Income Tax Assessment Act 1936

PART III - LIABILITY TO TAXATION  

Division 6 - Trust income  

SECTION 100A   PRESENT ENTITLEMENT ARISING FROM REIMBURSEMENT AGREEMENT  

100A(1)   [ Where beneficiary presently entitled to income]  

Where:

(a) apart from this section, a beneficiary of a trust estate who is not under any legal disability is presently entitled to a share of the income of the trust estate; and

(b) the present entitlement of the beneficiary to that share or to a part of that share of the income of the trust estate (which share or part, as the case may be, is in this subsection referred to as the relevant trust income ) arose out of a reimbursement agreement or arose by reason of any act, transaction or circumstance that occurred in connection with, or as a result of, a reimbursement agreement;

the beneficiary shall, for the purposes of this Act, be deemed not to be, and never to have been, presently entitled to the relevant trust income.

100A(2)   [ Where amount paid or applied]  

Where:

(a) apart from this section, a beneficiary of a trust estate who is not under any legal disability would, by reason that income of the trust estate was paid to, or applied for the benefit of, the beneficiary, be deemed to be presently entitled to income of the trust estate; and

(b) that income or a part of that income (which income or part, as the case may be, is in this subsection referred to as the relevant trust income ) was paid to, or applied for the benefit of, the beneficiary as a result of a reimbursement agreement or as a result of any act, transaction or circumstance that occurred in connection with, or as a result of, a reimbursement agreement;

the relevant trust income shall, for the purposes of this Act, be deemed not to have been paid to, or applied for the benefit of, the beneficiary.

100A(3)   [ Application and exclusion of trustee beneficiary]  

In the preceding provisions of this section:

(a) a reference to income of a trust estate to which a beneficiary is, apart from this section, presently entitled shall be read as not including a reference to:

(i) income of the trust estate to which the beneficiary is presently entitled in the capacity of a trustee of another trust estate, being income that was paid to, or applied for the benefit of, the beneficiary before 6 March 1980; or

(ii) income that was paid to, or applied for the benefit of, the beneficiary before 12 June 1978; and

(b) a reference to income of a trust estate that was paid to, or applied for the benefit of, a beneficiary of the trust estate shall be read as not including a reference to:

(i) income of the trust estate that, before 6 March 1980, was paid to, or applied for the benefit of, the beneficiary in the capacity of a trustee of another trust estate; or

(ii) income of the trust estate that was paid to, or applied for the benefit of, the beneficiary before 12 June 1978.

100A(3A)   [ Limitations on subsection (1) - trustee beneficiary]  

Where:

(a) apart from this section, a beneficiary (in this subsection referred to as the trustee beneficiary ) of a trust estate is presently entitled to a share of the income of the trust estate in the capacity of a trustee of another trust estate (in this subsection referred to as the interposed trust estate );

(b) apart from this subsection, the trustee beneficiary would, by virtue of subsection (1), be deemed not to be, and never to have been, presently entitled to that share or a part of that share of the income of the first-mentioned trust estate (which share or part is in this subsection referred to as the relevant trust income ); and

(c) apart from this section, a beneficiary of the interposed trust estate is or was, or beneficiaries of the interposed trust estate are or were, presently entitled, or deemed to be presently entitled, to any income of the interposed trust estate (in this subsection referred to as the distributable trust income ) that is attributable to the relevant trust income;

subsection (1) does not apply, and shall be deemed never to have applied, in relation to the trustee beneficiary, in relation to any part of the relevant trust income to which the distributable trust income is attributable.

100A(3B)   [ Limitations on subsection (2) - trustee beneficiary]  

Where:

(a) apart from this section, a beneficiary (in this subsection referred to as the trustee beneficiary ) of a trust estate would, by reason that income of the trust estate was paid to, or applied for the benefit of, the trustee beneficiary, be deemed to be presently entitled to income of the trust estate in the capacity of a trustee of another trust estate (in this subsection referred to as the interposed trust estate );

(b) apart from this subsection, that income or a part of that income (which income or part is in this subsection referred to as the relevant trust income ) would, by virtue of subsection (2), be deemed not to have been paid to, or applied for the benefit of, the trustee beneficiary; and

(c) apart from this section, a beneficiary of the interposed trust estate is or was, or beneficiaries of the interposed trust estate are or were, presently entitled, or deemed to be presently entitled, to any income of the interposed trust estate (in this subsection referred to as the distributable trust income ) that is attributable to the relevant trust income;

subsection (2) does not apply, and shall be deemed never to have applied, in relation to the trustee beneficiary, in relation to any part of the relevant trust income to which the distributable trust income is attributable.

100A(3C)   [ Beneficiary under legal disability - subsection (3A) and (3B)]  

A reference in paragraph (3A)(c) or (3B)(c) to a beneficiary of a trust estate shall be read as not including a reference to a beneficiary who is under a legal disability.

100A(4)   [ Section 99A(4) and (4A) applicable]  

Where subsection (1) or (2) applies in relation to any income of a trust estate of a year of income:

(a) in the application of this Division in relation to the trust estate in relation to the year of income, section 99A shall be read as if subsections (2), (3) and (3A) of that section were omitted; and

(b) for the purposes of any application of section 99A in relation to the trust estate in relation to the year of income, the trust estate shall be deemed to be a resident trust estate.

100A(5)   [ Present entitlement to income arising out of reimbursement agreement]  

For the purposes of subsection (1), but without limiting the generality of that subsection, where:

(a) a reimbursement agreement was entered into at or after the time when a person became a beneficiary of a trust estate (whether the person became a beneficiary of the trust estate before or after the commencement of this section); and

(b) the amount (in this subsection referred to as the increased amount ) of the share of the income of the trust estate to which the beneficiary is presently entitled exceeds the amount (in this subsection referred to as the original amount ) of the income of the trust estate to which the beneficiary would have been, or could reasonably be expected to have been, presently entitled if the reimbursement agreement had not been entered into or if an act, transaction or circumstance that occurred in connection with, or as a result of, the reimbursement agreement had not occurred;

the present entitlement of the beneficiary to so much of the increased amount as exceeds the original amount shall be taken to have arisen out of the reimbursement agreement.

100A(6)   [ Amount paid or applied as result of reimbursement agreement]  

For the purposes of subsection (2), but without limiting the generality of that subsection, where:

(a) a reimbursement agreement was entered into at or after the time when a person became a beneficiary of a trust estate (whether the person became a beneficiary of the trust estate before or after the commencement of this section); and

(b) income of the trust estate was paid to, or applied for the benefit of, the beneficiary and the amount (in this subsection referred to as the increased amount ) of that income exceeds the amount (in this subsection referred to as the original amount ) that would have been, or could reasonably be expected to have been, paid to, or applied for the benefit of, the beneficiary if the reimbursement agreement had not been entered into or if an act, transaction or circumstance that occurred in connection with, or as a result of, the reimbursement agreement had not occurred;

so much of the increased amount as exceeds the original amount shall be taken to be income of the trust estate that was paid to, or applied for the benefit of, the beneficiary as a result of the reimbursement agreement.

100A(6A)   [ Deduction deemed not allowable]  

Where:

(a) subsection (1) or (2) applies, or would but for subsection (3A) or (3B) apply, in relation to a beneficiary of a trust estate in relation to a reimbursement agreement in relation to any income of the trust estate; and

(b) as part of, under or in connection with the reimbursement agreement, the beneficiary incurred or incurs a loss or outgoing after 5 March 1980 in respect of which a deduction has been allowed or would, but for this subsection, be allowable;

then, notwithstanding any other provision of this Act, a deduction shall be deemed not to have been, or not to be, allowable, as the case may be, in respect of that loss or outgoing.

100A(6B)   [ Nil cost price of trading stock]  

Where subsection (6A) deems a deduction not to have been, or not to be, allowable in respect of a loss or outgoing incurred by a taxpayer in the acquisition of property that, for the purposes of the application of this Act and the Income Tax Assessment Act 1997 in relation to the taxpayer is or was trading stock, then, notwithstanding any other provision of this Act or that Act, the cost or cost price of that property, for the purposes of the application of Subdivision B of Division 2 of Part III of this Act or Division 70 (Trading stock) or 385 (Primary production) of the Income Tax Assessment Act 1997 in relation to that property in relation to the taxpayer, shall be taken to be, and at all times to have been, nil.

100A(7)   [ " Reimbursement agreement " ]  

Subject to subsection (8), a reference in this section, in relation to a beneficiary of a trust estate, to a reimbursement agreement shall be read as a reference to an agreement, whether entered into before or after the commencement of this section, that provides for the payment of money or the transfer of property to, or the provision of services or other benefits for, a person or persons other than the beneficiary or the beneficiary and another person or other persons.

100A(8)   [ Purpose with which agreement must be entered into]  

A reference in subsection (7) to an agreement shall be read as not including a reference to an agreement that was not entered into for the purpose, or for purposes that included the purpose, of securing that a person who, if the agreement had not been entered into, would have been liable to pay income tax in respect of a year of income would not be liable to pay income tax in respect of that year of income or would be liable to pay less income tax in respect of that year of income than that person would have been liable to pay if the agreement had not been entered into.

100A(9)   [ Purpose of any party to agreement relevant]  

For the purposes of subsection (8), an agreement shall be taken to have been entered into for a particular purpose, or for purposes that included a particular purpose, if any of the parties to the agreement entered into the agreement for that purpose, or for purposes that included that purpose, as the case may be.

100A(10)   [ Payment of money by loan]  

A reference in subsection (7) to the payment of money to a person or persons shall be read as including a reference to the payment of money to a person or persons by way of loan.

100A(11)   [ " Person " includes " trustee " ]  

A reference in this section to a person shall be read as including a reference to a person in the capacity of a trustee.

100A(12)   [ Release, etc, of debt a payment of money]  

For the purposes of this section, an agreement that provides for a person to release, abandon, fail to demand payment of or postpone payment of, a debt owed by another person shall be deemed to be an agreement that provides for the payment of money to that other person.

100A(13)   [ Definitions]  

In this section:

agreement
means any 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, but does not include an agreement, arrangement or understanding entered into in the course of ordinary family or commercial dealing.

Note:

Section 960-255 of the Income Tax Assessment Act 1997 may be relevant to determining family relationships for the purposes of the definition of agreement .

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