Private ruling: Payments from mining company
Date of advice: 23 May 2017
Published: September 2017
Ruling period: Year ended 30 June 2016 | Year ended 30 June 2017 | Year ended 30 June 2018 | Year ended 30 June 2019 | Year ended 30 June 2020
Date scheme commenced: 1 July 2015

Ruling: Q1: Are the amounts paid to the Direct Benefits Trust 1 (DBT 1) under the Indigenous land use agreement (body corporate agreement) (ILUA) a native title benefit under section 59-50 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. | Q2: Is any part of the payment to DBT 1 under the ILUA unable to qualify as a native title benefit under section 59-50 of the ITAA 1997? | A2: No. | Q3: Are the amounts paid to DBT 1 under the ILUA a mining payment under section 59-15 of the ITAA 1997? | A3: No. | Q4: Where the amount paid to DBT 1 under the ILUA is paid to a trust, does the amount form part of the trust estate or the income of the trust? | A4: The amount paid forms part of the trust estate. | Q5: Where the trustee distributes an amount of trust estate to a beneficiary of the trust who is an *Indigenous person, an *Indigenous holding entity or a *distributing body, will the amount be non-assessable non-exempt income of the beneficiary? | A5: Yes. | Q6: Where the amount paid to DBT 1 under the ILUA is invested, will any income generated be non-assessable non-exempt? | A6: No.

Relevant facts and circumstances: Background You have provided copies of relevant documents which should be read in conjunction with and form part of the scheme of this ruling. The People are a society of Aboriginal people whose traditional country is located in Australia. The People are those Aboriginal people who are descendants of a number of apical ancestors and who recognise themselves as a person of the People and are recognised by others as a person of the People as detailed in the relevant schedule of the approved determination of native title made by the Federal Court of Australia . You are a member of the People. Native Title Aboriginal Corporation (NTAC), for and on behalf of the People, entered into the ILUA with the mining company. NTAC entered into the ILUA in its capacity as: a) agent and attorney for and on behalf of the People b) the Registered Native Title Body Corporate holding the Native Title under the Native Title Determination on trust for the People; and c) the Prescribed Body Corporate (PBC). NTAC is a corporation incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth). NTAC holds the native title rights and interests the subject of the Native Title Determination in trust for the People and, as such, is a registered native title body corporate under the Native Title Act 1993 (Cth) (NTA). NTAC is registered as a charity with the Australian Charities and Not-for-Profits Commission and is endorsed by the Commissioner for an income tax exemption and other tax concessions. The ILUA applies to the land and waters within the Native Title Determination (Agreement Area) which includes all of the land and waters the subject of the Native Title Determination. The ILUA is a 'Body Corporate ILUA' which meets the requirements of sections 24BA to 24BI of the Native Title Act 1993 (NTA) and commences on the date it is registered on the Register of Indigenous Land Use Agreements maintained by the National Native Title Tribunal (Commencement Date). The ILUA was registered with the National Native Title Tribunal and therefore commenced on that date. Financial benefits paid to NTAC and the People under the ILUA Under the ILUA, the financial benefits to be paid by the mining company to NTAC include: a) accumulated mining benefits, a sign-on amount and an execution amount plus accrued interest currently held in a separate preservation bank account of the mining company (Accumulated Payments); and b) quarterly mining benefit payments calculated on sales of mineral produced at New Mines in the Agreement Area (Quarterly Payments). Under the ILUA, the mining company agrees to pay the Accumulated Payments to a benefits management structure nominated by NTAC comprising the following entities and arrangements: a) XYZ trustees as trustee of the Charitable Trust (CT). CT is a registered charity that is endorsed by the Commissioner as income tax exempt. b) XYZ trustees as trustee of the Direct Benefits Trust 1 (DBT 1). c) XYZ trustees as trustee of Direct Benefits Trust 2 (DBT 2). d) The People and Mining Company Sub Fund Agreement (Sub Fund Agreement). The beneficiaries of the DBT 1 and the beneficiaries of the DBT 2 can only be Indigenous persons. Under the ILUA, the mining company is to pay the Accumulated Payments as follows: a) XX% to CT and XX% to DBT 1 and DBT 2 of the remaining amount of accumulated mining benefits b) an agreed sign-on Amount, plus any interest, in accordance with the Binding Heads of Agreement, to DBT 1; and c) an agreed Execution Amount, plus any interest, in accordance with Binding Heads of Agreement, to DBT 2. Pursuant to the relevant clauses of the ILUA, the mining company is to pay each Future Quarterly Payment proportionately to CT, DBT 1 and DBT 2. Pursuant the Sub Fund Agreement, the percentage of Quarterly Payments that relate to commercial production from other New Mines are to be paid to DBT 1 and DBT 2 having regard to the proportion People who are on the respective register of beneficiaries; to be determined as at 30 June of the first year and every five years thereafter. No part of the Accumulated Payments or the Quarterly Payments is for the purpose of meeting administration costs, or remuneration, or consideration for the provision of goods or services. The ILUA relevantly provides that: a) the People and NTAC acknowledge and agree that the Accumulated Payments and the Quarterly Payments are in full and final satisfaction of any Compensation Entitlements of each member of the People and NTAC; b) the People and NTAC release and discharge the mining company and the State from any and all claims, actions, demands or proceedings whether present or future for any Compensation Entitlements by or on behalf of the People and each member of the People; and c) unless permitted by the ILUA, or otherwise agreed by the parties, the People and NTAC agree not to, and agree to procure a Registered Native Title Body Corporate not to, charge the mining company or the State under section 60AB of the NTA for any of the matters permitted by that section that are done or authorised under the ILUA. Compensation Entitlements are defined in the ILUA to mean: any rights or entitlements (including to compensation or damages) whether monetary or otherwise, under any law (including common law, equity and statute) arising from or in connection with and at any time: ● the Agreed Acts whether done before or after the Commencement Date; ● the Grant or Modification of the mining company Titles; ● the Grant or Modification of an enjoyment, exercise of rights or discharge of obligations under any mining company Title, whether done before or after the Commencement Date; ● the Grant of Interests or Approvals within or relating to the Agreement Area to, and the exercise of rights or discharge of obligations under them whether done before or after the Commencement Date by any mining company Entity; and ● any effect of any of the above things on: native title rights and interests; Aboriginal heritage or cultural values; or interest of the People in relation to land that is derived from a connection with, or use or occupation of land pursuant to or derived from any Aboriginal tradition or traditional law or custom but excluding any right or entitlements (including to compensation or damages) whether monetary or otherwise arising in relation to: ● personal injury; ● damage to personal property; or ● a breach of this document. The ILUA requires the People and NTAC to support the mining company's Business including by: a) agreeing with, consenting to and supporting the Existing Operations including all mining company Existing Titles b) agreeing with, consenting to and supporting the doing of every Future Act and the Grant or Modification of every Approval and Interest and the Modification of every mining company Existing Title that is for an Agreed Purpose c) agreeing to the activities that are permitted by Approvals and Interests held by mining company Entities currently and in the future d) not doing anything to object or challenge any of the acts or processes agreed under the ILUA in relation to the company's Business e) agreeing to the surrender to, or compulsory acquisition by the State of the People's native title in relation to part of the Agreement Area to enable the grant of particular Interests or Approvals, but only where the mining company certifies to the People that it has considered alternative Interests or Approvals that do not require native title to be extinguished and that none have been identified. The mining company's Business means the whole and each part of the business of mining and recovering, processing, stockpiling, blending, transporting (including by rail and shipping) and marketing of the particular mineral in and around the mining region including the planning, development, operation and expansion, further expansion and decommissioning of each of those things. Existing Operations means those parts of the mining company's Business that are within the Agreement Area at the Commencement Date. The mining company Existing Titles include each Approval or Interest relating to the Agreement Area at the Commencement Date that is held by the mining company. Agreed Purpose includes Existing Operations and future actions relating to the mining company's Business. The People's consent means that the State, the mining company or other companies associated with the mining company will be able to build things such as roads, power lines, pipelines, houses and dams, which benefit not only people in the area of the People's Native Title Determination but also outside the area. For example, a water pipeline which is built within the Agreement Area might also supply water to areas outside the Agreement Area. A breach by the People or NTAC of their respective obligations to provide support for the mining company's Business gives rise to a contractual right of the mining company to suspend and/or forfeit future mining benefit payments, set-off any loss or damage against future mining benefit payments and/or terminate the ILUA. A breach by the mining company of its obligations to make required payments gives rise to a contractual right of the People to issue notices and suspend their support. Pursuant to the ILUA, NTAC (on behalf of the People), the mining company and the trustee entered into the Sub Fund Agreement. The purpose of the Sub Fund Agreement was to record the terms on which CT, DBT 1 and DBT 2 would receive and manage the payments from the mining company. By executing the Sub Fund Agreement and the ILUA, the People and the mining company have agreed a Benefits Management Structure (BMS). Under the ILUA, other past agreements are terminated on the Commencement Date and effectively replaced by the ILUA. History of the Native Title Claims and Previous Agreements A claimant application was lodged by an Indigenous group with the National Native Title Tribunal (NNTT) in accordance with the NTA (original claimant application). The People were named as members of the native title claim group. A second claimant application was lodged with the NNTT. The claim area overlapped the claim area of the original claimant application to an extent. Some members of the native title claim group were former members of the native title claim group to the original claimant application. Subsequently, the Applicant to the original claimant application acting for and on behalf of themselves and the People, and the mining company, entered into a Binding Initial Agreement (BIA). The Applicant to the second claimant application and the mining company entered into a Binding Heads of Agreement (BHOA). The terms of the BIA and the BHOA (the Agreements) were on substantially the same terms. The Agreements relate to the development and operation of mining on land within the respective claim areas of the original claimant application and the second claimant application, which overlapped. The initial mine was situated substantially within the overlap area. Commercial production at the initial mine commenced. However, the payments that would otherwise have been made in accordance with the Agreements were retained by the mining company in an interest bearing preservation account pending: a) firstly, the reaching of an agreement between the members of the native title claim groups that resolves the claims to the overlap area and their respective proportionate entitlement to receipt of the mining benefits; and b) secondly, the identification of the trust or financial arrangements to receive the mining benefits. The Agreements relevantly provided, among other things, that: ● The mining company will pay financial benefits in quarterly instalments calculated on production from mines located within the relevant claim area in consideration of the claimants 'giving their support'. ● Those payments constitute the claimants full and final entitlement to compensation for the effect on their native title rights and interests and on all other rights they may have, on the grant of the Participation Titles (mining tenements) and the conduct of Participation Operations (mining operations). The Agreements also provide that the mining benefits are payable in consideration of the claimants giving their support for the Participation (mineral mining, processing, transportation etc.) pursuant to which the claimants: ● agree and will not object to: ● the grant of the Participation Titles ● the conduct of the Participation Operations; and ● must: ● not challenge the validity of the grant of any of the Participation Titles ● refrain from making any assessment that any further process under the NTA or other legislation ought to be completed in order to assure the validity of any of the Initial Participation Titles; and ● will do all things reasonably necessary to support the Participation and give effect to the Agreements, including executing all necessary documents for the purposes of the grant of any Participation Titles. A breach by the applicable claimant of their respective obligations to provide support for the Participation gives rise to a contractual right of the mining company to terminate or suspend the mining benefit payments. The mining company commitments in the Agreements were conditional on there being no objection or challenge by the claimants to the grant, validity or effect of the Initial Participation Titles (including any challenge based on an alleged non-compliance with the 'future act' processes of the NTA) and the withdrawal of any objections or challenges that had been made. A failure to satisfy this condition gives rise to a contractual right to terminate the Agreements. The commitments of the mining company were also conditional on the completion by the claimants of a number of priority cultural heritage surveys and consultations occurring in relation to any necessary applications under the Aboriginal Heritage Act 1972 . A failure on the part of the claimants to use reasonable endeavours to undertake any cultural heritage surveys as requested by the mining company may give rise to a separate contractual right to terminate or suspend the mining benefit payments. The Agreements were initial agreements as it was the intention of the parties to those agreements to negotiate and execute an Indigenous Land Use Agreement (ILUA) which would replace the Agreements. The original and second claims were, by Federal Court order, combined into a single claimant application under the NTA (The Claim). The Claim occurred pursuant to an agreement known as the Binding Heads of Agreement - between the Applicant in the original claim and the Applicant to the second claim. The Combination Agreement also set out how The Claim would be prosecuted and how the claimants agreed to use their best endeavours to ensure that particular financial benefits, under certain agreements, would be divided equally between the original claimants and the second claimants. The Combination Agreement was subsequently terminated by an Internal Settlement Deed. Following the trial of The Claim, the Federal Court determined that the People were the common law holders of native title in the area the subject of the Claim (Determination Area) and that they held native title under the NTA. The native title rights and interests determined to be held by the People are native title rights and interests (as defined in section 223 of the NTA) in the Determination Area including the right to access, move about and be present on the land and waters, live on the land in camps and shelters, engage in cultural activities including conducting and participating in ceremonies and meetings; the right to hunt, gather and fish within the land and waters and to have access to, maintain and protect places and areas of importance. Exclusive rights given to the People in relation to 'the Exclusive Area' were the right to possess, occupy, use and enjoy the land and waters and the right to make decisions about the access and use of the land and waters by other people. Claimants who were not members of the People, were determined by the Federal Court not to be common law holders of native title in the Determination Area. As required by the NTA (see Division 6 of Part 2) and as part of the orders made in the Determination, NTAC, a company registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth), was determined to hold the native title rights and interests the subject of the Determination in trust for the People and, as such, is a registered native title body corporate under the NTA. NTAC is not a party to the Agreements but is a party to the ILUA. A benefit management structure was created comprising the following entities: a) Charitable Trust (CT) b) Direct Benefits Trust 1 (DBT 1) c) Direct Benefits Trust 2 (DBT 2). The mining company paid part of the accumulated preserved benefits (and accrued interest) to CT, DBT 1 and DBT 2 pursuant to the Early Release Agreement. The mining company at that time had not yet approved a benefit management structure for the purposes of the Agreements. The Early Release Agreement required NTAC (on its own behalf and on behalf of the People), the mining company and the Trustee to enter into the Interim Sub Fund Agreement to record the terms on which CT, DBT 1 and DBT 2 would receive and manage the Early Release Payment. The Interim Sub Fund Agreement would terminate on commencement of the Combined Final Agreement or as otherwise agreed by the parties. CT, DBT 1 and DBT 2 received and administered the Early Release Payment for the charitable objects and/or for the benefit of the beneficiaries in accordance with the terms of the Interim Sub Fund Agreement and the respective trust deeds. The Early Release Payment was paid by the mining company to the DBT 1, DBT 2 and CT at the direction of the People and the other Descendants and in discharge of the pre-existing obligations of the mining company under the Agreements. Since the signing of the Early Release Agreement and the payment of the Early Release Payment, the mining company continued to pay quarterly mining payments, calculated in accordance with the terms of the Agreements, to the preservation account pending the conclusion of a 'Combined Final Agreement' as defined in the Early Release Agreement. The ILUA is the 'Combined Final Agreement'. The ILUA was entered on the Register of Indigenous Land Use Agreements, triggering the remaining provisions of the ILUA to commence.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 59-15 | Income Tax Assessment Act 1997 Section 59-50 | Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Section 6-10 | Income Tax Assessment Act 1997 Section 6-15 | Income Tax Assessment Act 1997 Section 10-5 | Income Tax Assessment Act 1997 Subsection 995-1(1) | Income Tax Assessment Act 1936 Subsection 95(1) | Income Tax Assessment Act 1936 Section 128U | Native Title Act 1993 Section 11 | Native Title Act 1993 Section 24BB | Native Title Act 1993 paragraph 31(1)(b) | Native Title Act 1993 Subsection 61(1) | Native Title Act 1993 Section 225 | Native Title Act 1993 Section 226 | Native Title Act 1993 Section 228 | Native Title Act 1993 Section 232 | Native Title Act 1993 Section 233 | Native Title Act 1993 Section 227 | Native Title Act 1993 Section 193 | Native Title Act 1993 Section 223 | Native Title Act 1993 Section 237A | Native Title Act 1993 Section 238 | Native Title Act 1993 Section 253

Reasons for decision: Summary: All future references to the Income Tax Assessment Act 1997 will appear as ITAA 1997. All future references to the Income Tax Assessment Act 1936 will appear as ITAA 1936. All future references to the Native Title Act 1993 will appear as NTA 1993. | Summary: The amounts paid to the Direct Benefits Trust (DBT 1) under the Indigenous land use agreement (body corporate agreement) (ILUA) are a native title benefit under section 59-50 of the Income Tax Assessment Act 1997 (ITAA 1997). | Detailed Reasoning - Detailed reasoning: For a payment to satisfy the requirements to be a native title benefit under section 59-50 ITAA 1997, the payment must: ● otherwise be included in assessable income (subsection 59-50(1) of the ITAA 1997) ● be made to an Indigenous person or Indigenous holding entity (subsection 59-50(1) of the ITAA 1997) ● arise under an agreement (subparagraph 59-50(5)(a)(i) of the ITAA 1997 or an ancillary agreement (subparagraph 59-50(5)(a)(ii) of the ITAA 1997) ● relate to an act that would extinguish native title or that would otherwise be wholly or partly inconsistent with the continued existence, enjoyment or exercise of native title (paragraph 59-50(5)(a) of the ITAA 1997) OR is compensation determined in accordance with Division 5 of Part 2 of the Native title Act 1993 (paragraph 59-50(5)(b) of the ITAA 1997) | Detailed Reasoning - Payment would otherwise be included in your assessable income: The assessable income of a taxpayer consists of the following amounts: ● amounts which constitute income according to ordinary concepts (ordinary income) (section 6-5 of the ITAA 1997) ● amounts which are not ordinary income but are included in the assessable income of a taxpayer by virtue of the specific provisions contained in the ITAA 1997 and the ITAA 1936 (statutory income) (section 6-10 of the ITAA 1997) If an amount received by a taxpayer is neither ordinary income nor statutory income then the amount is not included in the assessable income of the taxpayer (section 6-15 of the ITAA 1997). There is no definition of 'ordinary income' contained in either ITAA 1997 or the ITAA 1936 but a substantial body of case law has evolved over time which sets out various factors that must be taken into account to determine whether an amount is ordinary income. Where an amount is not ordinary income, it may give rise to statutory income. Section 10-5 of the ITAA 1997 contains a list of provisions in the ITAA 1997 and the ITAA 1936 which, amongst other things, deal with the specific types of amounts which are included in statutory income. Where an amount does not have the characteristics of ordinary income, and is not statutory income, the amount may be regarded as capital in nature. The difficulties encountered in determining whether an amount is income or capital are recognised in extensive case law including IRC v British Salmon Aero Engines Ltd [1938] 2 KB 482 per Lord Greene; Hallstroms Pty Ltd v Federal Commissioner of Taxation (1946) 72 CLR 634 per Dixon J and Scott v Commissioner of Taxation (NSW) (1935) SR (NSW) 215 per Jordan CJ. In GP International Pipecoaters Pty Ltd v Federal Commissioner of Taxation (1990) 170 CLR 124 the Full Bench of the High Court set out a number of factors which they considered indicative of whether an amount was received on income or capital account including the 'periodicity, regularity, recurrence, character of the thing disposed of and the scope of the transaction, venture or business which gave rise to the receipt'. Further, in Federal Commissioner of Taxation v Anstis (2010) 76 ATR 735, the court stated that the 'totality of the circumstances' must be considered in determining the character of the amount in the recipients hands. | Detailed Reasoning - Application to your circumstances: On the basis of the material provided, if the amounts paid to the DBT 1 under the ILUA are not native title benefits it is considered they will otherwise be included in assessable income as ordinary income. | Detailed Reasoning - Payment must be made to an *Indigenous person or an *Indigenous holding entity: Subsection 995-1(1) of the ITAA 1997 defines an 'Indigenous person' as an individual who is a member of the Aboriginal race of Australia or a descendent of an Indigenous inhabitant of the Torres Strait Islands. Subsection 59-50(6) of the ITAA 1997 defines 'Indigenous holding entity' as: (a) a distributing body (b) a trust if the beneficiaries of the trust can only be Indigenous persons or Indigenous holding entities; or (c) a registered charity. Subsection 128U(1) of the ITAA 1936 defines a 'distributing body' as: (a) an Aboriginal Land Council established by or under the Aboriginal Land Rights (Northern Territory) Act 1976 (b) a corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 ; or (c) repealed (d) any other incorporated body that: (i) is established by or under provisions of a law of the Commonwealth or of a State or Territory that relate to Indigenous persons; and (ii) is empowered or required (whether under that law or otherwise) to pay moneys received by the body to Indigenous persons or to apply such moneys for the benefit of Indigenous persons, either directly or indirectly. Further assistance is provided in the NTA 1993. ● Subection 61(1) of the NTA 1993 defines a 'native title claim group' as those persons who, according to their traditional laws and customs, hold the common or group rights and interests comprising the particular native title claimed; ● Subsection 223(1) of the NTA 1993 defines 'native title' as the communal, group or individual rights and interests of Aboriginal people or Torres Strait Islanders; and ● Section 225 of the NTA 1993 requires that a determination of native title must specify who holds it. Under the ILUA the payments are made to the CT, DBT 1 and DBT 2. CT is an Indigenous Holding Entity as it is a registered charity. DBT 1 and DBT 2 are not registered charities and do not satisfy the definition of a distributing body as they are not an Aboriginal Land Council or an incorporated entity. DBT 1 and DBT 2 are each an Indigenous Holding Entity because each is a trust whose beneficiaries are restricted to Indigenous persons. The amount or *non-cash benefit must arise under an agreement made under an Act of the Commonwealth, a State or a Territory, or under an instrument made under such an Act OR an ancillary agreement to such an agreement While the terms 'agreement' and 'ancillary agreement' are not defined in either the ITAA 1936 or the ITAA 1997, Note 1 to subsection 59-50(5) of the ITAA 1997 states that Indigenous Land Use Agreements (ILUAs) within the meaning of the NTA 1993; agreements under paragraph 31(1)(b) of the NTA 1993 or recognition and settlement agreements under the Traditional Owners Settlement Act 2010 (Vic) will satisfy the requirement to be an agreement or an ancillary agreement. Further Note 2 to subsection 59-50(5) of the ITAA 1997 states that an ILUA does not require a determination of native title under the NTA 1993. Paragraph 1.27 of the Explanatory Memorandum (EM) to Taxation Laws Amendment Bill 2012 No. 6 (TLAB 2012/6) which introduced section 59-50 of the ITAA 1997 also confirms that an ILUA would be considered an agreement. Paragraph 1.29 of the EM to TLAB 2012/6 states that '..An ancillary agreement is a subsidiary agreement that is directly connected with a primary agreement and may provide details not contained in the primary agreement.' Section 24BB of the NTA 1993 provides that an agreement must be about one or more of the following matters in relation to an area: (a) the doing, or the doing subject to conditions (which may be about procedural matters), of particular future acts, or future acts included in classes, (aa) particular future acts (other than intermediate period acts) or future acts (other than intermediate period acts) included in classes, that have already been done. Section 24BE of the NTA 1993 goes on to provide that: (1) The agreement may be given for any consideration, and subject to any conditions, agreed by the parties (other than consideration or conditions that contravene any law) (2) Without limiting subsection (1), the consideration may be the grant of a freehold estate in any land, or any other interests in relation to land whether statutory or otherwise. Therefore, where the parties have made an agreement under the NTA 1993, it is this agreement which should be construed as the 'agreement' under subsection 59-50(5)(a) of the ITAA 1997 and any other agreements between the parties should fall within the term 'ancillary agreement'. | Detailed Reasoning - Application to your circumstances: The payments to CT, DBT 1 and DBT 2 arise under the ILUA which is an indigenous land use agreement made under the NTA; an Act of the Commonwealth. The People have been party to various agreements since the initial native title claim was lodged, culminating in the ILUA. We accept that the earlier agreements are all part of the one agreement-making process relating to native title. The ILUA is taken to be 'the agreement'. The amount or benefit must relate to an act that would extinguish *native title or that would otherwise be wholly or partly inconsistent with the continued existence, enjoyment or exercise of native title OR is compensation determined in accordance with Division 5 of Part 2 of the Native title Act 1993 Whether a payment relates to an act (or acts) that would extinguish native title or would be wholly or partly inconsistent with the continued existence of native title, or the ability of an indigenous group to enjoy or exercise their native title rights, will be a question of fact in each case. Subsection 995-1(1) of the ITAA 1997 states that 'native title' has the same meaning as in the NTA 1993. Subsection 223(1) of the NTA 1993 defines the term 'native title' or 'native title rights and interests' as: The expression native title, or native title rights and interests means the communal, group or individual rights and interests of Aboriginal peoples or Torres Strait Islanders in relation to land or waters, where: (a) the rights and interests are possessed under the traditional laws acknowledged, and the traditional customs observed, by the Aboriginal peoples or Torres Strait islanders; and (b) the Aboriginal peoples or Torres Strait Islanders, by those laws and customs, have a connection with the land or waters; and (c) the rights and interests are recognised by the common law of Australia. Subsections 223(2) and 223(3) of the NTA 1993 extend the definition in subsection 223(1) of the NTA 1993 to include hunting, gathering or fishing rights and rights and interests under 223(1) of the NTA 1993 which are converted into, or replaced by, statutory rights and interests. The particular rights and interests that will fall within the definition of 'native title' or 'native title rights and interests' will differ from one Indigenous group to another. These 'rights and interests' of an Indigenous group would be expected to be particularised in the native title claim lodged by the group under the NTA 1993, whether or not it has been determined. It is also possible that the native title rights and interests of several Indigenous groups may co-exist for a particular geographic region (claim area). Even in situations where a native title claim is not successful, paragraph 1.28 of the EM to TLAA 2012/6 states that 'it is possible for an amount or benefit arising under an agreement to qualify as a native title benefit even if it is later found that native title does not exist. It is sufficient that the agreement is made under Australian legislation and the amount or benefit otherwise meets the criteria of the provision, if the acts to which the agreement pertains would extinguish native title if it was found to exist' [see also example 1.9]. Therefore, if an agreement is struck after a claim is lodged but before it is determined, the benefits under the agreement may qualify as a native title benefit under section 59-50 of the ITAA 1997. However, if an agreement is struck after a native title claim has been rejected, amounts paid under the agreement could never qualify as native title benefits. The ITAA 1997 does not define the 'act' that might extinguish or impair the exercise of native title. However section 226 of the NTA 1993 defines 'act' to include the grant, issue, variation, extension, renewal, revocation or suspension of a licence, permit, authority or instrument; the creation, variation, extension, renewal or extinguishment of any interest in relation to land or waters or any legal or equitable right (under contract or otherwise) and any act having an effect at common law or in equity. The relevant 'act' in paragraph 59-50(5)(a) of the ITAA 1997 is not confined to an act or acts that have already occurred and could encompass a 'past act' (section 228 of the NTA 1993), an 'intermediate period act' (section 232A of the NTA 1993), a 'future act' (section 233 of the NTA 1993) or arguably any act at common law which may have the effect of extinguishing native title, which prevails over native title or causes native title to yield (see Brown v Western Australia ( 2012) 294 ALR 223 at 456 upheld in Western Australia v Brown [2014] HCA 8; 306 ALR 168). The ITAA 1997 does not define 'would' however the term appears to contemplate acts that are yet to occur, but which will have an impact on native title when they do. This might include situations where the agreement between the native title group and the mining company contemplates consent being given to a future grant of a mining right for an area yet to be identified but which will impose restrictions on the ability of the members of the native title group to access or enjoy the land when the mining right is granted. The ITAA 1997 does not provide a list of circumstances where native title is considered to have been 'extinguished' or when some act may be considered to be 'wholly or partly inconsistent with its continued existence, enjoyment or exercise'. However the NTA 1993 states the following at section 227: An act affects native title if it extinguishes the native title rights and interests or if it is otherwise wholly or partly inconsistent with their continued existence, enjoyment or exercise . It has been argued that it is sufficient that an act affects native title rights and interests, regardless of who holds those rights and interests. In particular the ITAA 1997 does not require that the native title rights and interests be held by the same persons receiving, or directing, the amounts under the agreement. The circumstances under which a benefit 'relates to' an act that extinguishes or affects native title is not set out in the ITAA 1936, ITAA 1997 or the NTA. However, the phrase has been considered in a number of cases which support a wide interpretation. In Tooheys Ltd v Commissioner of Stamp Duties (NSW) (1961 105 CLR 604, Taylor J acknowledged that the phrase 'relating to' was extremely wide but considered some precision was to be found within the context in which the phrase was expressed. In Oceanic Life Ltd v Chief Commissioner of Stamp Duties (NSW) [1999] NSWCA 416 Fitzgerald JA considered the width of the phrase 'relating to' is undoubted. The most recent consideration of the phrase appears in Commonwealth Bank of Australia v Garuda Aviation Pty Ltd (2013) 45 WAR 92. While it is not necessary to establish a direct link between the payment (or the quantum of the payment) under the relevant agreement or ancillary agreement and the act or acts asserted to have extinguished native title or been wholly or partly inconsistent with its continued existence, enjoyment or exercise there must be a connection between the payment and the act for the amount paid to qualify as a native title benefit. | Detailed Reasoning - Application to your circumstances: The Federal Court determined that the People were the common law holders of native title in the area the subject of the native title claim and that they held native title under the Native Title Act 1993 (Determination area). NTAC, for and on behalf of the People, entered into the ILUA with the mining company and it was subsequently registered with the National Native Title Tribunal. The payments to CT, DBT 1 and DBT 2 are not compensation determined in accordance with Division 5 of Part 2 of the NTA 1993. Therefore, to qualify as native title benefits for the purposes of section 59-50 of the ITAA 1997, the payments must relate to an act that would extinguish native title or that would otherwise be wholly or partly inconsistent with the continued existence, enjoyment or exercise of native title. Determined native title rights and interests; and qualifications The native title rights and interests in relation to the Determination Area (other than the Exclusive Area) give the People the following non-exclusive rights, including the right to conduct activities necessary to give effect to them: (a) the right to access, move about and be present on the land and waters, live on the land in camps and shelters, and engage in cultural activities on the land and waters including conducting and participating in ceremonies and meetings; (b) the right to hunt and take fauna, gather and take flora, take fish and take stones, timber, ochre and water; (c) the right to have access to, maintain and protect places and areas of importance on or in the land and waters of the Determination Area, including rock art, engraving sites, stone arrangements and the like. The native title rights and interests set out above do not confer: (a) possession, occupation, use and enjoyment on the People to the exclusion of all others; or (b) a right to control the access to, or use of, the land and waters or its resources. The native title rights and interests in relation to the Exclusive Area give the People the following exclusive rights, including the right to conduct activities necessary to give effect to them: (a) the right as against the whole world to possess, occupy, use and enjoy the land and waters; (b) a right to make decisions about the use of the land and waters by persons who are not members of the People; and (c) a right to control the access of others to the land and waters. Sections 47A and 47B of the NTA 1993 apply to disregard any prior extinguishment in relation to the land and waters in the Exclusive Area. 'Other Interests' in relation to the Determination Area are leases (eg. for construction, use, extension of: fibre-optic cables, an accommodation village, railway and associated roads), reserves, pastoral leases, water interests, mining tenements including mining leases, miscellaneous licences, general purpose leases, exploration licences, prospecting licences (Schedule X of the Native Title Determination). The relationship between the non-exclusive and exclusive native title rights and interests and the Other Interests is that: (a) to the extent that any of the Other Interests are inconsistent with the continued existence, enjoyment or exercise of the native title rights and interests, the native title rights and interests continue to exist in their entirety, but the native title rights and interests have no effect in relation to the Other Interests to the extent of the inconsistency during the currency of the Other Interests; and otherwise, (b) the existence and exercise of the native title rights and interests do not prevent the doing of any activity required or permitted to be done by or under the Other Interests and these activities prevail over the native title rights and interests and any exercise of them. A qualification on the native title rights and interests in both the non-exclusive and exclusive areas is that they do not confer any rights in relation to minerals, petroleum, geothermal energy resources, geothermal energy and water captured by the holders of the Other Interests. | Detailed Reasoning - The payments: Under the ILUA, the financial benefits to be paid by the mining company are: ● accumulated mining benefits, a sign-on amount and an execution amount and accrued interest (Accumulated Payments); and ● quarterly mining benefit payments (calculated on sales of mineral) (Future Quarterly Payments). | Detailed Reasoning - Acts given consent: The ILUA requires the People and NTAC to support the mining company's mining Business including by: a) agreeing with, consenting to and supporting the Existing Operations including all of the mining company's Existing Titles, b) agreeing with, consenting to and supporting the doing of every Future Act and the Grant or Modification of every Approval and Interest and the Modification of every mining company Existing Title that is for an Agreed Purpose, c) agreeing to the activities that are permitted by Approvals and Interests held by the mining company Entities currently and in the future, d) not doing anything to object or challenge any of the acts or processes agreed under the ILUA in relation to the mining company 's mining Business, e) agreeing to the surrender to, or compulsory acquisition by the State of the People's native title in relation to part of the Agreement Area to enable the grant of particular Interests or Approvals, but only where the mining company certifies to the People that it has considered alternative Interests or Approvals that do not require native title to be extinguished and that none have been identified. A Future Act includes an act that takes place after 1 January 1994 and validly affects native title rights and interests to any extent. Other key terms above are defined in the ILUA: Existing Operations - those parts of the mining company's mining Business that are within the Agreement Area at the Commencement Date. Grant - means grant, extend, renew, re-grant or re-make. Approval - means any authorisation, licence, permit, approval, certificate, consent, direction or notice inclusive of any Modification, and includes an approval from a Minister, Government Agency or other competent authority, for example the approval of proposals under a Government Agreement. Interest - means (whether granted before, on or after the Commencement Date) any: ● legal or equitable interest in land or waters ● right to occupy, use or traverse land or waters ● right to mine, quarry, extract or explore for minerals or water ● easement, charge, power or licence over or in connection with land or waters ● Authorisation, permit or licence from any Government Agency Existing Title - each Approval and each Interest which relates in whole or in part to the Agreement Area Granted at the Commencement Date and held by an entity of the mining company. | Detailed Reasoning - Payments in satisfaction of Compensation Entitlement: The ILUA provides that: a) the People and NTAC acknowledge and agree that the Accumulated Payments and the Future Quarterly Payments are in full and final satisfaction of any Compensation Entitlements of each member of the People and NTAC; and b) the People and NTAC release and discharge the mining company and the State from any and all claims, actions, demands or proceedings whether present or future for any Compensation Entitlements by or on behalf of the People and each member of the People. 'Compensation Entitlements' are any rights or entitlements to compensation arising from or in connection with, at any time, the Agreed Acts , the Grant or Modification of the mining company Titles; the Grant or Modification of an enjoyment, exercise of rights or discharge of obligations under any mining company Title, the Grant of Interests or Approvals and the exercise of rights or discharge of obligations under them; and any effect of any of these things on native title rights and interests. Connection between the payments and acts The ILUA covers acts for which the mining company needs to obtain the People's consent. The ILUA is entered on the Register of Indigenous Land Use Agreements; thereby validating the acts. In consideration for the payments, the People and NTAC must agree with, consent to and support, the mining company's existing operations and titles and the doing of every Future Act, and the Grant or Modification of every Approval and Interest and the Modification of every mining company Existing Title that is for an Agreed Purpose. The definition of 'act' in section 226 of the NTA 1993 includes such 'legal acts'. The rights and interests particularised in the native title determination are wide ranging and it is accepted that the acts, when done, would be wholly or partly inconsistent with the enjoyment or exercise of native title. The payments made under the ILUA are in satisfaction of any Compensation Entitlement. The definition of 'Compensation Entitlement' relates directly to the above acts and recognises that they may affect the X People's native title rights and interests. The sign-on amount, the execution amount and the future quarterly payments are instalments of the total amount negotiated between the parties to permit the mining company to conduct its mining project/s on land over which the People hold native title. | Detailed Reasoning - Conclusion: Taking a holistic view of the agreement between the mining company and the People, it is considered that the overall package of payments has the required connection to an act, or acts, which would affect the People's native title. The amounts paid under the ILUA are native title benefits under section 59-50 of the ITAA 1997. Accordingly, these amounts will not form part of the assessable income of the members of the People, including the taxpayer. | Summary: No part of the payment to DBT 1 under the ILUA is unable to qualify as a native title benefit because of subsection 59-50(3) of the ITAA 1997. | Detailed Reasoning - Detailed reasoning: Subsections 59-50(1) and (2) of the ITAA 1997 set out the requirements that must be satisfied for a payment to be a native title benefit. However subsection 59-50(3) of the ITAA 1997 states that an amount or benefit will not be a native title benefit to the extent that it is: (a) for the purposes of meeting the provider's administrative costs, or (b) as remuneration or consideration for the provisions of goods or services. In relation to subsection 59-50(3) of the ITAA 1997, the Explanatory Memorandum (EM) to Taxation Laws Amendment (2012 Measures No. 6) Bill 2012 (TLAB No.6 2012) provides further clarification and a number of examples (examples 1.5, 1.6 and 1.7) which demonstrate when an amount has been paid for administrative costs or for goods and services. In particular paragraph 1.23 of the EM states: An amount or benefit someone provides to meet their administrative costs or as remuneration or consideration for the provision of goods and services is not NANE income, even if the amount is, or arises from, a native title benefit. This is the case even where the amount or benefit is provided to an Indigenous holding entity or Indigenous person (who would be entitled to receive the native title benefit). Administrative costs is a broad term and includes, but is not limited to, fees for legal and accounting services and other necessary costs associated with the ongoing administration of the entity. Therefore, if an amount is paid for the purposes of meeting (or reimbursing) an entity's administrative costs or is remuneration, or is for goods and services that have been provided, the amount cannot qualify as a mining payment or as a native title benefit, even if the payment is made to or on behalf of, an Indigenous person, an Indigenous group or Indigenous holding entity. | Detailed Reasoning - Application to your circumstances: No part of the Accumulated Payments or Future Quarterly Payments is for the purpose of meeting administration costs or remuneration or consideration for the provision of goods or services. Accordingly, no part of the payments to DBT 1 under the ILUA are unable to qualify as a native title benefit because of subsection 59-50(3) of the ITAA 1997. | Summary: The amounts paid to DBT 1 under the ILUA are not a mining payment under section 59-15 of the ITAA 1997. | Detailed Reasoning - Detailed reasoning: Under section 59-15 of the ITAA 1997 a payment will be a non-assessable non-exempt mining payment if it satisfies the following conditions: ● it is a mining payment (section 128U of the ITAA 1936) ● it relates to Indigenous land (subsection 995-1(1) of the ITAA 1997); and ● it is made to a distributing body (section 128U of the ITAA 1936); or ● it is made to one or more Indigenous persons (subsection 995-1(1) of the ITAA 1997) or applied for their benefit. A 'mining payment' is defined in subsection 128U(1) of the ITAA 1936 as 'a payment made to a distributing body or made to, or applied for the benefit of, an Indigenous person or persons, being: (c) any other payment made on or after 1 July 1979 under provisions of a law of the Commonwealth or of a State or Territory that relate to *Indigenous persons or under an agreement made in accordance with such provisions, being a payment made: (i) in consideration of the issuing, granting or renewal of a miner's right or mining interest in respect of *Indigenous land (ii) in consideration of the granting of permission to a person to enter or remain on Indigenous land or to do any act on Indigenous land in relation to prospecting or exploring for, or mining of, minerals; or (iii) by way of payment of mineral royalties payable in respect of the mining of minerals on Indigenous land or by way of payment of an amount determined by reference to an amount of mineral royalties received by the Commonwealth, a State or the Northern Territory in respect of the mining of minerals on Indigenous land, However it does not include a payment made by a distributing body (paragraph 128(1)(d) of the ITAA 1936 or a native title benefit (paragraph 128U(1)(e) of the ITAA 1936). Subsection 6(1) of the ITAA 1936 defines 'Indigenous land' as having the same meaning as in the Income Tax Assessment Act 1997 . Subsection 995-1(1) of the ITAA 1997 defines 'Indigenous land' to mean 'any estate or interest in land that, under an *Australian law relating to *Indigenous persons, is held for the use or benefit of Indigenous persons'. The term 'Indigenous land' replaced the former term 'Aboriginal land' which was repealed by No 84 of 2013, s 3 and Sch 1 item 14, effective 28 June 2013. Neither the ITAA 1936 nor the ITAA 1997 define 'estate' or 'interest' in land. Section 253 of the NTA 1993 defines an ' interest , in relation to land or waters' as meaning: (a) a legal or equitable estate or interest in the land or waters; or (b) any other right (including a right under an option and a right of redemption), charge, power or privilege over, or in connection with: (i) the land or waters; or (ii) an estate or interest in the land or waters; or (c) a restriction on the use of the land or waters, whether or not annexed to other land or waters. Section 253 of the NTA 1993 defines 'land' as including the airspace over, or subsoil under, land, but does not include waters. 'Waters' is defined as including: (a) sea, a river, a lake, a tidal inlet, a bay, an estuary, a harbour or subterranean waters; or (b) the bed or subsoil under, or airspace over, any waters (including waters mentioned in paragraph (a)); or (c) the shore, or subsoil under or airspace over the shore, between high water and low water. Therefore, if a payment is made to an Indigenous person or persons or applied for their benefit or to a distributing body, to the extent the payment is not a native title benefit under section 59-50 of the ITAA 1997 it may still be a mining payment under section 59-15 of the ITAA 1997. However a payment will not be non-assessable non-exempt to the extent the amount is paid to a distributing body for the purposes of meeting its administrative costs (subsection 59-15(4) of the ITAA 1997 or where the amount is remuneration or considerations for goods and services provided (subsection 59-15(5) of the ITAA 1997). | Detailed Reasoning - Application to your circumstances: The ILUA is made under the NTA 1993 which is a Commonwealth Act that relates to Indigenous persons. This requirement is therefore satisfied. The payments made to DBT 1 under the terms of ILUA grant permission to the mining company to enter the Agreement Area in order to conduct its X mining operation which includes exploration, mining, transport, processing and treatment of X. A determination of native title has been made and there is formal recognition of the claimant's native title rights and interests in the land under the NTA. It is therefore considered that the native title rights and interests in the land are 'held' under an Australian law for the use or benefit of Indigenous persons. Accordingly, as the People's native title has been determined, the condition that the mining company payments are made in relation to 'Indigenous land' is met. The People were required to nominate a BMS to receive and manage the monetary benefits payable to them. The trustee of the DBT 1 receives and administers the proportion of the mining company payments, set out in the ILUA, for the benefit of the DBT 1 beneficiaries; who are restricted to Indigenous persons. Each future quarterly payment transferred into DBT 1, for distribution to the beneficiaries, satisfies the requirement that the payment is applied for the benefit of one or more Indigenous persons. Therefore, the future quarterly payments paid to DBT 1 under the ILUA would be mining payments under section 59-15 of the ITAA 1997. However, a payment that is a native title benefit is excluded from the definition of a 'mining payment' in paragraph 128U(1)(e) of the ITAA 1936. As it was concluded at Question 1 that the amounts paid under the ILUA are native title benefits under section 59-50 of the ITAA 1997, they are not mining payments under section 59-15 of the ITAA 1997. | Summary: Where the amount paid to the People under the ILUA is paid to a trust, the amount forms part of the trust estate. | Detailed Reasoning - Detailed reasoning: Sections 59-15 and 59-50 of the ITAA 1997 set out the conditions that must be satisfied for a payment to be a non-assessable non-exempt mining payment or a non-assessable non-exempt native title benefit. They do not discuss the nature of such a payment in the hands of a trustee. Section 95 of the ITAA 1936 provides that the net income of a trust estate is the total assessable income of the trust estate calculated as if the trustee were a resident taxpayer, less allowable deductions. The income of a trust is what is generated by the trust property. It follows that a payment, directed to the trustee of a trust pursuant to an agreement between an entity and an Indigenous person or a native title group, will not meet the definition of trust income. The amount directed to the trust will form part of the trust estate. | Detailed Reasoning - Application to your circumstances: The ILUA requires that the payments from the mining company to the People be paid into a Benefits Management Structure (BMS) that is to include a charitable trust and at least one, but no more than two, discretionary trusts. At the Commencement Date, CT is the charitable trust and DBT 1 and DBT 2 are the discretionary trusts in the BMS agreed to by the People and the mining company. The trusts receive the payments at the direction of the People. The payments made to each trust therefore form part of the trust estate. | Summary: Where the trustee distributes an amount of trust estate to a beneficiary of the trust who is an Indigenous person, an Indigenous holding entity or a distributing body, the amount will be non-assessable non-exempt income of the beneficiary. | Detailed Reasoning - Detailed reasoning: Subsection 59-50(2) of the ITAA 1997 provides that an amount or other benefit is non-assessable non-exempt income to the extent that the amount, or other benefit, arises directly or indirectly from a native title benefit and the person receiving that amount or other benefit is an Indigenous person or Indigenous holding entity. Therefore where: ● the trust satisfies the definition of Indigenous holding entity; and ● the trustee distributes a proportion of the trust estate to an eligible beneficiary who satisfies the definition of Indigenous person or Indigenous holding entity; the amount will be non-assessable non-exempt income in the hands of the beneficiary. | Detailed Reasoning - Relevant definitions: Indigenous person is defined in section 995-1 of the ITAA 1997 as an individual who is: ● a member of the Aboriginal race of Australia; or ● a descendant of an Indigenous inhabitant of the Torres Strait Islands. Subsection 59-50(6) of the ITAA 1997 defines 'Indigenous holding entity' as: a) a distributing body; or b) a trust, if the beneficiaries of the trust can only be *Indigenous persons or Indigenous holding entities; or c) a registered charity. Distributing body is defined in section 128U of the ITAA 1936: ● an Aboriginal Land Council established by or under the Aboriginal Land Rights (Northern Territory) Act 1976 ; ● a corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 ; or ● any other incorporated body that: a. is established by or under the provisions of a law of the Commonwealth or of a State or territory that relate to Indigenous persons, and b. is empowered or required (whether under that law or otherwise) to pay moneys received by the body to Indigenous Persons or to apply such money for the benefit of Indigenous persons, either directly or indirectly. | Detailed Reasoning - Application to your circumstances: As noted above, DBT 1 is an indigenous holding entity because it is a trust whose beneficiaries can only be Indigenous persons or Indigenous holding entities. You are an Indigenous person and a beneficiary of the DBT 1. If the DBT 1 distributes a proportion of the trust estate to you, the amount will be non-assessable non-exempt income in your hands (except any portion that is interest, remuneration or for administration costs). The same applies to all members of the People who are beneficiaries of DBT 2. | Summary: Where the amount paid to the People under the ILUA is invested, any income generated will not be non-assessable non-exempt. | Detailed Reasoning - Detailed reasoning: Subsection 59-50(2) of the ITAA 1997 provides that an amount or other benefit is non-assessable non-exempt income to the extent that the amount, or other benefit, arises directly or indirectly from a native title benefit and the person receiving that amount or other benefit is an Indigenous person or an Indigenous holding entity. The EM to TLAB No. 6 2012 provides clarification at paragraphs 1.19, 1.20 and example 1.2 that an amount or benefit may still retain its character as a native title benefit where an Indigenous person or an Indigenous holding entity receives it through another Indigenous holding entity. However, paragraph 59-50(4)(b) of the ITAA 1997 states that an amount will not be non-assessable non-exempt where it arises from an entity investing the native title benefit or an amount that arises directly or indirectly from it. Paragraphs 1.21, 1.22 and examples 1.3 and 1.4 of the EM to TLAB No.6 2012 demonstrate the limitations to the non-assessable non-exempt status of such payments. It does not extend to a situation where the amount or benefit has first passed to a person who is not an Indigenous person or an entity which is not an Indigenous holding entity (example 1.3). Nor will non-assessable non-exempt status apply where the amount or benefit has arisen from investing a native title benefit. Income earned from such an investment is intended to be subject to normal income tax rules (paragraph 1.22 and example 1.4). In relation to a trust estate, where income is generated by a trustee investing an amount of trust capital, section 95 of the ITAA 1936 provides that the net income of the trust will be the total assessable income of the trust, less allowable deductions. Further Draft Taxation Ruling TR 2012/D1 states: Para 71. For trust law purposes, income of a trust is essentially that which is a product of the trust property - for example, rent from the letting of trust property or interest on loans of trust property. On that basis, it is likely to correspond in most cases with what would be ordinary income under section 6-5. Para 86. The many references in Division 6 to the 'income of the trust estate' show that the trust estate and its income are distinct concepts, the income being the product of the estate. Accordingly, where an amount is invested, even if the amount was a non-assessable non-exempt native title benefit, the income generated will form part of assessable income. | Detailed Reasoning - Application to your circumstances: You are an Indigenous person. You will receive amounts through DBT 1 in the form of distributions. DBT 1 is an Indigenous Holding Entity. | Detailed Reasoning - Interest earned by the mining company on the Accumulated amounts: Under the ILUA, the mining company agrees to pay the Accumulated Payments and the Future Quarterly Payments to the BMS. After the Commencement Date, within the timeframe specified, the mining company paid the Accumulated Payments which comprise the remaining amount of accumulated mining benefits held in an interest bearing bank account of the mining company, plus any interest, a sign-on Amount plus any interest; and an Execution Amount plus any interest. Accordingly, DBT 1 and DBT 2 need to include in their assessable income for the relevant income year any interest earned on the accumulated mining benefits, sign-on amount and execution amounts paid to them. If you receive a distribution in an income year, you need to include in your assessable income the portion of your distribution that is interest. The part of the distribution you receive that is not interest does not need to be included in your assessable income. The same applies to beneficiaries of DBT 1 and DBT 2. | Detailed Reasoning - Trustee investing the payments from the mining payment: As discussed above, the EM to TLAB No.6 2012 clarifies that there are limitations to the non-assessable non-exempt status of an amount or benefit under subsection 59-50(2). In particular paragraph 1.22 and example 1.4 of the EM provide that where an amount or benefit has arisen from investing a native title benefit, the income generated will not be non-assessable non-exempt but rather will be subject to the normal income tax rules. Where the trustee of a trust distributes an amount of trust income to an eligible beneficiary, and the beneficiary is not under a legal disability, the amount will be assessable income in the hands of the beneficiary under section 97 of the ITAA 1936. In all other cases the amount will be assessable to the trustee under section 99A of the ITAA 1936. | Detailed Reasoning - Future Quarterly Payments: From the Commencement Date, the mining company will pay each Future Quarterly Payment to CT, DBT 1 and DBT 2 proportionately in accordance with the ILUA. If the trustee invests any of the Future Quarterly Payments, the income earned will not be a non-assessable non-exempt (NANE) native title benefit. The income earned on the investment will form part of the assessable income of the trusts. If you receive a distribution in an income year that includes income generated by the trustee from investing any of the Future Quarterly Payments, the income generated will not be NANE income in your hands. You will have to include the amount in your assessable income in the income tax year the distribution is made to you. The same applies to all members of the People who are beneficiaries of DBT 1 or DBT 2. | Detailed Reasoning - If you invest any of the mining company payments: If you invest all or part of the amounts you receive as a distribution, any income generated, including bank interest, will also be assessable income to you in the income tax year you earn it. This applies to all members of the People who are beneficiaries of DBT 1 or DBT 2.