ATO ID 2002/238: Assessment of minor beneficiary's share of the net trust income
Date of decision: 21 January 2002
Year of income: Year ended 30 June 2000
Business line: Private Groups and High Wealth Individuals

Issue
Are both the trustee and the minor beneficiary assessable on a minor beneficiary's share of the net trust income under subsection 98(1) and subsection 100(1) of the Income Tax Assessment Act 1936 (ITAA 1936) respectively?

Decision
Yes, both the trustee and minor beneficiary are assessable on the minor beneficiary's share of the net trust income under subsection 98(1) and subsection 100(1) of the ITAA 1936 respectively.

Facts
A beneficiary, who was 16 years of age at the end of the income year, was presently entitled to a share of trust income from an Australian resident trust. The beneficiary also received income from other sources.

Reasons for decision
Summary: Subsection 98(1) of the ITAA 1936 provides that where a beneficiary who is under a legal disability is presently entitled to a share of trust income, the trustee is assessed and liable to pay tax on that share in respect of: As the beneficiary was less than 18 years of age (a minor) and, therefore, under a legal disability at the end of the income year, the trustee is assessable on the beneficiary's share of the net trust income under subsection 98(1). In addition, subsection 100(1) of the ITAA 1936 provides that the minor beneficiary is also assessable on their share of the net trust income because the beneficiary was in receipt of income from other sources. A credit for the tax payable by the trustee, in respect of the beneficiary's share of the net trust income, is allowed to the beneficiary under subsection 100(2) of the ITAA 1936.

Legislative references: Income Tax Assessment Act 1936 subsection 98(1) subsection 100(1) subsection 100(2)
Subject references: Legal disability Minor beneficiaries Trusts Trust beneficiaries Trust income Trust distributions