Private ruling: Taxation of trust estate income
Date of advice: 30 March 2021
Published: June 2021
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion under subsection 99A(2) of the Income Tax Assessment Act 1936 (ITAA 1936) to tax the trustee on estate income under section 99 of the ITAA 1936 from 23 May 20XX? | A1: Yes. After consideration of the relevant factors, the Commissioner is of the opinion that it would be unreasonable that section 99A of the ITAA 1936 should apply in relation to the trust estate that is administered under Part XI of the Bankruptcy Act 1966 . Accordingly, section 99 of the ITAA 1936 will apply.

Relevant facts and circumstances: The deceased died intestate and no one was able to administer the estate. A distant relative of the deceased attempted to obtain a grant of letters of administration: however, as the Court required payment of a substantial bond the process was abandoned. The deceased owned a dwelling which was the residence of the deceased up until the date of death and rem a ined vacant following the death. A creditor of the estate obtained an order under Part XI of the Bankruptcy Act 1966 (Bankruptcy Act) for the deceased estate to be administered under that part of the Act, based on unpaid amounts in respect of the dwelling. The applicant for this private ruling was appointed trustee for the administration of the estate of the deceased under the Bankruptcy Act. The trustee had to arrange for the sale of the dwelling and for payments to be made to creditors of the estate. The assets of the deceased estate included interest earning term deposits with a bank.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 99 | Income Tax Assessment Act 1936 section 99A | Income Tax Assessment Act 1936 subsection 99A(2) | Income Tax Assessment Act 1936 paragraph 99A(2)(c)