(2) A reference in this section to income of a trust estate to which a beneficiary is presently entitled shall be read as not including a reference to income of a trust estate:
(a) to which a beneficiary is deemed to be presently entitled by virtue of the operation of subsection 95A(2) where the beneficiary:
(i) is a natural person;
(ii) is a resident at the end of the year of income;
(iii) is not, in respect of that income, a beneficiary in the capacity of a trustee of another trust estate; and
(iv) is not a beneficiary to whom subsection 97A(1) or (1A) applies in relation to the year of income; or
(b) to which a beneficiary is presently entitled where the beneficiary:
(i) is a non‑resident at the end of the year of income;
(ii) is not a beneficiary to whom subsection (3) of this section or subsection 97A(1) or (1A) applies in relation to the year of income; and
(iii) is not, in respect of that income, a beneficiary in the capacity of a trustee of another trust estate.
(3) Where:
(a) a beneficiary of a trust estate is presently entitled to a share of the income of the trust estate;
(b) the beneficiary is a non‑resident at the end of the year of income; and
(c) the beneficiary is:
(i) a body, association, fund or organization the income of which is exempt from tax by virtue of the operation of Subdivision 50‑A or section 51‑5, 51‑10 or 51‑30 of the Income Tax Assessment Act 1997; or
(ii) an organization the income of which is exempt from tax by virtue of a regulation in force under the International Organisations (Privileges and Immunities) Act 1963;
that beneficiary is, for the purposes of the application of this Division in relation to that beneficiary in relation to that year of income, a beneficiary to whom this subsection applies.
97A Beneficiaries who are owners of farm management deposits
(1) Where a beneficiary who is under a legal disability:
(a) is presently entitled to a share of the income of a trust estate derived during a year of income of the beneficiary; and
(b) is the owner of a farm management deposit made during the year of income;
this Division applies in relation to the beneficiary in relation to the year of income as if the beneficiary were not under any legal disability.
(1A) Where a beneficiary who is deemed by subsection 95A(2) to be presently entitled to any income of a trust estate derived during a year of income of the beneficiary:
(a) is not under a legal disability; and
(b) is the owner of a farm management deposit made during the year of income;
the beneficiary is, for the purposes of the application of this Division in relation to that beneficiary in relation to that year of income, a beneficiary to whom this subsection applies.
Note: This section applies to certain beneficiaries as if they were individuals who are carrying on a primary production business: see subsections 393‑25(3), (4), (5) and (6) of the Income Tax Assessment Act 1997.
98 Liability of trustee
(1) Where a beneficiary of a trust estate who is under a legal disability is presently entitled to a share of the income of the trust estate, the trustee of the trust estate shall be assessed and liable to pay tax in respect of:
(a) 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
(b) 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;
as if it were the income of an individual and were not subject to any deduction.
(2) Where a beneficiary of a trust estate:
(a) is deemed to be presently entitled to a share of the income of the trust estate of a year of income by virtue of the operation of subsection 95A(2);
(aa) is a natural person and is not, in respect of that share of the income of the trust estate, a beneficiary in the capacity of a trustee of another trust estate;
(b) is not a beneficiary to whom subsection 97A(1) or (1A) applies in relation to the year of income; and
(c) is not under a legal disability;
the trustee of the trust estate shall be assessed and liable to pay tax in respect of:
(d) 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
(e) 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;
as if it were the income of an individual and were not subject to any deduction.
(2A) If:
(a) a beneficiary of a trust estate who is presently entitled to a share of the income of the trust estate:
(i) is a non‑resident at the end of the year of income; and
(ii) is not, in respect of that share of the income of the trust estate, a beneficiary in the capacity of a trustee of another trust estate; and
(iii) is not a beneficiary to whom section 97A applies in relation to the year of income; and
(iv) is not a beneficiary to whom subsection 97(3) applies; and
(b) the trustee of the trust estate is not assessed and is not liable to pay tax under subsection (1) or (2) in respect of any part of that share of the net income of the trust estate;
subsection (3) applies to the trustee in respect of:
(c) 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
(d) 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.
(3) A trustee to whom this subsection applies in respect of an amount of net income is to be assessed and is liable to pay tax:
(a) if the beneficiary is not a company—in respect of the amount of net income as if it were the income of an individual and were not subject to any deduction; or
(b) if the beneficiary is a company—in respect of the amount of net income at the rate declared by the Parliament for the purposes of this paragraph.
Note: If the trust estate’s net income includes a net capital gain, and the beneficiary is a company, Subdivision 115‑C of the Income Tax Assessment Act 1997 affects the assessment of the trustee.
(4) If:
(a) a beneficiary of a trust estate (the first trust estate) who is presently entitled to a share of the income of the first trust estate:
(i) is, in respect of that share of the income of the first trust estate, a beneficiary in the capacity of a trustee of another trust estate; and
(ii) is not a beneficiary to whom subsection 97(3) applies; and
(b) a trustee of the other trust estate is a non‑resident at the end of the year of income;
the trustee of the first trust estate is to be assessed and is liable to pay tax in respect of so much of that share of the net income of the first trust estate as is attributable to sources in Australia at the rate declared by the Parliament for the purposes of this subsection.
Note: If the trust estate’s net income includes a net capital gain, Subdivision 115‑C of the Income Tax Assessment Act 1997 affects the assessment of the trustee.
98A Non‑resident beneficiaries assessable in respect of certain income
(1) Where the trustee of a trust estate is assessed and is liable to pay tax in respect of the whole or a part of a share of the net income of a trust estate of a year of income in pursuance of subsection 98(3), the assessable income of the beneficiary who is presently entitled to that share of the income of the trust estate shall include:
(a) so much of the individual interest of the beneficiary in the net income of the trust estate as is attributable to a period when the beneficiary was a resident; and
(b) so much of the individual interest of the beneficiary in 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.
(2) Where the trustee of a trust estate is assessed and is liable to pay tax in respect of the whole or a part of a share of the net income of a trust estate of a year of income in pursuance of subsection 98(3):
(a) there shall be deducted from the income tax assessed against the beneficiary the amount (in this subsection referred to as the relevant amount) of the tax paid by the trustee in respect of the beneficiary’s interest in the net income of the trust estate; and
(b) if the relevant amount is greater than the amount of the income tax assessed against the beneficiary—the Commissioner shall pay to the beneficiary an amount equal to the difference between those 2 amounts.
Note: See Division 3A of Part IIB of the Taxation Administration Act 1953 for the rules about how the Commissioner must pay the entity. Division 3 of Part IIB allows the Commissioner to apply the amount owing as a credit against tax debts that the entity owes to the Commonwealth.
(3) If a beneficiary of a trust estate who is presently entitled to a share of the income of the trust estate:
(a) is not, in respect of that share of the income of the trust estate, a beneficiary in the capacity of a trustee of another trust estate; and
(b) is a non‑resident at the end of the year of income;
the assessable income of the beneficiary includes so much of the individual interest of the beneficiary in the net income of the trust estate as is reasonably attributable to a part of the net income of another trust estate in respect of which the trustee of the other trust estate is assessed and is liable to pay tax under subsection 98(4).
(4) To the extent that subsection (3) includes an amount in the assessable income of a beneficiary of a trust estate, the amount is not included by subsection (1) or section 100.
98B Deduction from beneficiary’s tax
(1) This section applies to a beneficiary of a trust estate for a year of income if the assessable income of the beneficiary of the year of income includes an amount covered by subsection (2).
(2) This subsection covers an amount (the assessable amount) if:
(a) the amount is included in the assessable income of the beneficiary under one of the following:
(i) section 97;
(ii) subsection 98A(3);
(iii) section 100; and
(b) the amount does not represent income of the trust estate to which the beneficiary is presently entitled in the capacity of a trustee of another trust estate; and
(c) the amount is reasonably attributable to:
(i) an amount (the taxed net income) in respect of which the trustee of another trust estate is assessed and liable to pay tax (the subsection 98(4) tax) under subsection 98(4); or
(ii) an amount (the taxed component) in respect of which the trustee of an AMIT is assessed and liable to pay tax (the paragraph 276‑105(2)(c) tax) because of paragraph 276‑105(2)(c) of the Income Tax Assessment Act 1997.
(3) A proportion of the subsection 98(4) tax or of the paragraph 276‑105(2)(c) tax (as applicable) is to be deducted from the income tax assessed against the beneficiary of the year of income. That proportion is the same as the proportion of the taxed net income or of the taxed component (as applicable) that gave rise to the assessable amount.
Note: To work out the proportion of the taxed net income that gives rise to assessable income for a beneficiary of another trust estate, you would have regard to the share of the income of each interposed trust estate to which a beneficiary (including a beneficiary in the capacity of a trustee) is presently entitled.
Example: The P Trust has two non‑resident trustee beneficiaries, the trustees of the S Trust and the H Trust. Each trustee is presently entitled to a 1/2 share of the income of the P Trust. The net income of the P Trust is $100,000. The trustee of the P Trust pays tax of $22,500 under subsection 98(4) in respect of the trustee of the S Trust’s interest and $22,500 under subsection 98(4) in respect of the trustee of the H Trust’s interest.
The S Trust has a non‑resident beneficiary, G, who is presently entitled to a 1/3 share of the income of the S Trust. The net income of the S Trust is $30,000. Subsection 98A(3) includes $10,000 in G’s assessable income.
The taxed net income of the P trust is $50,000. The proportion of that taxed net income that gave rise to the $10,000 being included in G’s assessable income is 1/3.This is because G had a 1/3 share of the income of the S Trust. $7,500 (1/3 x $22,500) is deducted from the income tax assessed against G.
If section 97, subsection 98A(3) or section 100 also includes amounts in the assessable income of any beneficiaries of the H Trust, each of those beneficiaries also works out the amount of the deduction against the income tax assessed against them in the same way.
(4) If the amount to be deducted under subsection (3) is greater than the amount of the income tax assessed against the beneficiary, the Commissioner must pay to the beneficiary an amount equal to the difference between those 2 amounts.
Note: See Division 3A of Part IIB of the Taxation Administration Act 1953 for the rules about how the Commissioner must pay the entity. Division 3A of Part IIB allows the Commissioner to apply the amount owing as a credit against tax debts that the entity owes to the Commonwealth.
99 Certain trust income to be taxed as income of an individual
(1) This section applies in relation to a trust estate in relation to a year of income only if section 99A does not apply in relation to that trust estate in relation to that year of income.
(2) Where there is no part of the net income of a resident trust estate:
(a) that is included in the assessable income of a beneficiary of the trust estate in pursuance of section 97;
(b) in respect of which the trustee of the trust estate is assessed and liable to pay tax in pursuance of section 98; or
(c) that represents income to which a beneficiary is presently entitled that is attributable to a period when the beneficiary was not a resident and is also attributable to sources out of Australia;
the trustee shall be assessed and is liable to pay tax on the net income of the trust estate as if it were the income of an individual who was a resident and were not subject to any deduction.
(3) Where there is a part of the net income of a resident trust estate:
(a) that is not included in the assessable income of a beneficiary of the trust estate in pursuance of section 97;
(b) in respect of which the trustee is not assessed and is not liable to pay tax in pursuance of section 98; and
(c) that does not represent income to which a beneficiary is presently entitled that is attributable to a period when the beneficiary was not a resident and is also attributable to sources out of Australia;
the trustee shall be assessed and is liable to pay tax on that part of the net income of the trust estate as if it were the income of an individual who was a resident and were not subject to any deduction.
(4) Where there is no part of the net income of a trust estate that is not a resident trust estate:
(a) that is included in the assessable income of a beneficiary of the trust estate in pursuance of section 97;
(b) in respect of which the trustee of the trust estate is assessed and liable to pay tax in pursuance of section 98; or
(c) that is attributable to sources out of Australia;
the trustee shall be assessed and is liable to pay tax on the net income of the trust estate as if it were the income of an individual and were not subject to any deduction.
(5) Where there is a part of the net income of a trust estate that is not a resident trust estate:
(a) that is attributable to sources in Australia;
(b) that is not included in the assessable income of a beneficiary of the trust estate in pursuance of section 97; and
(c) in respect of which the trustee of the trust estate is not assessed and is not liable to pay tax in pursuance of section 98;
the trustee shall be assessed and is liable to pay tax on that part of the net income of the trust estate as if it were the income of an individual and were not subject to any deduction.
99A Certain trust income to be taxed at special rate
(2) This section does not apply in relation to a trust estate in relation to a year of income, being a trust estate:
(a) that resulted from:
(i) a will, a codicil or an order of a court that varied or modified the provisions of a will or a codicil; or
(ii) an intestacy or an order of a court that varied or modified the application, in relation to the estate of a deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate;
(b) that consists of the property of a person who has become bankrupt, being property that has vested in The Official Receiver in Bankruptcy, or in a registered trustee, under the Bankruptcy Act 1966;
(c) that is administered under Part XI of the Bankruptcy Act 1966; or
(d) that consists of property of a kind referred to in paragraph 102AG(2)(c);
if the Commissioner is of the opinion that it would be unreasonable that this section should apply in relation to that trust estate in relation to that year of income.
(3) In forming an opinion for the purposes of subsection (2):
(a) the Commissioner shall have regard to the circumstances in which and the conditions, if any, upon which, at any time, property (including money) was acquired by or lent to the trust estate, income was derived by the trust estate, benefits were conferred on the trust estate or special rights or privileges were conferred on or attached to property of the trust estate, whether or not the rights or privileges have been exercised;
(b) if a person who has, at any time, directly or indirectly:
(i) transferred or lent any property (including money) to, or conferred any benefits on, the trust estate; or