Private ruling: Trust income
Date of advice: 10 December 2024
Published: 20 January 2025
Ruling period: Year ended 30 June 20YY | Year ended 30 June 20YY
Date scheme commenced: 17 May 20YY

Ruling: Q1: Does your net income of the Australian estate include foreign income derived by a non-resident executor of a foreign trust? | A1: No. The definition of a trustee in subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) includes an executor. Therefore, as the executor of the Australian Will, the Australian Executor is a trustee of a trust over the property dealt with under the Australian Will. As trustee, the Australian Executor is subject to the provisions within Division 6 of Part III of the ITAA 1936, but only in relation to the assets dealt with by the Australian Will. The assets or income of the foreign trust was not dealt with by the Australian will.

Relevant facts and circumstances: On XX XX 20XX, the deceased passed away. At the time of their passing, they were an Australian resident for taxation purposes that owned assets in both Australia and another country. The deceased left two Wills with respect to both the foreign jurisdiction (the Foreign Estate) and the Australian jurisdiction (the Australian Estate). The Foreign Estate On XX XX 20XX, probate was granted to Person A with respect to the Foreign Estate. Person A is a foreign resident and non-resident for Australian tax purposes. The Foreign Estate consists of Foreign bank accounts, retirement funds, a life insurance payment and a death benefit the deceased received from the passing of her spouse a month prior to their death. It derived income from the retirement funds and interest on the bank account. It has paid tax in the Foreign jurisdiction. The beneficiaries of the Foreign Estate were non-residents for Australian tax purposes throughout the relevant years. The Foreign Estate has now been finalised and distributions made to the relevant beneficiaries. The Australian Estate On XX XX 20XX, probate was granted to Person B with respect to the Australian Estate. Person B is an Australian resident for taxation purposes. Person B did not and does not own any overseas assets for the Australian estate. The Australian Estate has derived interest income from an Australian bank account. This is the only income derived by the Australian Estate. The beneficiaries of the Australian Estate were non-residents for Australian tax purposes during the relevant income tax return years. They are not presently entitled to any share of the income. The Australian Estate is now ready to be finalised. Person B intends making the final distribution of the assets remaining in the Australian estate and winding up the Australian Estate.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 99 | Income Tax Assessment Act 1936 section 99A | Income Tax Assessment Act 1936 section 6(1)