Private ruling: Trust
Date of advice: 15 December 2015
Published: February 2016
Ruling period: Year ended 30 June 2015 | Year ended 30 June 2016
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise his discretion under section 99A of the Income Tax Assessment Act 1936 (ITAA 1936) to assess the estate under section 99 of the ITAA 1936? | A1: Yes.

Relevant facts and circumstances: The Deceased died on the XXXX. The Deceased's last testamentary documents comprised a will and X codicils. The only significant assets of the Estate at the time of the Deceased's death were the main residence and a bundle of investments in publicly listed company shares. Under the codicil of the Deceased, A was granted the right to reside at the home during their lifetime and was granted a life interest in the form of an annuity of $X per year. A survived the Deceased by a number of years and died on the XXXX. The assets and liabilities of the Estate have not significantly changed since the Deceased's death. No person has transferred or lent any property (including money) to the Estate. No person has conferred any benefits on the Estate or conferred or attached any special rights or privileges on the estate.

Relevant legislative provisions: Section 99 of the Income Tax Assessment Act 1936 | Section 99A of the Income Tax Assessment Act 1936

Reasons for decision: Summary: Section 99 of the Income Tax Assessment Act 1936 (ITAA 1936) will apply to the taxation of so much of the net income of a trust estate in relation to a year of income to which there is no beneficiary presently entitled in situations where section 99A of the ITAA 1936 does not apply. All such income falls initially within the ambit of section 99A of the ITAA 1936. In a limited number of cases, the Commissioner has a discretion to assess the trustee under section 99 of the ITAA if he is of the opinion that it would be unreasonable that section 99A of the ITAA 1936 should apply. Section 99A(2) of the ITAA 1936 gives the Commissioner a discretion to assess the trustee pursuant to section 99 of the ITAA 1936, rather than section 99A of the ITAA 1936, inter alia, in relation to a trust estate that resulted from a will, a codicil, an intestacy or a court order varying the provisions of a will, a codicil or the operation of the intestacy provisions Subsection 99A(3) provides that in forming an opinion for the purposes of subsection 99A(2) the Commissioner is to have regard to certain matters. (1) the circumstances in which and the conditions, if any, upon which, at any time- a. property - including money - was acquired by or lent to the trust estate, b. income was derived by the trust estate, c. benefits were conferred on the trust estate, or d. special rights or privileges - irrespective of whether they have been exercised - were conferred on or attached to property of the trust estate. (1) whether any person, who has at any time, directly or indirectly- a. transferred or lent any property (including money) to, or conferred any benefits on, the trust estate; or b. conferred or attached any special right or privilege, or done any act or thing, either alone or together with another person or persons, that has resulted in the conferring or attaching of any special right or privilege, on or to property of the trust estate, whether or not the right or privilege has been exercised, (1) has at any time, directly or indirectly, done any similar thing in relation to any other trust estate. (2) such other matters, if any, as he thinks fit. As the estate has been created in consequence of the provisions of a will and the codicils and all the assets held in the trust arose from the will, the discretion under subsection 99A(2) of the ITAA 1936 is exercised to assess the income of the trust in accordance with Section 99 of the ITAA 1936.