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Edited version of private advice
Authorisation Number: 7910162443358
Date of advice: 21 February 2024
Ruling
Subject: Resident trust estate
Question
Was the XX Trust a 'resident or resident of Australia' within the meaning of section 6(1) of the Income Tax Assessment Act 1936 in the income years ended 20XX, 20XX and 20XX.
Answer
Yes
This ruling applies for the following period:
20XX to 20XX
Relevant facts and circumstances
The XX Trust (the Trust) was established by deed, between Person A (as settlor) and Company A (as trustee), dated DDMM19YY.
Company B was subsequently appointed trustee in place of Company A. Company B has been the trustee since DDMM19YY.
Company B is an Australian proprietary company limited by shares incorporated within Australia. The registered office of Company B is within Australia.
Relevant legislative provisions
ITAA 1936 subsection 6(1)
ITAA 1936 subsection 95(2)
ITAA 1997 subsection 995-1(1)
Reasons for decision
Subsection 95(2) of the Income Tax Assessment Act 1936 (ITAA 1936) provides the following in relation to the definition of a 'resident trust estate':
For the purposes of this Division, a trust estate shall be taken to be a resident trust estate in relation to a year of income if:
(a) a trustee of the trust estate was a resident at any time during the year of income; or
(b) the central management and control of the trust estate was in Australia at any time during the year of income.
Subsection 6(1) of the ITAA 1936 defines a 'resident or resident of Australia' to include:
... a company which is incorporated in Australia, or which, not being incorporated in Australia, carries on ... business in Australia and has either its central management and control in Australia, or its voting power ... controlled by shareholders who are residents of Australia.
Subsection 6(1) also defines a 'year of income' to have the meaning given to an 'income year' in the Income Tax Assessment Act 1997 (ITAA 1997). In effect, subsection 995-1(1) of the ITAA 1997 defines 'income year' by reference to the term 'financial year' (which is also defined in subsection 995-1(1) of ITAA 1997) as a period of 12 months beginning on 1 July.
Company B was incorporated in Australia and was, therefore, a resident of Australia in each of the income years ended 20XX, 20XX and 20XX. Company B was the trustee of the XX Trust in each of those income years. As a result, the XX Family Trust was a resident trust estate.