Private ruling: Trading trust
Date of advice: 8 June 2023
Published: 31 July 2023
Ruling period: 1 July 2022 to 30 June 2023
Date scheme commenced: In the income year ending 30 June 2023

Ruling: Q1: Will X Trust be a 'trading trust' as defined in section 102N of the Income Tax Assessment Act 1936 (ITAA 1936), so as to be a trust covered by subsection 275-10(4) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No.

Relevant facts and circumstances: X Trust is a unit trust which invests (through subsidiary trusts) in land which is leased to tenants for rent.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 102M | Income Tax Assessment Act 1936 section 102N | Income Tax Assessment Act 1997 subsection 275-10(4)

Reasons for decision: Summary: Having regard to all the relevant facts and circumstances, the Commissioner is satisfied that the Trustee of X Trust only invests in units in unit trusts (satisfying subparagraph (b)(i) of the definition of 'eligible investment business in section 102M of the ITAA 1936), and the trustee of each of those subsidiary unit trusts invests in land primarily for the purpose of deriving rent (satisfying paragraph (a) of the definition of 'eligible investment business' in section 102M of the ITAA 1936). Therefore, X Trust is not a 'trading trust' as defined in section 102N of the ITAA 1936 and will not be a trust covered by subsection 275-10(4) of the ITAA 1997 .