94L Dividend includes distribution of corporate limited partnership
A reference in the income tax law (other than subsection 44(1A) of this Act) to a dividend or to a dividend within the meaning of section 6:
(a) includes a reference to a distribution made by the partnership, whether in money or in other property, to a partner in the partnership; and
(b) does not include a reference to a distribution to the extent to which the distribution is attributable to profits or gains arising during a year of income in relation to which the partnership was not a corporate limited partnership.
94M Drawings etc. deemed to be dividends paid out of profits
(1) If the partnership pays or credits an amount to a partner in the partnership:
(a) against the profits or anticipated profits of the partnership; or
(b) otherwise in anticipation of the profits of the partnership;
(whether or not the amount of the profits or anticipated profits is ascertainable), the amount paid or credited is taken, for the purposes of the income tax law, to be a dividend paid by the partnership to the partner out of profits derived by the partnership.
(2) If the partnership makes a subsequent distribution, the Commissioner must take such steps (if any) as are necessary to ensure that the partner is not subject to double taxation.
94N Private company does not include corporate limited partnership
A reference in the income tax law to a private company in relation to the year of income does not include a reference to the partnership.
Note: Division 7A (Distributions to entities connected with a private company) applies to certain corporate limited partnerships in the same way as it applies to private companies: see section 109BB.
94P Share includes interest in corporate limited partnership
A reference in the income tax law to a share includes a reference to an interest in the partnership.
94Q Shareholder includes partner in corporate limited partnership
A reference in the income tax law to a shareholder includes a reference to a partner in the partnership.
94R Liquidator may include partner in corporate limited partnership
For the purposes of the income tax law:
(a) a reference to the liquidator of the partnership includes a reference to a partner in the partnership who carries out the winding‑up of the partnership; and
(b) a reference to distributions made by a liquidator in the course of winding up the partnership includes a reference to distributions made by such a partner to himself or herself in the course of winding‑up the partnership.
94S Continuity of corporate limited partnership not affected by changes in composition
For the purposes of the income tax law, a change in the composition of the partnership does not affect the continuity of the partnership.
94T Residence of corporate limited partnership
(1) For the purposes of the income tax law, the partnership is:
(a) a resident; and
(b) a resident within the meaning of section 6; and
(c) a resident of Australia; and
(d) a resident of Australia within the meaning of section 6;
if and only if:
(e) the partnership was formed in Australia; or
(f) either:
(i) the partnership carries on business in Australia; or
(ii) the partnership’s central management and control is in Australia.
(2) In determining whether the partnership carries on business in Australia for the purposes of subparagraph (1)(f)(i), if, for the year of income, the partnership is an IMR entity (within the meaning of the Income Tax Assessment Act 1997, but disregarding paragraph 842‑220(a) of that Act), disregard business that:
(a) is carried on by the partnership (either by itself directly or by another entity on its behalf); and
(b) solely relates to IMR financial arrangements (within the meaning of that Act).
94U Incorporation
For the purposes of the income tax law, the partnership is taken to have been incorporated:
(a) in the place where it was formed; and
(b) under a law in force in that place.
94V Obligations and offences
(1) The application of the income tax law to the partnership as if the partnership were a company is subject to the following changes:
(a) obligations that would be imposed on the partnership are imposed instead on each partner, but may be discharged by any of the partners;
(b) the partners are jointly and severally liable to pay any amount that would be payable by the partnership;
(c) any offence against the income tax law that would otherwise be committed by the partnership is taken to have been committed by each of the partners.
(2) In a prosecution of a person for an offence that the person is taken to have committed because of paragraph (1)(c), it is a defence if the person proves that the person:
(a) did not aid, abet, counsel or procure the relevant act or omission; and
(b) was not in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the person).
94X Modification of loss provisions
Subdivisions 165‑A and 165‑B of the Income Tax Assessment Act 1997 apply in relation to the partnership as if the provisions relating to voting power had not been enacted.
Division 6—Trust income
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.
95AAB Adjustments under Subdivision 115‑C or 207‑B of the Income Tax Assessment Act 1997—references in this Act to assessable income under section 97, 98A or 100
(1) Subsection (2) applies if an amount is included in the assessable income of a beneficiary of a trust estate because of Subdivision 115‑C or 207‑B of the Income Tax Assessment Act 1997.
(2) For the purposes of a provision of this Act (other than a provision mentioned in subsection (3)), treat the amount as being included in the beneficiary’s assessable income in relation to the net income of the trust estate under section 97, 98A or 100 (as the case requires).
(3) The provisions are as follows:
(a) sections 97, 98A (other than subsection 98A(2)) and 100 (other than subsections 100(2) and (3));
(b) sections 98, 99 and 99A;
(c) Subdivisions 115‑C and 207‑B of the Income Tax Assessment Act 1997.
(4) To avoid doubt, subsection (2) applies despite subsection 6(1AA).
95AAC Adjustments under Subdivision 115‑C or 207‑B of the Income Tax Assessment Act 1997—references in this Act to liabilities under section 98, 99 or 99A
(1) Subsection (2) applies if an amount in respect of which a trustee of a trust estate is liable to be assessed (and pay tax) under section 98 in respect of the beneficiary is increased because of Subdivision 115‑C or 207‑B of the Income Tax Assessment Act 1997.
(2) For the purposes of a provision of this Act (other than a provision mentioned in subsection (5)), treat the amount of the increase as being an amount in respect of which the trustee is liable to be assessed (and pay tax) under section 98 in respect of the beneficiary’s interest in or share of the net income of the trust estate.
(3) Subsection (4) applies if an amount in respect of which a trustee of a trust estate is liable to be assessed (and pay tax) under section 99 or 99A is increased because of Subdivision 115‑C or 207‑B of the Income Tax Assessment Act 1997.
(4) For the purposes of a provision of this Act (other than a provision mentioned in subsection (5)), treat the amount of the increase as being an amount in respect of which the trustee is liable to be assessed (and pay tax) under section 99 or 99A in respect of the net income of the trust estate.
(5) The provisions are as follows:
(a) sections 97, 98A (other than subsection 98A(2)) and 100 (other than subsections 100(2) and (3));
(b) sections 98, 99 and 99A;
(c) Subdivisions 115‑C and 207‑B of the Income Tax Assessment Act 1997.
(6) To avoid doubt, subsections (2) and (4) apply despite subsection 6(1AA).
95AAD Division does not apply in relation to AMIT
This Division does not apply in relation to a trust estate that is an AMIT.
95 Interpretation
(1) In this Division:
adjusted Division 6 percentage, of an entity that is a beneficiary or trustee of a trust estate, means the entity’s Division 6 percentage of the income of the trust estate calculated on the assumption that the amount of a capital gain or franked distribution to which any beneficiary or the trustee of the trust estate is specifically entitled were disregarded in working out the income of the trust estate.
adjusted net income, in relation to a trust estate, has the meaning given by subsection 100AB(4).
Division 6 percentage:
(a) a beneficiary of a trust estate has a Division 6 percentage of the income of the trust estate equal to the share (expressed as a percentage) of the income of the trust estate to which the beneficiary is presently entitled; and
(b) the trustee of a trust estate has a Division 6 percentage of the income of the trust estate equal to the share (expressed as a percentage) of the income of the trust estate to which no beneficiary is presently entitled.
However, if the income of a trust estate is nil:
(c) a beneficiary of a trust estate has a Division 6 percentage of the income of the trust estate of 0%; and
(d) the trustee of a trust estate has a Division 6 percentage of the income of the trust estate of 100%.
exempt income, in relation to a trust estate, means the exempt income of the trust estate calculated as if the trustee were a taxpayer who was a resident.
Note: See also Division 54 of the Income Tax Assessment Act 1997 (in particular, the provisions in section 54‑70 about trusts), which provides a tax exemption for certain payments under structured settlements and structured orders.
net income, in relation to a trust estate, means the total assessable income of the trust estate calculated under this Act as if the trustee were a taxpayer in respect of that income and were a resident, less all allowable deductions, except deductions under Division 393 of the Income Tax Assessment Act 1997 (Farm management deposits) and except also, in respect of any beneficiary who has no beneficial interest in the corpus of the trust estate, or in respect of any life tenant, the deductions allowable under Division 36 of the Income Tax Assessment Act 1997 in respect of such of the tax losses of previous years as are required to be met out of corpus.
A trust may be required to work out its net income in a special way by Division 266 or 267 in Schedule 2F to this Act or Division 275 of the Income Tax Assessment Act 1997.
non‑assessable non‑exempt income, in relation to a trust estate, means the non‑assessable non‑exempt income of the trust estate calculated as if the trustee were a taxpayer who was a resident.
specifically entitled has the same meaning as in the Income Tax Assessment Act 1997.
(2) For the purposes of this Division, a trust estate shall be taken to be a resident trust estate in relation to a year of income if:
(a) a trustee of the trust estate was a resident at any time during the year of income; or
(b) the central management and control of the trust estate was in Australia at any time during the year of income.
(3) In this Division, a trust estate that is not a resident trust estate in relation to a year of income is referred to as a non‑resident trust estate in relation to that year of income.
95AB Modifications for special disability trusts
(1) This Division applies with the modifications set out in this section in relation to a year of income in relation to a trust estate that is a special disability trust at the end of the year of income.
(2) Treat the principal beneficiary of the trust estate as being presently entitled to all of the income of the trust estate of the year of income.
(3) If the principal beneficiary of the trust estate is a resident of Australia at the end of the year of income treat that person as being under a legal disability throughout the year of income.
(4) If there is no income of the trust estate assume that:
(a) there is income of the trust estate of the year of income; and
(b) the principal beneficiary of the trust estate is presently entitled to all of the income of the trust estate of the year of income.
(5) If the amount to be deducted under subsection 100(2) from the income tax assessed against the principal beneficiary is greater than the amount of the income tax assessed against the principal beneficiary, the Commissioner must pay to the principal beneficiary an amount equal to the difference between those 2 amounts.
Note: The tax offset is subject to the refundable tax offset rules: see section 67‑23 of the Income Tax Assessment Act 1997.
95A Special provisions relating to present entitlement
(1) For the purposes of this Act, where a beneficiary of a trust estate is presently entitled to any income of the trust estate, the beneficiary shall be taken to continue to be presently entitled to that income notwithstanding that the income is paid to, or applied for the benefit of, the beneficiary.
(2) For the purposes of this Act, where a beneficiary has a vested and indefeasible interest in any of the income of a trust estate but is not presently entitled to that income, the beneficiary shall be deemed to be presently entitled to that income of the trust estate.
95B Certain beneficiaries deemed not to be under legal disability
For the purposes of this Act, a beneficiary of a trust estate who is presently entitled to a share of the income of the trust estate in the capacity of a trustee of another trust estate shall, in respect of his or her present entitlement to that share, be deemed not to be under a legal disability.
96 Trustees
Except as provided in this Act, a trustee shall not be liable as trustee to pay income tax upon the income of the trust estate.
97 Beneficiary not under any legal disability
(1) Subject to Division 6D, where a beneficiary of a trust estate who is not under any legal disability is presently entitled to a share of the income of the trust estate:
(a) the assessable income of the beneficiary shall include:
(i) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was a resident; and
(ii) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia; and
(b) the exempt income of the beneficiary shall include:
(i) so much of the individual interest of the beneficiary in the exempt income of the trust estate as is attributable to a period when the beneficiary was a resident; and
(ii) so much of the individual interest of the beneficiary in the exempt income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia;
except to the extent to which the exempt income to which that individual interest relates was taken into account in calculating the net income of the trust estate; and
(c) the non‑assessable non‑exempt income of the beneficiary shall include:
(i) so much of the individual interest of the beneficiary in the non‑assessable non‑exempt income of the trust estate as is attributable to a period when the beneficiary was a resident; and
(ii) so much of the individual interest of the beneficiary in the non‑assessable non‑exempt income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia.