Private ruling: Commissioner discretion - income tax
Date of advice: 8 October 2024
Published: 18 November 2024
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in subsection 100AA(4) of the Income Tax Assessment Act 1936 (ITAA 1936) to disregard the failure of the Trustee to notify the tax exempt beneficiary of their present entitlement to a share of the trust fund at the end of two months after the end of the relevant income year as required in paragraph 100AA(1)(c) of the ITAA 1936? | A1: Yes. Having considered your circumstances, the Commissioner will exercise the discretion in subsection 100AA(4) of the ITAA 1936 to disregard the failure of the Trustee to notify the tax exempt entity of its present entitlement.

Relevant facts and circumstances: Entity A (the Trustee) is a Trustee of the Trust. At the end of the income year, the Trustee resolved that all the income of the Trust for that income year should be set aside for the benefit of the Beneficiary. The Trust 20XX Income Tax Return reflects the Beneficiary being presently entitled to $XX,XXX of income. The Beneficiary is income tax exempt entity for the purposes of section 100AA of the ITAA 1936. The Trustee failed to satisfy the two-month requirement regarding notifying in writing the Beneficiary of the present entitlement. The failure to satisfy the two month requirement in relation to the $XX,XXX was due to the Trust first return and some confusion over the 31 August deadline. The Trustee has informed the Beneficiary of this entitlement as soon as the Trustee became aware of the oversight. The Commissioner has not previously applied this discretion to the Trustee.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 100AA(1) | Income Tax Assessment Act 1936 subsection 100AA(2) | Income Tax Assessment Act 1936 subsection 100AA(3) | Income Tax Assessment Act 1936 subsection 100AA(4) | Income Tax Assessment Act 1936 subsection 100AA(5)