Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p6
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 6/80)
Character Range: 4356183–4358796

of the Income Tax Rates Act 1986.

Excess amount to be adjusted
 (3) If the trust is an *AMIT for the income year:
 (a) if paragraph (b) does not apply—treat the trust as having an *over in the income year in which the determination is made, for the specified income year, of a character relating to *ordinary income, or *statutory income, from an *Australian source, equal to the amount mentioned in subsection (5); or
 (b) if the trust already has such an over in the income year in which the determination is made, for the specified income year—increase the amount of that over by the amount mentioned in subsection (5).
 (4) If the trust is not an *AMIT for the income year, reduce the trust's *net income for the income year in which the determination is made by the amount mentioned in subsection (5), to the extent that the net income is attributable to that amount.

Excess amount
 (5) The amount is the excess mentioned in paragraph 275‑610(1)(b) in respect of the *non‑arm's length income, reduced by deductions (if any) that:
 (a) are reflected in:
 (i) if the trust is an *AMIT for the income year—the amounts of its *trust components for the income year (disregarding subsection (3)); or
 (ii) otherwise—its *net income for the income year (disregarding subsection (4)); and
 (b) are attributable only to the amount of non‑arm's length income.

275‑610  Non‑arm's length income
 (1) An amount of *ordinary income or *statutory income is non‑arm's length income of a *managed investment trust if:
 (a) it is derived from a *scheme the parties to which were not dealing with each other at *arm's length in relation to the scheme; and
 (b) that amount exceeds the amount that the entity might have been expected to derive if those parties had been dealing with each other at arm's length in relation to the scheme; and
 (c) the amount is none of the following:
 (i) a distribution from a *corporate tax entity;
 (ii) a distribution from a trust that is not a party to the scheme mentioned in paragraph (a);
 (iii) a *return covered by subsection (2).
 (1A) Disregard subparagraph (1)(c)(ii) if the amount of *ordinary income or *statutory income is *excepted MIT CSA income.
 (2) This subsection covers a *return that an entity pays or provides on a *debt interest, if the rate (expressed on an annual basis) of the return does not exceed the greater of:
 (a) the *benchmark rate of return for the interest; and
 (b) the *base interest rate for the day on which the return is paid or provided, plus 3 percentage points.
 (3) Subsection (4) applies if:
 (a) an amount would be *non‑arm's length income of