Private ruling: Payments to a trust
Date of advice: 27 May 2024
Published: 8 July 2024

Ruling: Q1: Is Company A entitled to claim a deduction for payments to Trust A, under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. | Q2: Is Company A required to include in its assessable income under section 6-5 of the ITAA 1997, amounts derived from its related entities in respect of payments to Trust A? | A2: Yes.

Relevant facts and circumstances: Company A is an Australian resident company. Trust A is a fixed trust settled in Australia. Company A makes certain payments to Trust A with contributions received from several related entities.

Relevant legislative provisions: Section 6-5 of the ITAA 1997 | Section 8-1 of the ITAA 1997

Reasons for decision: Summary: Company A is entitled to claim a deduction for payments to Trust A under section 8-1 of ITAA 1997 because the payments are incurred in gaining or producing assessable income of Company A and they not considered to be capital or of a capital nature. The amounts derived by Company A from the related entities are ordinary income. Therefore, they are assessable to Company A under section 6-5 of the ITAA 1997.