay or apply the entire Capital of the Trust to the Rulees (Distribution Resolutions) is passed, and the entire Capital of the Trust is paid or applied to the Rulees, no amount of the Current Exempt Corpus will be included in the assessable income of the Rulees under subsection 99B(1) of the ITAA 1936 for reason that the Current Exempt Corpus represents Corpus to which paragraph 99B(2)(a) of the ITAA 1936 will apply?
Answer 2
Yes.
Question 3
Does the Commissioner agree that if the Distribution Resolution is passed, and the entire Capital of the Trust is paid or applied to the Rulees, the entirety of the Current Non-Exempt Corpus will be included in the assessable income of the Rulees under subsection 99B(1) of the ITAA 1936.
Answer 3
Yes.
This ruling applies for the following period:
Year ended XX June 19XX to year ending 20XX
The scheme commenced on:
XX November 19XX
Relevant facts and circumstances
The Trust was established by a deed under the laws of the Country A.
The Company acts as trustee (Trustee) for the Trust.
The Trustee resides in Country B, is arm's length and independent to the Rulees.
The Trust property was initially settled by person X.
The Trust was established, in part, to provide for person Y (now deceased) who was Taxpayer A's parent-in-law.
The Letter of Wishes from person X requested that, after the death of person Y, the Trust be liquidated, and the proceeds paid as follows:
• 50% to Charitable Trust;
• 25% to person Y (deceased) and Taxpayer A; and
• 25% to Taxpayer B Testamentary Trust.
The Trustee has drafted a resolution proposing to pay or apply the Originally Contributed Capital of the Trust to the Rulees.
The Trustee resides in XXX and is arm's length and independent of the Rulees.
The Rulees are Australian residents for tax purpose.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 99B
Income Tax Assessment Act 1936 subsection 99B(1)
Income Tax Assessment Act 1936 paragraph 99B(2)(a)
Income Tax Assessment Act 1936 section 102AAM