Private ruling: Excepted trust income
Date of advice: 3 December 2018
Published: March 2019
Ruling period: Year ended 30 June 20XX to Year ending 30 June 2024
Date scheme commenced: 1 July 20YY

Ruling: Q1: Is the income of the Trust derived from the investment of the money transferred into the Trust from entity A excepted trust income? | A1: Yes. After examining the specific circumstances of the Trust, the Commissioner considers that the Trust satisfies the conditions set out in sub-subparagraph 102AG(2)(c)(i)(A) and subsection 102AG(2A) of the Income Tax Assessment Act 1936. Where the beneficiary’s share of the trust net income consists wholly of excepted income, and the beneficiary is not entitled to a share of the net income of any other trust, the trustee pays tax at normal individual tax rates.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. Individual A passed away following a work place incident. Individual A’s employer at the time of death was a contractor to entity A. To pre-empt a potential claim for damages, entity A has provided a payment by way of a compensatory benefit, on the condition that it is used to provide for the education of individual B, individual A’s child. The Trust was established in the year ended 20XX. The sole beneficiary of the Trust is individual B. Individual B is a prescribed person. Under the terms of the Deed establishing the Trust, the settlor intends on the execution hereof to lodge with the Trustee the initial amount to be invested in authorised investments and all authorised investments shall be held by the Trustee upon the trusts and subject to the terms and conditions hereinafter declared and contained.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 10 2AC | Income Tax Assessment Act 1936 section 102AG | Income Tax Assessment Act 1936 sub-subparagraph 102AG(2)(c)(i)(A) | Income Tax Assessment Act 1936 subsection 102AG(2A)