(i) declares that he or she holds a right to receive income from property upon trust for 2 or more other persons in succession; or
(ii) transfers such a right to, or to a trustee to be held upon trust for, 2 or more other persons in succession;
the right shall be deemed to be separately transferred to each of those other persons for the respective periods for which the right is held upon trust for, or transferred to, those persons.
(5) Where an interest in property or a right to receive income from property is transferred by 2 or more persons jointly, each of those persons shall, for the purposes of this Division, be deemed to have transferred an interest in that property or a right to receive income from that property, as the case may be.
(6) In this Division, unless the contrary intention appears:
(a) a reference to the arm’s length consideration in respect of a transfer of a right to receive income from property is a reference to the consideration that might reasonably be expected to have been received or receivable in respect of the transfer if the right had been transferred under an agreement between independent parties dealing at arm’s length with each other in relation to the agreement and transfer; and
(b) a reference to the amount of consideration is, in a case where consideration is paid or given otherwise than in cash, a reference to the money value of the consideration.
102B Certain income transferred for short periods to be included in assessable income of transferor
(1) Subject to this section, where a right to receive income from property is transferred, otherwise than by a will or codicil, by a person (in this subsection referred to as the transferor) to an associate of the transferor for a period that will, or may for any reason other than the death of any person or the associate becoming under a legal disability, terminate before the prescribed date, any income that:
(a) is derived from the property;
(b) is paid to, or applied or accumulated for the benefit of:
(i) the associate; or
(ii) any other associate of the transferor to whom a right to receive income from the property has been transferred (whether by the first‑mentioned associate or any other person) after the first‑mentioned transfer; and
(c) would, if the first‑mentioned transfer had not been made, have been included in the assessable income of the transferor;
shall be treated for the purposes of this Act as if the first‑mentioned transfer had not been made.
(2) Subsection (1) (other than subparagraph (1)(b)(ii)) does not apply in relation to a transfer of a right to receive income from property where:
(a) the right was not a right that arose from the ownership by the transferor of an interest in the property;
(b) the right arose from the ownership by the transferor of an interest in the property and, before or at the time of the first‑mentioned transfer, the transferor transferred that interest to the transferee or another person; or
(c) consideration has been received or is receivable in respect of the transfer and the amount of that consideration is not less than the arm’s length consideration in respect of the transfer.
(3) Where, on a particular day, a person who has transferred to another person a right to receive income from property:
(a) in any case—transfers to the other person or to a third person an interest in the property, being the interest from the ownership of which by the transferor the right arose;
(b) in the case of a natural person—dies; or
(c) in the case of a company—ceases to exist;
subsection (1) (other than subparagraph (1)(b)(ii)) does not apply, in relation to the transfer of the right to receive income, in relation to income that is derived from the property after that day.
(4) Subsection (1) does not apply in relation to income derived by a person in pursuance of a transfer to that person of a right to receive income from property where, by reason of subsection 51‑50(3) of the Income Tax Assessment Act 1997, the income so derived by the person is not exempt from tax under section 51‑30 of that Act.
(4A) Where:
(a) subsection (1) (other than subparagraph (1)(b)(ii)) applies in relation to a transfer by a person of a right to receive income from property; and
(b) consideration has been received or is receivable in respect of the transfer;
then, notwithstanding any other provision of this Act (other than a provision of Part IVA), the amount of the consideration shall not be included in the assessable income of the person of a year of income.
(5) Nothing in any other provision of this Act prevents the amendment of an assessment at any time for the purpose of excluding from the assessable income of a person income that is, by virtue of subsection (1), to be included in the assessable income of another person.
(6) Where there is excluded from the assessable income of a person an amount that, in pursuance of subsection (1) was previously treated as assessable income of that person, nothing in any other provision of this Act prevents the amendment of any assessment at any time to give effect to the inclusion in the assessable income of another person of an amount that, in pursuance of that subsection, was treated as not being so included for the purposes of the assessment.
102C Effect of certain transfers of rights to receive income from property
Where:
(a) any income is paid to, or applied or accumulated for the benefit of, a person (in this section referred to as the transferee) by reason of the transfer to the person of a right to receive income from property; and
(b) the income so paid, applied or accumulated is, by virtue of section 102B, to be included in the assessable income of another person (in this section referred to as the transferor);
then:
(c) for the purposes of the application of this Act other than this Division in relation to the transferor, an amount equal to the income so paid, applied or accumulated:
(i) shall be deemed to have been paid by the transferor to the transferee at the time at which the income was paid to, or applied or accumulated for the benefit of, the transferee; and
(ii) shall be deemed to have been so paid for the purpose for which the right was transferred; and
(d) where, if the right had not been transferred, but the transferor had paid to the transferee, at the time at which the income was so paid to, or applied or accumulated for the benefit of, the transferee and for the purpose for which the right was transferred, an amount (in this paragraph referred to as the notional amount) equal to the amount of the income so paid, applied or accumulated, the notional amount or a part of the notional amount would have been included in the assessable income of the transferee—there shall be included in that assessable income an amount equal to the notional amount or that part of the notional amount, as the case may be.
102CA Consideration in respect of transfer to be included in assessable income of transferor in certain cases
(1) Subject to this section, where:
(a) a right to receive income from property is transferred, otherwise than by a will or codicil, by a person to another person;
(b) consideration has been received or is receivable in respect of the transfer; and
(c) immediately after the transfer, subsection 102B(1) (other than subparagraph 102B(1)(b)(ii)) does not apply in relation to the transfer;
the assessable income of the transferor of the year of income in which the right is transferred shall include the amount of the consideration.
(2) Subsection (1) does not apply in relation to a transfer of a right to receive income from property where:
(a) the right was not a right that arose from the ownership by the transferor of an interest in the property; or
(b) the right arose from the ownership by the transferor of an interest in the property and, before or at the time of the first‑mentioned transfer, the transferor transferred that interest to the transferee; or
(c) the right is, or is part of, a Division 230 financial arrangement (within the meaning of the Income Tax Assessment Act 1997).
(3) Where, by reason of subsection 51‑50(3) of the Income Tax Assessment Act 1997, income derived by a person pursuant to a transfer to the person of a right to receive income from property is not exempt from tax under section 51‑30 of that Act, subsection (1) does not apply in relation to the transfer.
Division 6C—Income of certain public trading trusts
102M Interpretation
In this Division, unless the contrary intention appears:
arrangement has the same meaning as in the Income Tax Assessment Act 1997.
eligible investment business means one or more of:
(a) investing in land for the purpose, or primarily for the purpose, of deriving rent; or
(b) investing or trading in any or all of the following:
(i) secured or unsecured loans (including deposits with a bank or other financial institution);
(ii) bonds, debentures, stock or other securities;
(iii) shares in a company, including shares in a foreign hybrid company (as defined in the Income Tax Assessment Act 1997);
(iv) units in a unit trust;
(v) futures contracts;
(vi) forward contracts;
(vii) interest rate swap contracts;
(viii) currency swap contracts;
(ix) forward exchange rate contracts;
(x) forward interest rate contracts;
(xi) life assurance policies;
(xii) a right or option in respect of such a loan, security, share, unit, contract or policy;
(xiii) any similar financial instruments; or
(c) investing or trading in financial instruments (not covered by paragraph (b)) that arise under financial arrangements, other than arrangements excepted by section 102MA.
excluded rent means rent worked out by reference to the profits or receipts of an entity that uses any of the relevant land under an arrangement that is designed to result in the transfer of all, or substantially all, of what would otherwise be the profits of the entity to another party to the arrangement.
financial arrangement has the same meaning as in the Income Tax Assessment Act 1997.
land includes an interest in land and fixtures on land.
net income, in relation to a public trading trust, means the total assessable income of the trust calculated under this Act as if the trustee were a taxpayer in respect of that income and were a resident, less all allowable deductions.
A public trading trust may be required to work out its net income in a special way by Division 266 or 267 in Schedule 2F.
prescribed trust estate means a trust estate that is, or has been, a public trading trust in relation to any year of income.
property includes a chose in action and also includes any estate, interest, right or power, whether at law or in equity, in or over property.
relevant year of income means the year of income that commenced on 1 July 1985 or a subsequent year of income.
trading business means a business that does not consist wholly of eligible investment business.
unit, in relation to a prescribed trust estate, includes a beneficial interest, however described, in any of the income or property of the trust estate.
unitholder, in relation to a prescribed trust estate, means the holder of a unit or units in the prescribed trust estate.
unit trust dividend means:
(a) any distribution made by the trustee of a prescribed trust estate, whether in money or in other property, to a unitholder; and
(b) any amount credited by the trustee of a prescribed trust estate to a unitholder as a unitholder;
but does not include:
(c) money paid or credited, or property distributed, by the trustee of a prescribed trust estate to the extent to which the money or property is attributable to profits arising during a year of income in relation to which the prescribed trust estate was not a public trading trust; or
(d) money paid or credited, or property distributed, by the trustee of a prescribed trust estate in respect of the cancellation, extinguishment or redemption of a unit to the extent to which:
(i) the money paid or credited or the property distributed represents money paid to, or property transferred to, the trustee for the purpose of the creation or issue of that unit; and
(ii) the amount of the money paid or credited or the value of the property distributed, as the case may be, does not exceed the amount of the money paid to the trustee, or the value, at the time of transfer, of the property transferred to the trustee, for the purpose of the creation or issue of that unit.
102MA Arrangements not covered
(1) For the purposes of paragraph (c) of the definition of eligible investment business in section 102M, the excepted arrangements are those specified in this section.
Note: This section does not affect an arrangement that satisfies paragraph (a) or (b) of that definition.
Leasing or property arrangement
(2) A right or obligation arising under:
(b) an arrangement to which Division 240 of the Income Tax Assessment Act 1997 (about arrangements treated as a sale and loan) applies; or
(ba) an arrangement to which Division 242 (about leases of luxury cars) of the Income Tax Assessment Act 1997 applies; or
(c) a financial arrangement in the form of a loan that is taken to exist by subsection 250‑155(1) of the Income Tax Assessment Act 1997; or
(d) an arrangement that, in substance or effect, depends on the use of a specific asset that is:
(i) real property; or
(ii) goods or a personal chattel (other than money or a money equivalent); or
(iii) intellectual property;
and gives a right to control the use of the asset; or
(e) an arrangement that is a licence to use:
(i) real property; or
(ii) goods or a personal chattel (other than money or a money equivalent); or
(iii) intellectual property.
Interest in partnership or trust estate
(3) A right carried by an interest in a partnership or a trust estate, or an obligation that corresponds to such a right, if:
(a) there is only one class of interest in the partnership or trust estate; or
(b) the interest is an equity interest in the partnership or trust estate; or
(c) for a right or obligation relating to a trust estate—the trust estate is managed by a funds manager or custodian, or a responsible entity (as defined in the Corporations Act 2001) of a registered scheme (as so defined).
General insurance policies
(4) A right or obligation under a general insurance policy.
Guarantees and indemnities
(5) A right or obligation under a guarantee or indemnity unless:
(a) the financial arrangement is one where:
(i) its value changes in response to changes in a specified variable or variables (such as an interest rate, foreign exchange rate, credit rating, index or commodity or financial instrument price); and
(ii) there is no requirement for a net investment, or there is such a requirement but the net investment is smaller than would be required for other types of financial arrangement that would be expected to have a similar response to changes in market factors; or
(b) the guarantee or indemnity is given or entered into in relation to a financial arrangement.
Superannuation and pension income
(6) A right to receive, or an obligation to provide, a financial benefit (as defined in the Income Tax Assessment Act 1997) if the right or obligation arises from a person’s membership of a superannuation or pension scheme.
Retirement village arrangements
(7) A right or obligation arising under:
(a) a contract that gives rise to a right to occupy residential premises in a retirement village (as defined in the A New Tax System (Goods and Services Tax) Act 1999); or
(b) a contract under which a resident of such a retirement village is provided with general or personal services in the retirement village.
102MB Investing in land
Moveable property
(1) For the purposes of this Division, investments in moveable property, being property that is:
(a) incidental to and relevant to the renting of land; and
(b) customarily supplied or provided in connection with the renting of land; and
(c) ancillary to the ownership and use of land;
are taken to be investments in land.
Safe harbour rule
(2) For the purposes of this Division, an entity’s investments in land are taken to be for the purpose, or primarily for the purpose, of deriving rent during a year of income if:
(a) each of those investments is for purposes (other than the purpose of trading) that include a purpose of deriving rent; and
(b) at least 75% of the gross revenue from those investments for the year of income consists of rent (except excluded rent); and
(c) none of the remaining gross revenue from those investments for the year of income is:
(i) excluded rent; or
(ii) from the carrying on of a business that is not incidental and relevant to the renting of the land.
(3) In working out the gross revenue referred to in paragraph (2)(b), payments for the provision of services that:
(a) are incidental to and relevant to the renting of land; and
(b) are ancillary to the ownership and use of the land;
are taken to be rent derived from the land.
Example: Payments as reimbursement for expenses incurred by the lessor in providing security services for a shopping centre would be covered by this subsection.
(4) In working out the gross revenue referred to in subsection (2), disregard any capital gains and capital losses from a CGT event arising from a disposal or other realisation of ownership of land.
Meaning of entity
(5) In this section:
entity has the same meaning as in the Income Tax Assessment Act 1997.