Private ruling: Distributions to tax-exempt beneficiaries - anti-avoidance rules
Date of advice: 5 June 2025
Published: 11 August 2025
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Do the specific anti-avoidance provisions in section 100AA and section 100AB of the Income Tax Assessment Act 1936 (ITAA 1936) apply where the trustee has made to a tax exempt entity presently entitled to the net income of the trust for the relevant income year? | A1: No. The anti-avoidance provisions outlined in section 100AA and 100AB of the ITAA 1936 do not apply for the relevant income year as the trustee met the requirements to pay the beneficiary within two months after year-end, and the beneficiary's entitlement did not exceed the benchmark percentage.

Relevant facts and circumstances: The Trust is a family trust. During the relevant income year, the Trust made a payment of a specified amount to a tax exempt entity. The entity's adjusted Division 6 percentage does not exceed its benchmark percentage. The Trust Deed provides that the Trustee may distribute income to any Beneficiary during the financial year in such amount as it determines. The Trust Deed provides that the Trustee may choose to accumulate all or part of the Trust's income during a Financial Year for a period allowed by law, regardless of other provisions. Any accumulated income will be treated as capital, but the Trustee retains the power to treat it as income at any time. The Trust Deed provides that any tax exempt entity the Trustee nominates from time to time is a Named Beneficiary.

Relevant legislative provisions: Income Tax Assessment Act 1936 section100AA | Income Tax Assessment Act 1936 section100AB