ATO Interpretative Decision

ATO ID 2001/300

Income Tax

Non-resident beneficiary - Australian sourced trust income
FOI status: may be released

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CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is the non-resident taxpayer assessable on their share of Australian sourced trust income under section 98A of the Income Tax Assessment Act 1936 (ITAA 1936)?

Decision

Yes, the non-resident taxpayer is assessable on their share of Australian sourced trust income under section 98A of the ITAA 1936.

Facts

The taxpayer was a non-resident of Australia at the end of the income year.

The taxpayer was presently entitled to a share of trust income from an Australian resident trust. The taxpayer received a distribution of income and capital gains from the trust in respect of the income year.

The trust income was not subject to withholding tax.

Reasons for Decision

Subsection 98(4) of the ITAA 1936 provides that where an individual beneficiary is presently entitled to a share of trust income and is a non-resident at the end of the income year, the trustee is liable to pay tax on that share. The trustee is taxable on:

•
so much of the share of the net income as is attributable to a period when the beneficiary was a resident, whatever the source of the income, and
•
so much of the share as is attributable to a period when the beneficiary was not a resident and is also attributable to Australian sources.

As the taxpayer was a non-resident at the end of the income year, the trustee is assessable under subsection 98(4) as described above.

In addition, section 98A of the ITAA 1936 provides that the non-resident taxpayer will also be assessable on that share of the trust income. However, subsection 98A(2) allows to the taxpayer a credit for the tax already paid by the trustee. If the tax paid by the trustee exceeds the tax payable by the taxpayer, the excess is refunded to the taxpayer.

Date of decision:  15 August 2001

Legislative References:
Income Tax Assessment Act 1936
   section 98A
   subsection 98A(2)
   subsection 98(4)

Keywords
Tax credits
Non resident individuals
Non resident beneficiaries
Trusts
Trust beneficiaries
Trust income
Trust distributions

Business Line:  Small Business/Individual Taxpayers

Date of publication:  8 September 2001

ISSN: 1445-2782

history
  Date: Version:
You are here 15 August 2001 Original statement
  1 February 2008 Archived

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