Commonwealth Consolidated Acts

[Index] [Table] [Search] [Search this Act] [Notes] [Noteup] [Previous] [Next] [Download] [Help]

INCOME TAX ASSESSMENT ACT 1936 - SECT 95AAA

Simplified outline of the relationship between this Division, Division 6E and Subdivisions 115 - C and 207 - B of the Income Tax Assessment Act 1997

    The following is a simplified outline of the relationship between this Division, Division   6E and Subdivisions   115 - C and 207 - B of the Income Tax Assessment Act 1997 .

This Division   sets out the basic income tax treatment of the net income of the trust estate. Generally:

  (a)   it has the result of assessing beneficiaries on a share of the net income of the trust estate based on their present entitlement to a share of the income of the trust estate; and

  (b)   it has the result of assessing the trustee directly on any residual net income; and

  (c)   as a collection mechanism, it has the result of assessing the trustee in respect of some beneficiaries, such as non - residents or those under a legal disability.

If the trust estate has capital gains, franked distributions or franking credits, this basic treatment is modified as described below.

Division   6E modifies the operation of this Division   for the purpose of excluding amounts relevant to capital gains, franked distributions and franking credits from the calculations of assessable amounts under sections   97, 98, 99, 99A and 100.

Division   6E does not modify the operation of this Division   (or any other provision of this Act) for any other purpose. For example:

  (a)   it does not modify the operation of this Division   for the purposes of applying section   100A; and

  (b)   it does not modify amounts taxed in the hands of the trustee under Subdivisions   115 - C and 207 - B of the Income Tax Assessment Act 1997 .

Subdivisions   115 - C and 207 - B of the Income Tax Assessment Act 1997 provide the corresponding taxation treatment for those capital gains, franked distributions and franking credits. Specifically:

  (a)   Subdivision   115 - C of that Act has the effect that an amount corresponding to each of those capital gains is taxed in the hands of the beneficiaries of the trust (as a capital gain) and, if necessary, assessed to the trustee.

  (b)   Subdivision   207 - B of that Act has the effect that an amount corresponding to each of those franked distributions is taxed in the hands of the beneficiaries of the trust and, if necessary, the trustee. It also has the effect that the entity in whose hands those distributions are taxed can take advantage of the relevant amount of related franking credits.



AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback