Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-25 - PARTICULAR KINDS OF TRUSTS  

Division 275 - Australian managed investment trusts: general  

Subdivision 275-L - Modification for non-arm ' s length income  

Operative provisions

SECTION 275-610   Non-arm ' s length income  

275-610(1)    
An amount of *ordinary income or *statutory income is non-arm ' s length income of a *managed investment trust if:

(a) it is derived from a *scheme the parties to which were not dealing with each other at *arm ' s length in relation to the scheme; and

(b) that amount exceeds the amount that the entity might have been expected to derive if those parties had been dealing with each other at arm ' s length in relation to the scheme; and

(c) the amount is none of the following:

(i) a distribution from a *corporate tax entity;

(ii) a distribution from a trust that is not a party to the scheme mentioned in paragraph (a);

(iii) a *return covered by subsection (2).

275-610(1A)    

Disregard subparagraph (1)(c)(ii) if the amount of *ordinary income or *statutory income is *excepted MIT CSA income.

275-610(2)    
This subsection covers a *return that an entity pays or provides on a *debt interest, if the rate (expressed on an annual basis) of the return does not exceed the greater of:

(a) the *benchmark rate of return for the interest; and

(b) the *base interest rate for the day on which the return is paid or provided, plus 3 percentage points.

275-610(3)    
Subsection (4) applies if:

(a) an amount would be *non-arm ' s length income of the *managed investment trust (disregarding that subsection); and

(b) the amount is a distribution from a trust, or a share of the *net income of a trust, if the trust is a party to the scheme mentioned in paragraph (1)(a).

275-610(4)    
The amount is *non-arm ' s length income of the *managed investment trust only to the extent that the distribution or share of *net income is attributable to non-arm ' s length income of the trust mentioned in paragraph (3)(b) (on that assumption that the trust were a managed investment trust) because of another operation of this section.

275-610(5)    
Subsection (6) applies if:

(a) an amount (the first amount ) of *ordinary income or *statutory income of the *managed investment trust that would be *non-arm ' s length income of the managed investment trust (disregarding that subsection) is:

(i) a distribution from a trust that is a party to the scheme mentioned in paragraph (1)(a); or

(ii) a share of the *net income of a trust that is a party to that scheme; and

(b) another amount (the second amount ) of ordinary income or statutory income of the managed investment trust is:

(i) a distribution from another trust (whether or not the other trust is a party to that scheme); or

(ii) a share of the net income of another trust (whether or not the other trust is a party to that scheme); and

(c) it is reasonable to conclude that the second amount would have been higher but for the first amount.

275-610(6)    
The first amount is not *non-arm ' s length income of the *managed investment trust to the extent that the second amount would have been higher as mentioned in paragraph (5)(c).