Income Tax Assessment Act 1936

Div 6B repealed by No 53 of 2016, s 3 and Sch 5 item 3, applicable to assessments for income years starting on or after 1 July 2016. No 53 of 2016 (as amended by No 15 of 2019), s 3 and Sch 5 Pt 4 contains the following transitional provision:

Part 4 - Transitional

75 Transitional rule for 20% tracing requirement and repeal of Division 6B - imputation  
(1)
This item applies if at a time (the cessation time ), on or after the commencement of this Schedule, either:

(a) section 102K of the Income Tax Assessment Act 1936 ceases to apply to the trustee of a trust because of the repeal of that section by Part 2 of this Schedule; or

(b) section 102S of that Act ceases to apply to the trustee of a trust because of the amendment made by Part 1 of this Schedule.

(2)
Subitems (3) and (3A) apply if:

(a) an event happens in respect of the trust that is described in:

(i) the table in subsection 205-15(1) of the Income Tax Assessment Act 1997 ; or

(ii) the table in subsection 205-30(1) of that Act; and

(b) the event happens on or after the cessation time but before 1 July 2019; and

(c) the event is:

(i) the trust paying income tax for an income year starting before 1 July 2016; or

(ii) the trust paying a PAYG instalment in respect of income tax for an income year starting before 1 July 2016; or

(iii) the trust receiving a refund of income tax for an income year starting before 1 July 2016; or

(iv) the trust franking a distribution; or

(v) the trust ceasing to be a franking entity.

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S 75(2) amended by No 15 of 2019, s 3 and Sch 1 items 34 - 36, by substituting " Subitems (3) and (3A) apply " for " Subitem (3) applies " , " 1 July 2019 " for " 1 July 2018 " in para (b) and inserting para (c)(v), effective 1 April 2019 and applicable in relation to the 2018-19 income year and later income years.

(2A)
However, subparagraph (2)(c)(v) does not apply unless the trust ' s franking account is in surplus immediately before the trust ceases to be a franking entity.

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S 75(2A) inserted by No 15 of 2019, s 3 and Sch 1 item 37, effective 1 April 2019 and applicable in relation to the 2018-19 income year and later income years.

(3)
For the purposes of determining whether a franking credit or franking debit arises in the trust ' s franking account as a result of the event:

(a) treat the trust as a corporate tax entity at the time the event happens; and

(b) treat the trust as satisfying the residency requirement in section 205-25 of the Income Tax Assessment Act 1997 for the income year in which the event happens.

(3A)
If the event is an event described in item 4 of the table in subsection 205-30(1) of the Income Tax Assessment Act 1997 , treat the event as happening on 1 July 2019.

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S 75(3A) inserted by No 15 of 2019, s 3 and Sch 1 item 38, effective 1 April 2019 and applicable in relation to the 2018-19 income year and later income years.

(4)
Subitems (5) and (6) apply if:

(a) the trust makes a distribution on or after the cessation time but before 1 July 2019; and

(b) the trust ' s franking account is in surplus just before the trust makes the distribution; and

(c) the distribution is not made out of income derived in relation to the 2016-17 income year or a later income year.

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S 75(4) amended by No 15 of 2019, s 3 and Sch 1 items 39 - 41, by substituting " Subitems (5) and (6) apply " for " Subitem (5) applies " , " 1 July 2019 " for " 1 July 2018 " in para (a) and inserting para (c), effective 1 April 2019 and applicable in relation to the 2018-19 income year and later income years.

(5)
For the purposes of determining whether the trust franks the distribution as a result of the event:

(a) treat the trust as a corporate tax entity at the time it makes the distribution; and

(b) treat the trust as satisfying the residency requirement in section 202-20 of the Income Tax Assessment Act 1997 at the time it makes the distribution.

(6)
Treat a beneficiary of the trust who receives the distribution as receiving, for the purposes of the income tax law, a dividend from a corporate tax entity.

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S 75(6) inserted by No 15 of 2019, s 3 and Sch 1 item 42, effective 1 April 2019 and applicable in relation to the 2018-19 income year and later income years.

Note:

As a result, the trust will satisfy the requirement in paragraph 202-5(a) of that Act in respect of the distribution. If the other requirements in section 202-5 of that Act are satisfied in respect of the distribution, this means that the trust franks the distribution.

Div 6B comprising s 102D to 102L inserted by No 154 of 1981.

S 102D repealed by No 53 of 2016, s 3 and Sch 5 item 3, applicable to assessments for income years starting on or after 1 July 2016. For transitional provision, see note under Pt III Div 6B heading. S 102D formerly read:

SECTION 102D INTERPRETATION  
102D(1)
In this Division, unless the contrary intention appears -

arrangement
means an agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.

net income
, in relation to a corporate unit trust, means the total assessable income of the corporate unit trust calculated under this Act as if the trustee were a taxpayer in respect of that income and were a resident, less all allowable deductions.

A corporate unit trust may be required to work out its net income in a special way by Division 266 or 267 in Schedule 2F.

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Definition of " net income " amended by No 41 of 2011, s 3 and Sch 5 item 377, by substituting " in Schedule 2F " for " of Schedule 2F " in the note at the end, effective 27 June 2011.

Note to definition of " net income " inserted by No 17 of 1998.

prescribed trust estate
means a trust estate that is, or has been, a corporate unit trust in relation to any year of income.

property
includes a chose in action and also includes any estate, interest, right or power, whether at law or in equity, in or over property.

relevant year of income
means the year of income that commenced on 1 July 1980 or a subsequent year of income.

unit
, in relation to a prescribed trust estate, includes a beneficial interest, however described, in any of the income or property of the trust estate.

unitholder
, in relation to a prescribed trust estate, means the holder of a unit or units in the prescribed trust estate.

unit trust dividend
means:

(a) any distribution made by the trustee of a prescribed trust estate, whether in money or in other property, to a unitholder; and

(b) any amount credited by the trustee of a prescribed trust estate to a unitholder as a unitholder,

but does not include:

(c) moneys paid or credited, or property distributed, by the trustee of a prescribed trust estate to the extent to which the moneys are attributable, or the property is attributable, to profits arising during a year of income in relation to which the prescribed trust estate was not a corporate unit trust; or

(d) moneys paid or credited, or property distributed, by the trustee of a prescribed trust estate in respect of the cancellation, extinguishment or redemption of a unit to the extent to which:

(i) the moneys paid or credited or the property distributed represent or represents moneys paid to, or property transferred to, the trustee for the purpose of the creation or issue of that unit; and

(ii) the amount of the moneys paid or credited or the value of the property distributed, as the case may be, does not exceed the amount of the moneys paid to the trustee, or the value, at the time of transfer, of the property transferred to the trustee, for the purpose of the creation or issue of that unit.

102D(2)
A reference in this Division to an associate of a company or of the trustee of a unit trust (which company or trustee is in this subsection referred to as the primary entity ) shall be read as a reference to a company or the trustee of a trust estate (which company or trustee is in this subsection referred to as the associate ) where:

(a) the affairs or operations of the primary entity are, or are able to be, controlled, either directly or indirectly, by the associate;

(b) the affairs or operations of the associate are, or are able to be, controlled, either directly or indirectly, by the primary entity; or

(c) the operations of the primary entity are, or are able to be, controlled, either directly or indirectly, by a person who controls or is able to control, or by persons who control or are able to control, either directly or indirectly, the operations of the associate.

102D(3)
A reference in subsection (2) to the affairs or operations of a primary entity or of an associate, shall, in a case where the primary entity or the associate is a trustee, include a reference to the administration of the trust estate by the trustee.