Private ruling: Section 100A, assessable income
Date of advice: 17 February 2026
Published: 7 April 2026
Ruling period: DD MM YYYY to DD MM YYYY | DD MM YYYY to DD MM YYYY

Ruling: Q1: Does section 100A of the Income Tax Assessment Act 1936 (ITAA 1936)apply to the distribution from the Trust to Person A sourced from a franked dividend paid from Company A or Company B to the Trust? | A1: No. | Q2: Does section 100A of the ITAA 1936 apply to the distribution from the Trust to Company C sourced from a franked dividend paid from Company A or Company B to the Trust? | A2: No. | Q3: Is Person A, or the Trustee for the Trust, assessable on the distribution from the Trust to Person A? | A3: No.

Relevant facts and circumstances: Person F and Person E were Australian tax residents. Person D was the child of Person F and Person E, and was married to Person C. Person D and Person C had two children, Person B and Person A. Person F, Person E and Person D are deceased. During their lives, Person F and Person E established the following entities (among others): (a) the Trust; (b) the trustee of the Trust; (c) Company B; (d) Company D; (e) Company E; and (f) Company F. Company A is an Australian company incorporated on DD MM YYYY. Company A was formed as an entity to receive distributions of income from the Trust which was excess to the family's present needs. On DD MM YYYY, the shareholders of Company A were Person C and Person D with 1 ordinary share each. On DD MM YYYY, an additional 10,000 ordinary shares in Company A were issued to the Trust. References to the Trust in these facts and circumstances extends to include Company G, as trustee of the Trust. In YYYY, as a result of the passing of Person D, Person D's ordinary share in Company A was transferred to the Trust. Accordingly, the current shareholders of Company A are: (a) Person C with 1 ordinary share; and (b) the Trust with 10,001 ordinary shares. Prior to 16 December 2009, the Trust made distributions of the income of the Trust to Company A totalling $x,xxx,xxx.xx which were not paid to Company A (the Pre-2009 UPE ). From time to time, Company A has borrowed funds from Company B. The current balance of the loan is approximately $xxx,xxx.xx ( Company B Loan ). In turn, Company A has advanced small loans to other family-owned entities, Company H ($xx,xxx.xx) and Company D ($xxx.xx). Historically, Company A has received interest income from Company H. Company A has: (a) not traded and is dormant; (b) a franking account balance of $x,xxx,xxx as at DD MM YYYY; (c) retained profits of $x,xxx,xxx.xx; and (d) share capital of $xx,xxx.xx. Person B lives in Australia with their partner. Person B has one adult child who lives in Australia, Company C is a company wholly owned by Person B. Person A lives in Country A with their partner. Person A moved to Country A in YYYY and later married in YYYY. In YYYY, Person A and their partner had a child who was born in Country A. In YYYY, Person A's child was attending boarding school in Australia to gain an international high school education after being raised and schooled in Country A for the first twelve years of his life. On the passing of Person C, their two descendants Person A and Person B will inherit the family wealth in equal shares (either directly or indirectly via control of trust structures and companies). There are a number of other entities in the group, which are administered by Person A in Australia. The family have been considering a proposal to simplify the group including repaying inter-entity loans, winding up dormant entities in the group and providing a pathway for the family to access liquid funds from the structure over time having regard to the age of Person C and to plan for Person C's succession. Company A is a dormant entity with a large inter-entity loan balance and the family desire that the company be terminated. It is proposed that, with respect to the termination of Company A (figures are indictive and based on the account balances per the financial statements of Company A, Company B, the Trust and Company E as at DD MM YYYY): (a) Company B Loan is discharged - $xxx,xxx.xx; (i) Company A calls in loans receivable from Company H ($xx,xxx.xx) and Company D ($xxx.xx). (ii) Company B will repay its loan outstanding to Company E, in part ($xxx,xxx.xx). (iii) Company E will repay its loan outstanding to the Trust, in part ($xxx,xxx.xx). (iv) The Trust will use the funds to pay the unpaid entitlement to Company A in part ($xxx,xxx.xx). (v) Company A will use the funds to repay its loan payable to Company B ($xxx,xxx.xx). (b) Dividend paid by Company A to discharge the Pre-2009 UPE in part - $x,xxx,xxx.xx (i) Fully franked dividends are paid to its shareholders: • Trust (99.99%) - $x,xxx,xxx.xx, paid by reducing the loan receivable from the Trust. • Person C (0.0099%) - $xxx.xx), paid by cash equivalent to Person C. (c) Company A is liquidated, and in the course of liquidation: (i) Company A pays $1 in share capital to Person C; and (ii) Company A pays $10,001 in share capital to the Trust. (d) Company B dividend to the Trust: (i) Company B pays a fully franked dividend to the Trust on the dividend class share owned by the Trust (to the exclusion of all other classes of shares) in the amount of $xxx,xxx.xx, paid in cash. (e) The Trust distributes the fully franked dividends to Person A and Company C: (i) The Trust distributes a fully franked dividend to Person A ($x,xxx,xxx). The amount would be unpaid and available to be called upon when required by Person A. (ii) The Trust distributes a full franked dividend to Company C ($x,xxx,xxx). The Trust will pay the distribution to Company C partly in cash and partly by assigning a loan receivable from Company B to Company C. (f) To extent the distributions from the Trust to Person A can be paid in cash, then cash is paid to Person A. (g) The balance of the distributions from the Trust to Person A that is not paid in cash under item (f) will remain an unpaid present entitlement for the time being, recognising there is an intention to realise certain assets of the group. As and when assets are realised, the available cash would be used to pay the balance of the unpaid present entitlement to Person A. (h) The loan owed from Company B to Company C would be on the same terms as applied between the Trust and Company B; being interest free and repayable on demand, recognising there is an intention to realise certain assets of the group. When the assets are realised, the available cash would be used to pay the loan owing by Company B to Company C. It is proposed that in addition to the termination of Company A: (a) Company H will be liquidated by: (i) Selling its inventories and paying any taxes on gains realised; (ii) Declaring its profits as a dividend to its holding company; (iii) Winding up the company and paying its share capital to its holding company. (b) Inter-entity loans be repaid and consolidated. Assumptions There are no further steps in the arrangement beyond those listed in these facts and circumstances, either prior or subsequent, that form part of a reimbursement agreement. Person A is not a resident of Australia for tax purposes for any of the income years this ruling applies to.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 98 | Income Tax Assessment Act 1936 section 100A | Income Tax Assessment Act 1936 section 128B | Income Tax Assessment Act 1936 section 128C | Income Tax Assessment Act 1936 section 128D | Income Tax Assessment Act 1936 section Division 7A | Income Tax Assessment Act 1997 subsection 6-15(3)

Reasons for decision: Summary: No. Section 100A does not apply because the present entitlement does not arise out of a reimbursement agreement or in connection with a reimbursement agreement. The arrangement is intended to simplify the group structure having regard to family succession plans and the age of Person C. When the Trust has funds available, then those will be paid to Person A to satisfy their present entitlement. It is not unnatural that Person A and Person B (or entities they control) are made entitled to half each of the dividend received by the Trust and there is no sign of any agreement at the time Person A is made presently entitled contemplating the payment of the amount underlying his present entitlement to any other person. Rather, it is intended the present entitlement will be paid to Person A. | Detailed Reasoning - Detailed reasoning: Section 100A applies in cases in which a beneficiary has become presently entitled to trust income where it has been agreed that another person will benefit, and that agreement is made by any of its parties with a purpose that some person will pay less or no income tax as a result. Unlike the general anti-avoidance provisions in Part IVA, section 100A does not require the making of a determination by the Commissioner; it is a self-executing provision which operates according to its terms. According to the Explanatory Memorandum to the Income Tax Assessment Amendment Bill (No. 5) 1978 this provision is only concerned with tax avoidance arrangements, and targets the existence of an agreement or arrangement that is entered into, otherwise than in the course of ordinary family or commercial dealing and under which present entitlement to a share of trust income is conferred on a beneficiary in return for the payment of money, or the provision of benefits to some other person, company or trust. As set out in paragraph 5 of Taxation Ruling 2022/4 - Income Tax: section 100A reimbursement agreements , there are 4 basic requirements for the operation of section 100A: • the connection requirement (see paragraphs 57 to 76 of the Ruling) • the benefits to another requirement (see paragraphs 77 to 82 of the Ruling) • the tax reduction purpose requirement (see paragraphs 83 to 89 of the Ruling), and • the ordinary dealing exception (see paragraphs 90 to 113 of the Ruling). The consequence of section 100A applying is that the Trustee (and not the beneficiary) will be liable for income tax on amounts that may otherwise be included in the assessable income of the beneficiary in respect of the beneficiary's present entitlement. The Tax Reduction Purpose For an agreement to be a reimbursement agreement, one or more of the parties to the agreement must have entered into it for a purpose (which need not be a sole, dominant or continuing purpose) of securing that a person would be liable to pay less tax in an income year than they otherwise would have been liable to pay in respect of that income year (a tax reduction purpose). The proposed delay in paying out the present entitlement, on the specific facts in this case, is not for a purpose of securing a reduction in liability to income tax. The present entitlement to Person A remains unpaid only until such time as the Trust has funds available to make the payment and there is no sign any other person would instead be paid. Section 100A does not apply to the present entitlement from the Trust to Person A because the proposed delay in paying out the present entitlement would not constitute a tax reduction purpose. | Detailed Reasoning - Question 2: Does section 100A of the ITAA 1936 apply to the distribution from the Trust to Company C sourced from a franked dividend paid from Company A or Company B to the Trust? | Summary: No. Section 100A does not apply because the present entitlement does not arise out of a reimbursement agreement or in connection with a reimbursement agreement. The arrangement is intended to simplify the group structure having regard to family succession plans and the age of Person C. When the Trust has funds available, then those will be paid to Company C to satisfy its present entitlement. It is not unnatural that Person B (via their controlled entity, Company C) and Person A are made entitled to half each of the dividend received by the Trust and there is no sign of any agreement at the time Company C is made presently entitled contemplating payment to any other person. Rather, it is intended the present entitlement will be paid to Company C. | Detailed Reasoning - Detailed reasoning: For the same reasons discussed in question 1, the proposed delay in paying out the present entitlement would not be for a purpose of securing a reduction in liability to income tax. The intention is that the present entitlement will be paid to Company C and there is no sign any other person will instead be paid. Therefore, section 100A does not apply to the present entitlement because the proposed delay in paying out the present entitlement would not constitute a tax reduction purpose. | Detailed Reasoning - Question 3: Is Person A, or the Trustee for the Trust, assessable on the distribution from the Trust to Person A? | Summary: No. The fully franked dividend distributed by the Trust is non-assessable non-exempt income pursuant to section 128D because Person A is a non-resident. Therefore, the distribution is not assessable to Person A or the Trustee. | Detailed Reasoning - Detailed reasoning: Income taxed under the withholding tax rules, or specifically excluded from those rules (such as franked dividends), is not taxed again to the trustee under section 98 or to a beneficiary. | Detailed Reasoning - The Trust will make Person A, a non-resident of Australia, presently entitled to fully franked dividends. Section 128A(3) provides:: For the purposes of this Division, a beneficiary who is presently entitled to a dividend, to interest or to a royalty included in the income of a trust estate shall be deemed to have derived income consisting of that dividend, interest or royalty at the time when they became so entitled. Therefore, Person A will be deemed to have derived income consisting of the dividend when they become presently entitled to that dividend income. Paragraph 128B(3)(ga) then goes on to provide that section 128B (about liability to withholding tax) does not apply to: ( ga) income that consists of: | Detailed Reasoning - (i) the franked part of a dividend: As a result, Person A is not liable to any withholding tax on the fully franked dividend, and the Trust is not required to collect any withholding tax on its distribution of that fully franked dividend. | Detailed Reasoning - Finally, Section 128D (about certain income that is not assessable) provides (with our emphasis):: Income other than income to which section 128B applies by virtue of subsection (2A), (2C) or (9C) of that section upon which withholding tax is payable, or upon which withholding tax would, but for paragraph 128B(3)(ga) , (jb) or (m), section 128F, section 128FA or section 128GB, be payable, is not assessable income and is not exempt income of | Detailed Reasoning - a person.: Person A is a non-resident of Australia and is presently entitled to a fully franked dividend from the Trust. That is income specifically excluded from the withholding tax rules (by paragraph 128B(3)(ga)). As a result, that income is not assessable income and is not exempt income. The fully franked dividend income to which Person A is made presently entitled is not assessable income to either Person A or the Trustee.

Does Part IVA apply to this private ruling?: Part IVA of the Income Tax Assessment Act 1936 contains anti-avoidance rules that can apply in certain circumstances where you or another taxpayer obtains a tax benefit, imputation benefit or diverted profits tax benefit in connection with an arrangement. | If Part IVA applies, the tax benefit or imputation benefit can be cancelled (for example, by disallowing a deduction that was otherwise allowable) or you or another taxpayer could be liable to the diverted profits tax. | We have not fully considered the application of Part IVA to the arrangement you asked us to rule on, or to an associated or wider arrangement of which that arrangement is part. | If you want us to rule on whether Part IVA applies, we will need to obtain and consider all the facts about the arrangement which are relevant to determining whether Part IVA may apply. | For more information on Part IVA, go to our website ato.gov.au/gaar . | Reasons for decision: All legislative references are to the Income Tax Assessment Act 1936 unless otherwise specified.