Income Tax Assessment Act 1936

PART III - LIABILITY TO TAXATION  

Division 6D - Provisions relating to certain closely held trusts  

Subdivision A - Overview  

SECTION 102UA   WHAT THIS DIVISION IS ABOUT  

102UA(1)   [ Main purpose]  

The main purpose of this Division is to ensure that the trustee of a closely held trust with one or more trustee beneficiaries that are presently entitled to a share of the income or of a tax-preferred amount of the trust advises the Commissioner soon after the end of the year of income of certain details about those trustee beneficiaries. This will allow the Commissioner to check whether the assessable income of the trustee beneficiaries includes the correct share of net income, and whether the net assets of the trustee beneficiaries reflect the receipt of the tax-preferred amounts.

102UA(2)   [ Trustee beneficiary]  

To achieve this purpose, the Division:

(a) provides for the trustee to correctly identify the trustee beneficiaries within a specified period after the end of the year of income; and

(b) if the trustee fails to do so, provides for taxation at a penalty rate (in the case of net income) or offences under the Taxation Administration Act 1953 (in the case of tax-preferred amounts).

102UA(3)   [ Trustee becomes presently entitled]  

This Division also provides that, where the trustee of the closely held trust becomes presently entitled to an amount that is reasonably attributable to the whole or a part of the share of the net income of the closely held trust, there will also be taxation at a penalty rate.