ATO ID 2008/10: Transferor trusts: attribution of income to executor of estate of deceased transferor
Date of decision: 13 December 2007
Year of income: Year ending 30 June 2008
Business line: Private Groups and High Wealth Individuals

Issue
Can income of a non-resident trust estate be attributed under section 102AAZD of the Income Tax Assessment Act 1936 (ITAA 1936) to a trustee of the deceased estate of a natural person who was an attributable taxpayer in relation to a non-resident trust estate, in the year of the person's death?

Decision
No, the income of a non-resident trust estate cannot be attributed under section 102AAZD of the ITAA 1936 to the trustee of the deceased estate (the executor) of a person who transferred property or services to a non-resident trust, because the executor is not an attributable taxpayer.

Facts
A natural person (the taxpayer) was an attributable taxpayer in relation to a non-resident trust estate in a particular year of income. The taxpayer died part way through the financial year (1 July to 30 June).

Reasons for decision
Summary: An entity is an attributable taxpayer in relation to a year of income if the entity has transferred property or services to a non-resident trust (sub-subparagraph 102AAT(1)(a)(i)(C) or sub-subparagraph 102AAT(1)(a)(ii)(B) of the ITAA 1936). The executor of the estate of a deceased attributable taxpayer is generally not an attributable taxpayer unless the executor has transferred property or services to a non-resident trust estate through the exercise of a power of appointment or of a discretion by the executor. There are no 'successor' rules for the case of the death of a natural person who has transferred property or services. That is, no provision deems an executor to be an attributable taxpayer when a previous transfer of property or services was made by the deceased taxpayer. In the absence of 'successor' rules, the executor of the deceased estate, having a separate legal personality to the taxpayer, cannot be subject to attribution by virtue of a previous transfer of property or services by the taxpayer.

Legislative references: Income Tax Assessment Act 1936 section 102AAT section 102AAZD
Related ATO interpretative decisions: ATO ID 2008/9
Subject references: Deceased estates Executors Non resident trusts Trusts