Income Tax Assessment Amendment (Foreign Investment) Act 1992 (190 of 1992)
11 After section 96
(1) After section 96 of the Principal Act the following sections are inserted:
Certain provisions not to apply in respect of interests in non-resident trust estates to which Part XI applies
"96A.(1) An amount is not to be included under section 97 in the assessable income of a year of income of a beneficiary of a trust estate if:
(a) the beneficiary is a resident; and
(b) the trust estate is a non-resident trust estate in relation to that year of income; and
(c) section 529 applies to the beneficiary in relation to each notional accounting period of the relevant trust that ended or began in that year of income.
"(2) If:
(a) the assessable income of the trust estate of a resident public unit trust of a year of income includes any foreign investment fund income; and
(b) the sum of:
(i) the values of all the interests of a beneficiary of the trust estate who is a natural person (otherwise than in the capacity of a trustee), and any associates of that beneficiary, in FIFs and resident public unit trusts; and
(ii) the values of all FLPs in which that beneficiary and any associates of that beneficiary had interests;
at the end of the year of income did not exceed $50,000;
then:
(c) in calculating the beneficiary's share of the net income of the trust estate of the year of income, that net income is taken to be the amount that would have been that net income if that foreign investment fund income had not been included in that assessable income; and
(d) in calculating the beneficiary's share of the net income of any subsequent year of income, that net income is taken to be the amount that would have been that net income if section 23AK or section 613 applied as if no FIF attribution account credit arose for the relevant trust for the year of income mentioned in paragraph (c).
"(3) For the purposes of subsection (2), the value at the end of the year of income of a person's interest in a FIF or in a resident public unit trust, or of a FLP in which a person has an interest, is taken to be:
(a) the cost incurred by the person in acquiring the interest in the FIF, resident public unit trust or FLP, as the case may be; or
(b) the market value of the interest in the FIF or resident public unit trust, or of the FLP, as the case may be, at the end of the year of income;
whichever is the greater amount.
"(4) For the purposes of this section, a unit trust is a resident public unit trust in relation to a year of income if:
(a) it is a public unit trust for the purposes of Division 6AAA at all times during the year of income; and
(b) either of the following conditions was satisfied at any time during the year of income:
(i) the central management and control of the unit trust was in Australia;
(ii) a person who was a resident or persons who were residents held more than 50% of:
(A) the beneficial interests in the income of the unit trust; or
(B) the beneficial interests in the property of the unit trust.
"(5) In this section:
'interest', in relation to a resident public unit trust, means a unit in the trust or an entitlement to acquire such a unit.
"(6) Expressions used in this section that are also used in Part XI have, unless the contrary intention appears, the same meanings as in that Part.
Beneficiary of non-resident trust estate
"96B.(1) If at any time during the 1992-93 year of income or a later year of income a taxpayer had an interest (including an interest that is to arise at a future time or is contingent on the happening of an event) in a non-resident trust estate in relation to the year of income, this section has effect for the purposes of the application of this Division to the taxpayer in relation to the trust estate in relation to the year of income.
"(2) The taxpayer is taken to be a beneficiary of the trust estate who is presently entitled to a share of the income of the trust estate of the year of income and who is not under a legal disability.
"(3) The taxpayer's share of the net income of the trust estate of the year of income is the amount calculated in accordance withsection 96C.
Calculation of beneficiary's share of net income of non-resident trust estate
"96C.(1) If all of the income, profits or gains derived by a non-resident trust estate during the year of income consisted of either or both of the following:
(a) income, profits or gains to which beneficiaries of the trust estate were presently entitled;
(b) income, profits or gains to which beneficiaries of the trust estate were not presently entitled but which were distributed to beneficiaries of the trust estate during the year of income or within 2 months after the end of the year of income;
the share of a taxpayer referred to in section 96B of the net income of the trust estate of the year of income is the amount worked out using the formula:
(Net income * Attribution percentage)
In the formula:
'Net income' means the net income of the trust estate of the year of income;
'Attribution percentage' means the percentage of the total income, profits and gains derived by the trust estate during the year of income to which the taxpayer was presently entitled or to which the taxpayer was not presently entitled but which was distributed to the taxpayer during the year of income or within 2 months after the end of the year of income.
"(2) If subsection (1) does not apply in respect of a non-resident trust estate of the year of income, the share of a taxpayer referred to in section 96B of the net income of the trust estate of the year of income is the amount determined by calculating:
(a) the part of the taxpayer's share of the net income that is attributable to any interest or interests in the trust estate that the taxpayer had in the trust estate throughout the whole of the year of income; and
(b) the part or parts of the taxpayer's share of the net income that is or are attributable to any interest or interests in the trust estate that the taxpayer had throughout a particular part or particular parts of the year of income;
and adding up the amounts so calculated.
"(3) The part of the taxpayer's share of the net income that is attributable to an interest or interests that the taxpayer had throughout the whole of the year of income is the amount worked out using the formula:
(Net income * Attribution percentage)
"(4) The part of the taxpayer's share of the net income that is attributable to an interest that the taxpayer had throughout a particular part of the year of income is the amount worked out using the formula:
Net income * Attribution percentage * (Number of days held / Total number of days)
"(5) For the purposes of the formulas in subsections (3) and (4):
'Net income' means the net income of the trust estate of the year of income;
'Attribution percentage' means:
(a) the percentage of the income of the trust estate represented by the share of the income to which the taxpayer was entitled, or was entitled to acquire, at the test time because of:
(i) the taxpayer's interest or interests in the trust estate; and
(ii) any interest or interests in the trust estate that the taxpayer was entitled to acquire; or
(b) the percentage of the corpus of the trust estate represented by the share of the corpus to which the taxpayer was entitled, or was entitled to acquire, at the test time because of:
(i) the taxpayer's interest or interests in the trust estate; and
(ii) any interest or interests in the trust estate that the taxpayer was entitled to acquire;
or, if those percentages differ, the greater of those percentages;
'Number of days held' means the number of days in the part of the year of income throughout which the taxpayer had the interest;
'Total number of days' means the number of days in the year of income;
'the test time' means:
(a) if the taxpayer had an interest or interests in the trust estate at the end of the year of income-the end of the year of income; or
(b) if the taxpayer ceased during the year of income to have any interest in the trust estate-the time immediately before the taxpayer ceased to have such an interest.
"(6) If, apart from this subsection, the sum of the attribution percentages at a particular time in relation to a non-resident trust estate of all taxpayers who are residents would exceed 100%, the attribution percentage of each of those taxpayers is the percentage worked out using the formula:
(Individual percentage / Total percentage) * 100
where:
'Individual percentage' means the percentage that, apart from this subsection, would be the attribution percentage of the taxpayer concerned;
'Total percentage' means the sum of the percentages that, apart from this subsection, would be the attribution percentages of all taxpayers that are
residents.
"(7) For the purposes of subsection (5):
(a) the percentage of the income of the trust estate represented by the share of the income to which the taxpayer was entitled, or was entitled to acquire, at the test time because of the interest or interests referred to in subparagraph (a)(i) or (ii) of the definition of 'attribution percentage' in that subsection; or
(b) the percentage of the corpus of the trust estate represented by the share of the corpus to which the taxpayer was entitled, or was entitled to acquire, at the test time because of the interest or interests referred to in subparagraph (b)(i) or (ii) of the definition of 'attribution percentage' in that subsection;
is to be worked out by:
(c) ascertaining whichever of the following is applicable:
(i) the income of the trust estate for the year of income;
(ii) the corpus of the trust estate as at the end of the year of income; and
(d) assuming that the share to which the taxpayer was entitled, or became entitled to acquire, at the test time because of the interest or interests was the same at all other times during the year of income; and
(e) ascertaining the percentage concerned:
(i) if the test time is a time other than the end of the year of income-at the end of the year of income instead of at the test time; and
(ii) on that assumption.
"(8) In this section:
'entitled to acquire' has the same meaning as in Part XI.
"(9) A reference in this section to income, profits or gains having been distributed to a beneficiary of a trust estate is a reference to an amount included in such income, profits or gains having been paid or credited to, or applied for the benefit of, such a beneficiary.".
(2) The sections inserted in the Principal Act by subsection (1) apply to assessments in respect of income of the 1992-93 year of income and in respect of income of all later years of income.