This Draft TD, issued on Wed 13.6.2012, provides the Commissioner’s preliminary views on whether a beneficiary’s share of net income is worked out by reference to the proportion of the income of the trust estate to which the beneficiary is presently entitled.
Broadly, the Determination states that to determine the share of net income of a trust estate to be included in a beneficiary’s assessable income under para 97(1)(a) of the ITAA 1997, the beneficiary must:
- calculate how much of the income of the trust estate they are presently entitled to as a percentage share of that income; and
- apply that percentage to the net income of the trust.
However, the Determination states that the application of the above approach will depend on the facts and circumstances of each case, including the terms of the trust and where relevant, any resolutions made by trustees to appoint the income of the trust.
The Determination includes 11 examples to demonstrate the relevance of the trust deed and the wording of the trustee resolution to the outcome under the proportionate approach.
DATE OF EFFECT: When the final Determination is issued, it is proposed to apply both before and after its date of issue.
COMMENTS are due by 13 July 2012. ATO Contact: Lyn Freshwater – Tel: (07) 3213 5554; Fax: (07) 3213 5971; Email: lyn.freshwater@ato.gov.au.
[FJM Note: there is much controversy around this draft determination and the ATO has subsequently said that they may leave it as a draft for the time being.]
[LTN 112, 13/6]