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 represented by or reasonably attributable to a payment from which an entity was required to withhold an amount under Subdivision 12‑H in Schedule 1 to the Taxation Administration Act 1953.
Note: A credit is available under section 18‑50 in Schedule 1 to the Taxation Administration Act 1953 for an appropriate part of the amount withheld.
(2) There shall be deducted from the income tax assessed against a beneficiary to whom subsection (1) or (1A) applies (or a beneficiary under a legal disability whose assessable income is increased as a result of Subdivision 115‑C or 207‑B of the Income Tax Assessment Act 1997) the tax paid or payable by any trustee in respect of that beneficiary’s interest in the net income of the trust estate.
(3) However, an amount of tax is not to be deducted under subsection (2) from the income tax assessed against a beneficiary to the extent that the amount is deducted under section 98B from the income tax assessed against the beneficiary.
100AA Failure to pay or notify present entitlement of exempt entity
(1) Subsection (3) applies if:
(a) an exempt entity is presently entitled to an amount of the income of a trust estate; and
(b) the exempt entity is not an exempt Australian government agency (within the meaning of the Income Tax Assessment Act 1997); and
(c) at the end of 2 months after the end of the relevant income year, the trustee has failed to notify the exempt entity in writing of the present entitlement.
(2) For the purposes of this section, treat the trustee as giving the exempt entity notice in writing of the present entitlement at a time to the extent that the trustee pays the exempt entity the amount of the present entitlement at that time.
(3) For the purposes of this Act, treat the exempt entity as not being presently entitled, and having never been presently entitled, to the amount mentioned in paragraph (1)(a) of the income of the trust estate, to the extent that the trustee failed to notify the exempt entity of that amount as mentioned in paragraph (1)(c).
(4) However, subsection (3) does not apply if the Commissioner decides that the failure mentioned in paragraph (1)(c) of the trustee should be disregarded.
(5) 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 mentioned in paragraph (1)(c);
(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.
(6) If subsection (3) applies, for the purposes of any application of section 99A in relation to the trust estate in relation to the relevant year of income, treat the trust estate as a resident trust estate.
(7) This section does not apply in relation to a trust estate that is a managed investment trust (within the meaning of the Income Tax Assessment Act 1997) in relation to a year of income.
(a) an exempt entity is presently entitled to an amount of the income of a trust estate; and
(b) the exempt entity is not an exempt Australian government agency (within the meaning of the Income Tax Assessment Act 1997); and
(c) the exempt entity’s adjusted Division 6 percentage of the income of the trust estate exceeds the benchmark percentage determined under subsection (3).
(2) Subject to subsection 100AA(3), for the purposes of this Act, treat the exempt entity as not being presently entitled, and having never been presently entitled, to the amount of the income of the trust estate mentioned in paragraph (1)(a) of this section, to the extent that ensures that the exempt entity’s adjusted Division 6 percentage of the income of the trust estate equals the benchmark percentage determined under subsection (3) of this section.
(3) Determine the benchmark percentage by working out the following fraction (expressed as a percentage):
Start formula start fraction The amount to which the exempt entity is presently entitled from the trust estate, to the extent that the amount forms part of the trust estate's adjusted net income for the year of income over The trust estate's adjusted net income for the year of income end formula end fraction
(4) A trust estate’s adjusted net income for a year of income is its net income for that year of income, with the following adjustments:
(a) firstly, in determining that net income, disregard any capital gain or franked distribution to the extent to which a beneficiary of the trust estate or the trustee is specifically entitled to that gain or distribution;
(b) next, in determining the net capital gain (if any) of the trust for the year of income, disregard steps 3 and 4 of the method statement in subsection 102‑5(1) (CGT discount and small business concessions);
(c) next, reduce that net income by amounts (if any) that do not represent net accretions of value to the trust estate in that year of income (other than amounts included in that net income under Part IVA).
(5) Subsection (2) does not apply in relation to a trust estate in relation to a year of income if the Commissioner is of the opinion that it would be unreasonable that the subsection should apply in relation to that trust estate in relation to that year of income.
(6) In forming an opinion for the purposes of subsection (5), the Commissioner must consider the following matters:
(a) the circumstances that led to the exempt entity’s adjusted Division 6 percentage exceeding the benchmark percentage determined under subsection (3);
(b) the extent to which the exempt entity’s adjusted Division 6 percentage exceeds that benchmark percentage;
(c) the extent to which the exempt entity actually received distributions from the trust estate in respect of the year of income;
(d) the extent to which other beneficiaries of the trust estate were entitled to receive distributions of, or otherwise benefit from, amounts representing the adjusted net income of the trust estate;
(e) any other matters that the Commissioner considers relevant.
(7) If subsection (2) applies, for the purposes of any application of section 99A in relation to the trust estate in relation to the relevant year of income, treat the trust estate as a resident trust estate.
(8) This section does not apply in relation to a trust estate that is a managed investment trust (within the meaning of the Income Tax Assessment Act 1997) in relation to a year of income.
100A Present entitlement arising from reimbursement agreement
(1) Where:
(a) apart from this section, 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; and
(b) the present entitlement of the beneficiary to that share or to a part of that share of the income of the trust estate (which share or part, as the case may be, is in this subsection referred to as the relevant trust income) arose out of a reimbursement agreement or arose by reason of any act, transaction or circumstance that occurred in connection with, or as a result of, a reimbursement agreement;
the beneficiary shall, for the purposes of this Act, be deemed not to be, and never to have been, presently entitled to the relevant trust income.
(2) Where:
(a) apart from this section, a beneficiary of a trust estate who is not under any legal disability would, by reason that income of the trust estate was paid to, or applied for the benefit of, the beneficiary, be deemed to be presently entitled to income of the trust estate; and
(b) that income or a part of that income (which income or part, as the case may be, is in this subsection referred to as the relevant trust income) was paid to, or applied for the benefit of, the beneficiary as a result of a reimbursement agreement or as a result of any act, transaction or circumstance that occurred in connection with, or as a result of, a reimbursement agreement;
the relevant trust income shall, for the purposes of this Act, be deemed not to have been paid to, or applied for the benefit of, the beneficiary.
(3) In the preceding provisions of this section:
(a) a reference to income of a trust estate to which a beneficiary is, apart from this section, presently entitled shall be read as not including a reference to:
(i) income of the trust estate to which the beneficiary is presently entitled in the capacity of a trustee of another trust estate, being income that was paid to, or applied for the benefit of, the beneficiary before 6 March 1980; or
(ii) income that was paid to, or applied for the benefit of, the beneficiary before 12 June 1978; and
(b) a reference to income of a trust estate that was paid to, or applied for the benefit of, a beneficiary of the trust estate shall be read as not including a reference to:
(i) income of the trust estate that, before 6 March 1980, was paid to, or applied for the benefit of, the beneficiary in the capacity of a trustee of another trust estate; or
(ii) income of the trust estate that was paid to, or applied for the benefit of, the beneficiary before 12 June 1978.
(3A) Where:
(a) apart from this section, a beneficiary (in this subsection referred to as the trustee beneficiary) of a trust estate is presently entitled to a share of the income of the trust estate in the capacity of a trustee of another trust estate (in this subsection referred to as the interposed trust estate);
(b) apart from this subsection, the trustee beneficiary would, by virtue of subsection (1), be deemed not to be, and never to have been, presently entitled to that share or a part of that share of the income of the first‑mentioned trust estate (which share or part is in this subsection referred to as the relevant trust income); and
(c) apart from this section, a beneficiary of the interposed trust estate is or was, or beneficiaries of the interposed trust estate are or were, presently entitled, or deemed to be presently entitled, to any income of the interposed trust estate (in this subsection referred to as the distributable trust income) that is attributable to the relevant trust income;
subsection (1) does not apply, and shall be deemed never to have applied, in relation to the trustee beneficiary, in relation to any part of the relevant trust income to which the distributable trust income is attributable.
(3B) Where:
(a) apart from this section, a beneficiary (in this subsection referred to as the trustee beneficiary) of a trust estate would, by reason that income of the trust estate was paid to, or applied for the benefit of, the trustee beneficiary, be deemed to be presently entitled to income of the trust estate in the capacity of a trustee of another trust estate (in this subsection referred to as the interposed trust estate);
(b) apart from this subsection, that income or a part of that income (which income or part is in this subsection referred to as the relevant trust income) would, by virtue of subsection (2), be deemed not to have been paid to, or applied for the benefit of, the trustee beneficiary; and
(c) apart from this section, a beneficiary of the interposed trust estate is or was, or beneficiaries of the interposed trust estate are or were, presently entitled, or deemed to be presently entitled, to any income of the interposed trust estate (in this subsection referred to as the distributable trust income) that is attributable to the relevant trust income;
subsection (2) does not apply, and shall be deemed never to have applied, in relation to the trustee beneficiary, in relation to any part of the relevant trust income to which the distributable trust income is attributable.
(3C) A reference in paragraph (3A)(c) or (3B)(c) to a beneficiary of a trust estate shall be read as not including a reference to a beneficiary who is under a legal disability.
(4) Where subsection (1) or (2) applies in relation to any income of a trust estate of a year of income:
(a) in the application of this Division in relation to the trust estate in relation to the year of income, section 99A shall be read as if subsections (2), (3) and (3A) of that section were omitted; and
(b) for the purposes of any application of section 99A in relation to the trust estate in relation to the year of income, the trust estate shall be deemed to be a resident trust estate.
(5) For the purposes of subsection (1), but without limiting the generality of that subsection, where:
(a) a reimbursement agreement was entered into at or after the time when a person became a beneficiary of a trust estate (whether the person became a beneficiary of the trust estate before or after the commencement of this section); and
(b) the amount (in this subsection referred to as the increased amount) of the share of the income of the trust estate to which the beneficiary is presently entitled exceeds the amount (in this subsection referred to as the original amount) of the income of the trust estate to which the beneficiary would have been, or could reasonably be expected to have been, presently entitled if the reimbursement agreement had not been entered into or if an act, transaction or circumstance that occurred in connection with, or as a result of, the reimbursement agreement had not occurred;
the present entitlement of the beneficiary to so much of the increased amount as exceeds the original amount shall be taken to have arisen out of the reimbursement agreement.
(6) For the purposes of subsection (2), but without limiting the generality of that subsection, where:
(a) a reimbursement agreement was entered into at or after the time when a person became a beneficiary of a trust estate (whether the person became a beneficiary of the trust estate before or after the commencement of this section); and
(b) income of the trust estate was paid to, or applied for the benefit of, the beneficiary and the amount (in this subsection referred to as the increased amount) of that income exceeds the amount (in this subsection referred to as the original amount) that would have been, or could reasonably be expected to have been, paid to, or applied for the benefit of, the beneficiary if the reimbursement agreement had not been entered into or if an act, transaction or circumstance that occurred in connection with, or as a result of, the reimbursement agreement had not occurred;
so much of the increased amount as exceeds the original amount shall be taken to be income of the trust estate that was paid to, or applied for the benefit of, the beneficiary as a result of the reimbursement agreement.
(6A) Where:
(a) subsection (1) or (2) applies, or would but for subsection (3A) or (3B) apply, in relation to a beneficiary of a trust estate in relation to a reimbursement agreement in relation to any income of the trust estate; and
(b) as part of, under or in connection with the reimbursement agreement, the beneficiary incurred or incurs a loss or outgoing after 5 March 1980 in respect of which a deduction has been allowed or would, but for this subsection, be allowable;
then, notwithstanding any other provision of this Act, a deduction shall be deemed not to have been, or not to be, allowable, as the case may be, in respect of that loss or outgoing.
(6B) Where subsection (6A) deems a deduction not to have been, or not to be, allowable in respect of a loss or outgoing incurred by a taxpayer in the acquisition of property that, for the purposes of the application of this Act and the Income Tax Assessment Act 1997 in relation to the taxpayer is or was trading stock, then, notwithstanding any other provision of this Act or that Act, the cost or cost price of that property, for the purposes of the application of Subdivision B of Division 2 of Part III of this Act or Division 70 (Trading stock) or 385 (Primary production) of the Income Tax Assessment Act 1997 in relation to that property in relation to the taxpayer, shall be taken to be, and at all times to have been, nil.
(7) Subject to subsection (8), a reference in this section, in relation to a beneficiary of a trust estate, to a reimbursement agreement shall be read as a reference to an agreement, whether entered into before or after the commencement of this section, that provides for the payment of money or the transfer of property to, or the provision of services or other benefits for, a person or persons other than the beneficiary or the beneficiary and another person or other persons.
(8) A reference in subsection (7) to an agreement shall be read as not including a reference to an agreement that was not entered into for the purpose, or for purposes that included the purpose, of securing that a person who, if the agreement had not been entered into, would have been liable to pay income tax in respect of a year of income would not be liable to pay income tax in respect of that year of income or would be liable to pay less income tax in respect of that year of income than that person would have been liable to pay if the agreement had not been entered into.
(9) For the purposes of subsection (8), an agreement shall be taken to have been entered into for a particular purpose, or for purposes that included a particular purpose, if any of the parties to the agreement entered into the agreement for that purpose, or for purposes that included that purpose, as the case may be.