Private ruling: Discretionary Trust - Residency
Date of advice: 7 August 2025
Published: 27 October 2025
Ruling period: Year ended 30 June 2025
Date scheme commenced: 1 July 2024

Ruling: Q1: Is Trust X a resident trust for CGT purposes under subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997 ) ? | A1: Yes

Relevant facts and circumstances: Trust X is a discretionary trust established by Trust Deed. Company A is the trustee of the Trust. Company A was incorporated in Australia and is registered with ASIC as an Australian proprietary company with the registered office located in Australia.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 6(1) | Income Tax Assessment Act 1997 subsection 995-1(1)

Reasons for decision: Detailed Reasoning - Detailed reasoning: Subsection 995-1(1) of the ITAA 1997 provides that a trust (other than a unit trust) is a 'resident trust for CGT purposes' for an income year if, at any time during the year, the trustee is an Australian resident, or its central management and control is in Australia. Subsection 995-1(1) of the ITAA 1997 further provides a person is taken to be an "Australian resident" if they are a resident of Australia for the purposes of the ITAA 1936. The term "person" is also defined in subsection 995-1(1) of the ITAA 1997 to include a company. Subsection 6(1) of the ITAA 1936 provides a company is considered a resident of Australia if it satisfies either of the following criteria: • It is incorporated in Australia; or • It is not incorporated in Australia, but carries on business in Australia and either: - its central management and control is located in Australia; or - its voting power is controlled by shareholders who are residents of Australia This statutory definition establishes the criteria for determining corporate residency. Where a company is incorporated in Australia, it is automatically deemed to be a resident of Australia under the incorporation test, and no further inquiry is required. In this case, Trust X is a discretionary trust, and the trustee company is incorporated in Australia. In accordance with subsection 6(1) of the ITAA 1936 a company incorporated in Australia is deemed to be a resident of Australia for taxation purposes. Consequently, as the trustee of the trust is a resident of Australia, Trust X is a resident trust for CGT purposes in accordance with subsection 995-1(1) of the ITAA 1997.

Question 1: The trustee of the trust, Company A is incorporated in Australia and is a resident company of Australia. Consequently, as the trustee is a resident, the trust is considered a resident trust for CGT purposes in accordance with subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) and subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936).