Private ruling: Trust income - temporary budget repair levy
Date of advice: 29 June 2015
Published: June 2015
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Will the trustee of the deceased estate be liable for the budget repair levy? | A1: Yes

Relevant facts and circumstances: The deceased died less than three years ago. You have been appointed as executor/administrator of the deceased's estate. For the 2014-15 income year, the net income of the trust estate was more than $180,000. There were no beneficiaries presently entitled to the income of the trust estate.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 99 | Income Tax (Transitional Provisions) Act 1997 Section 4-11

Reasons for decision: Summary: As part of the 2014-15 Federal budget the Government introduced a Temporary Budget Repair Levy. The levy applies to the 2014-15, 2015-16 and 2016-17 income years. Section 4-11 of the Income Tax (Transitional Provisions) Act 1997 provides that the levy will be payable if: • you are an individual; and • your taxable income for the corresponding income year exceeds $180,000. However the note in section 4-11 of the Income Tax (Transitional Provisions) Act 1997 also states that the levy will apply to some trustees who are taxed as if certain trust income were income of individuals (such as under sections 98 and 99 of the Income Tax Assessment Act 1936 (ITAA 1936)). The levy is payable at a rate of two per cent of each dollar of a taxpayer's taxable income over $180,000. In this case, as no beneficiaries were presently entitled to the trust income, the trustee of the deceased estate will be assessed under section 99 of the ITAA 1936. Section 99 of the ITAA 1936 operates to assess the trustee as if they were an individual (with the benefit of the tax free threshold where the deceased died less than three years before the end of the income year). As the trustee of the deceased estate will be taxed as if they were an individual, the budget repair levy will apply as per section 4-11 of the Income Tax (Transitional Provisions) Act 1997 .