Private ruling: Section 100AA discretion
Published: March 2015
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 1 July 2010

Ruling: Q1: For the purpose of section 100AA of Income Tax Assessment Act 1936 (ITAA 1936), will the Commissioner disregard your failure to notify present entitlement to exempt entities? | A1: Yes.

Relevant facts and circumstances: The deceased passed away over 20 years ago. The relevant will provided for gifts to various child beneficiaries and to a number of tax exempt registered charities, with the final charitable gifts to be given after all of the child beneficiaries reached their qualifying age. Due to the last child beneficiary reaching qualifying age in 20XX, you (the trustees) did not become aware of your obligations under the newly enacted section 100AA until that time. It followed for the relevant years you inadvertently did not give notice to the charities of their present entitlement within the required two month period. However, recently you provided the relevant notifications to the five charities.

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 100AA

Reasons for decision: Summary: Effective from 29 June 2011, subsection 100AA(3) of the ITAA 1936 treats an exempt entity as not being presently entitled, and having never been presently entitled, to an amount of trust income to the extent that the trustee failed to notify the exempt entity (in writing) at the end of 2 months after the end of the relevant income year of the present entitlement. However, subsection 100AA(4) of the ITAA 1936 provides subsection (3) does not apply if the Commissioner decides that the failure of the trustee to notify should be disregarded. In making a decision under subsection (4) (or refusing to make such a decision), the Commissioner must have regard to the following: (a) the circumstances that led to the failure… (b) the extent to which the trustee has taken action to try to correct the failure and if so, how quickly that action was taken; (c) whether this section has operated previously in relation to the trustee, and if so, the circumstances in which this occurred; (d) any other matters that the Commissioner considers relevant. In your case, given you were not aware of the new legislation and given you took steps to correct your failure by notifying the relevant charities, the Commissioner decides that your failure to notify should be disregarded and that the relevant charities should enjoy present entitlement.