Private ruling: Capital gains tax - non resident trust - distribution to beneficiary - Australian resident
Published: July 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Is the distribution by the Trust to you taxable? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 855-45 | Income Tax Assessment Act 1997 Subsection 855-5(2) | Income Tax Assessment Act 1997 Section 115-215 | Income Tax Assessment Act 1936 Section 97

Reasons for decision: Summary: A non resident trust for capital gains tax (CGT) purposes means a trust that is not a resident trust. A trust is a resident trust for an income where, at any time during the year, either the trustee is a resident, or the central management or control of the trust is in Australia. When you arrived in Australia the property was owned by the Trust and was not owned by you and your spouse as individuals. At this time, the central management and control of the Trust was located in Australia, which has the effect that the Trust became a resident trust. When a trust becomes a resident trust for CGT purposes, there are rules relevant to each CGT asset that the trustee owned just before the trust became a resident trust. At the time the trust becomes a resident trust it is taken to have acquired the CGT asset at the market value on the date it became a resident trust. Therefore, the first element of the cost base and reduced cost base of the property is the market value of the property on your arrival in Australia. CGT event A1 occurred when the Trust disposed of the property. The time of the event will normally occur at the time you enter into the contract for the disposal or if there is no contract when the change of ownership occurs.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You and your spouse are a beneficiary and trustee of a non resident discretionary Trust. (The Trust) | The Trust has a corporate trustee who has no decision making power or management of the Trust. | The Trust was created by deed after 20 September 1985. | The Trust is the registered owner of a residential property located outside of Australia which was purchased after 20 September 1985. | The property was occupied by the beneficiaries as their main residence. | You and your spouse immigrated to Australia. | The property was then occupied by your sibling for a period of time. | The property has recently been sold by the Trust. | The Trust intends to distribute the proceeds of the sale to you. | The Trust has made a capital gain as a result of the sale.