The trustee of a unit trust that is a public trading trust in relation to a relevant year of income shall be assessed and is liable to pay tax on the net income of the public trading trust of the relevant year of income at the rate declared by the Parliament for the purposes of this section.
102T Modified application of Act in relation to certain unit trusts
(1) For the purpose of the application of this Act in relation to the imposition, assessment and collection of tax in respect of:
(a) the net income of a public trading trust; and
(b) the income or assessable income of a unitholder in a prescribed trust estate;
the following provisions of this section have effect.
Note: Under Subdivision 713‑C of the Income Tax Assessment Act 1997, this Act applies differently in relation to a public trading trust that chooses to form a consolidated group.
(3) For the purposes of the application of sections 46A and 46B in accordance with subsection (2), the Commissioner may be satisfied, in relation to a unit trust dividend, that a transaction, operation, undertaking, scheme or arrangement was by way of dividend stripping or similar to a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping if the Commissioner would have been satisfied, had the unit trust dividend been a dividend paid by a company, that the transaction, operation, undertaking, scheme or arrangement would have been a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping or, as the case requires, would have been similar to a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping.
(6) For the purposes of the application of the definition of year of income in subsection 6(1), the reference in that definition to a company (except a company in the capacity of a trustee) shall be read as including a reference to a public trading trust or, as the context requires, to the trustee of a public trading trust.
(7) A reference in the definition of person in subsection 6(1) to a company shall be read as including a reference to a public trading trust or, as the context requires, to the trustee of a public trading trust.
(8) The reference in section 158 to the taxable income of a company except income in respect of which it is assessable as trustee shall be read as including a reference to the net income of a public trading trust.
(9) A reference in section 355‑35 of the Income Tax Assessment Act 1997 to a body corporate is to be read as including a reference to a body corporate acting in its capacity as trustee of a public trading trust.
(11) A reference in subsection 44(1) or section 128B of this Act, in subsection 840‑805(3) of the Income Tax Assessment Act 1997, in Subdivision 12‑F in Schedule 1 to the Taxation Administration Act 1953 (except section 12‑225) or in subsection 12‑390(10) in that Schedule, to a company or to a company that is a resident shall be read as including a reference to a prescribed trust estate or, as the context requires, to the trustee of a prescribed trust estate.
(12) A reference in the definition of paid in subsection 6(1) or 44(1), or in section 128A or 128B, of this Act, or in Subdivision 12‑F in Schedule 1 to the Taxation Administration Act 1953 (except section 12‑225), to a dividend shall be read as including a reference to a unit trust dividend.
(13A) Subdivision 12‑F in Schedule 1 to the Taxation Administration Act 1953 applies in respect of units in a prescribed trust estate in the same way as it applies in respect of shares.
(14) A reference in subsection 44(1) to a shareholder in relation to a company shall be read as including a reference to a unitholder in a prescribed trust estate.
(16) A reference in section 6B, Division 6 or subsection 128A(3) or 157(3) of this Act, Division 275 or Subdivision 840‑M of the Income Tax Assessment Act 1997 or Subdivision 12‑H in Schedule 1 to the Taxation Administration Act 1953 to a trust estate or to a trustee shall be read as not including a reference to a trust estate that is a public trading trust or to the trustee of a public trading trust, as the case may be.
(19) For the purposes of subsection 44(1), a unit trust dividend paid by the trustee of a prescribed trust estate out of corpus of the trust estate shall, to the extent to which the unit trust dividend is attributable to profits derived by the trustee, be taken to be paid out of those profits.
(20) For the purposes of section 128B, a unit trust dividend paid to a unitholder in a prescribed trust estate shall be deemed to be income derived by the unitholder at the time at which the unit trust dividend is paid.
Non‑unit dividend
(21) Subsections (2), (3), (4) and (20) apply as if references in those subsections to a unit trust dividend included a reference to a non‑unit dividend.
(22) For the purposes of subsection 44(1), a non‑unit dividend paid by the trustee of a prescribed trust estate out of corpus of the trust estate is taken, to the extent to which the non‑unit dividend is attributable to a source in Australia, to be derived from a source in Australia.
(22A) For the purposes of subsection 44(1), a non‑unit dividend paid by the trustee of a prescribed trust estate out of corpus of the trust estate is taken, to the extent to which the non‑unit dividend is attributable to a source outside Australia, to be derived from a source outside Australia.
(23) If a provision of this Act that applies to a dividend:
(a) is taken under this section to apply to a unit trust dividend; and
(b) applies to a non‑share dividend in the same way as it applies to a dividend;
that provision also applies to a non‑unit dividend in the same way as it applies to a dividend.
Non‑unit equity interest
(24) If a provision of this Act that applies to a share:
(a) is taken under this section to apply to a unit in a prescribed trust estate; and
(b) applies to a non‑share equity interest in a company in the same way as it applies to a share;
that provision also applies to a non‑unit equity interest in a prescribed trust estate in the same way as it applies to a share.
Equity holder
(25) Subsections (1), (2), (18) and (20) apply as if references in those subsections to a unitholder included a reference to an equity holder who is not a unitholder.
(26) If a provision of this Act that applies to a shareholder:
(a) is taken because of this section to apply to a unitholder in a prescribed trust estate; and
(b) applies to an equity holder in a company who is not a shareholder in the same way as it applies to a shareholder;
that provision also applies to an equity holder in a prescribed trust estate who is not a unitholder in the same way as it applies to a shareholder.
Definitions
(27) In this section:
equity holder in a prescribed trust estate means the holder of an equity interest in the prescribed trust estate.
equity interest in a prescribed trust estate means:
(a) a unit in the prescribed trust estate; or
(b) any other interest that would be an equity interest in the prescribed trust estate if references in Division 974 of the Income Tax Assessment Act 1997 to a company included references to a prescribed trust estate or, as the context requires, to the trustee of a prescribed trust estate.
non‑unit dividend means a unit trust distribution that is not a unit trust dividend.
non‑unit equity interest in a prescribed trust estate means an equity interest in the prescribed trust estate that is not a unit in the prescribed trust estate.
unit trust distribution means a distribution, or an amount credited, that would be a unit trust dividend if references in the definition of unit trust dividend in section 102M to a unitholder were references to an equity holder.
Division 6D—Provisions relating to certain closely held trusts
Subdivision A—Overview
102UA What this Division is about
(1) The main purpose of this Division is to ensure that the trustee of a closely held trust with one or more trustee beneficiaries that are presently entitled to a share of the income or of a tax‑preferred amount of the trust advises the Commissioner soon after the end of the year of income of certain details about those trustee beneficiaries. This will allow the Commissioner to check whether the assessable income of the trustee beneficiaries includes the correct share of net income, and whether the net assets of the trustee beneficiaries reflect the receipt of the tax‑preferred amounts.
(2) To achieve this purpose, the Division:
(a) provides for the trustee to correctly identify the trustee beneficiaries within a specified period after the end of the year of income; and
(b) if the trustee fails to do so, provides for taxation at a penalty rate (in the case of net income) or offences under the Taxation Administration Act 1953 (in the case of tax‑preferred amounts).
(3) This Division also provides that, where the trustee of the closely held trust becomes presently entitled to an amount that is reasonably attributable to the whole or a part of the share of the net income of the closely held trust, there will also be taxation at a penalty rate.
Subdivision B—Interpretation
102UB Definitions—general
In this Division:
closely held trust has the meaning given by subsection 102UC(1).
correct TB statement has the meaning given by section 102UG.
present entitlement has a meaning affected by section 102UJ.
tax offset has the same meaning as in the Income Tax Assessment Act 1997.
tax‑preferred amount has the meaning given by section 102UI.
TB statement period has the meaning given by section 102UH.
trustee beneficiary has the meaning given by section 102UD.
trustee beneficiary non‑disclosure tax means tax payable under paragraph 102UK(2)(a) or 102UM(2)(a).
untaxed part, of a share of the net income of a closely held trust, has the meaning given by section 102UE.
102UC Closely held trust
(1) A closely held trust is:
(a) a trust where an individual has, or up to 20 individuals have between them, directly or indirectly, and for their own benefit, fixed entitlements to a 75% or greater share of the income, or a 75% or greater share of the capital, of the trust; or
(b) a discretionary trust;
except where the trust is an excluded trust.
Trustees of discretionary trusts treated as individuals
(2) For the purposes of paragraph (1)(a), if:
(a) a trustee of a discretionary trust holds a fixed entitlement to a share of the income or capital of the trust mentioned in that paragraph directly or indirectly; and
(b) no person holds that fixed entitlement directly or indirectly through the discretionary trust;
the trustee is taken to hold that fixed entitlement directly or indirectly as an individual and for the individual’s own benefit.
Individuals treated as single individual
(3) For the purposes of paragraph (1)(a), all of the following are taken to be a single individual:
(a) an individual, whether or not the individual holds fixed entitlements directly in the trust mentioned in that paragraph;
(b) the individual’s relatives;
(c) in relation to any fixed entitlements in respect of which other individuals are nominees of the individual or of the individual’s relatives—those other individuals.
Definitions
(4) In this section:
discretionary trust means a trust that is not a fixed trust within the meaning of section 272‑65 in Schedule 2F.
excluded trust means:
(a) a trust to which paragraph (b), (c) or (d) of the definition of excepted trust in section 272‑100 in Schedule 2F applies; or
(b) a unit trust whose units are listed on the stock market operated by ASX Limited.
fixed entitlement has the meaning given by sections 272‑5, 272‑10, 272‑15 and 272‑40 in Schedule 2F.
indirectly has the meaning given by section 272‑20 in Schedule 2F.
102UD Trustee beneficiary
A person is a trustee beneficiary of a closely held trust if the person is a beneficiary of the trust in the capacity of trustee of another trust.
102UE Meaning of untaxed part
(1) The untaxed part of a share of the net income of a closely held trust is so much of that share as is not covered by subsection (2).
(2) The share of the net income of the closely held trust is covered by this subsection to the extent that:
(a) the trustee of the closely held trust is assessed and liable to pay tax under subsection 98(4) in respect of the share; or
(b) the share 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 liable to pay tax under subsection 98(4); or
(c) the share is represented by or reasonably attributable to an amount from which an entity was required to withhold an amount under Subdivision 12‑H in Schedule 1 to the Taxation Administration Act 1953; or
(d) the share 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 was liable to pay trustee beneficiary non‑disclosure tax.
102UG Correct TB statement
Share of net income case
(1) This section applies if a share of the net income of a closely held trust for a year of income is included in the assessable income of a trustee beneficiary of the trust under section 97 and the share comprises or includes an untaxed part.
Tax‑preferred amount case
(2) This section also applies if a trustee beneficiary of a closely held trust is presently entitled at the end of a year of income to a share of a tax‑preferred amount of the trust.
Correct TB statement
(3) If this section applies, the trustee of the closely held trust makes a correct TB statement about the share if the trustee correctly states, in the approved form:
(a) if the trustee beneficiary is a resident at the end of the year of income:
(i) the name and tax file number of the trustee beneficiary; and
(ii) the amount of the untaxed part of the share or the amount of the share of the tax‑preferred amount; and
(b) if the trustee beneficiary is a non‑resident at the end of the year of income:
(i) the name and address of the trustee beneficiary; and
(ii) the amount of the untaxed part of the share or the amount of the share of the tax‑preferred amount.
Note: If a closely held trust has multiple trustee beneficiaries, the requirements in subsection (3) will have to be met for each of them for the trustee of the closely held trust to avoid paying any trustee beneficiary non‑disclosure tax.
102UH TB statement period
The TB statement period, for the trustee of a trust in relation to a year of income, is the period from the end of the year of income until the end of:
(a) the period within which the trustee is required to give to the Commissioner the trust’s return of income for the year of income; or
(b) such further period as the Commissioner allows.
102UI Tax‑preferred amount
The expression “tax‑preferred amount” of a trust means:
(a) income of the trust that is not included in its assessable income in working out its net income; or
(b) capital of the trust.
102UJ Extended concept of present entitlement to capital of a trust
For the purposes of this Division, section 95A applies in relation to capital of a trust in the same way as it applies to income of the trust.
Subdivision C—Trustee beneficiary non‑disclosure tax on share of net income
102UK Trustee beneficiary non‑disclosure tax where no correct TB statement
(1) Subject to subsection (2A), this section applies if:
(a) a share of the net income of a closely held trust for a year of income is included in the assessable income of a trustee beneficiary of the trust under section 97; and
(b) the share comprises or includes an untaxed part; and
(c) the trustee of the closely held trust is not covered by a determination under subsection (1A) for the year of income; and
(ca) the closely held trust is none of the following:
(i) a family trust (within the meaning of section 272‑75 in Schedule 2F);
(ii) a trust in relation to which an interposed entity election has been made and is in force in accordance with section 272‑85 in Schedule 2F;
(iii) a trust covered by subsection 272‑90(5) in Schedule 2F; and
(d) during the TB statement period in relation to the year of income, the trustee of the closely held trust does not make and give to the Commissioner a correct TB statement about the share.
Determination that a class of trustees is not required to give a correct TB statement
(1A) The Commissioner may, by legislative instrument, determine that a specified class of trustees is not required to make a correct TB statement for a year of income.
(1B) A determination under subsection (1A):
(a) may be expressed to be subject to conditions; and
(b) may be for one or more years of income.
Consequences of section applying
(2) If this section applies:
(a) either:
(i) if the trustee of the closely held trust is the only person in the trustee group (see subsection (3))—the trustee is liable to pay tax; or
(ii) if the trustee of the closely held trust is not the only person in the trustee group—the persons in the trustee group are jointly and severally liable to pay tax;
as imposed by the Taxation (Trustee Beneficiary Non‑disclosure Tax) Act (No. 1) 2007, on the untaxed part; and
(b) except for the purposes of sections 99, 99A and 99B and this Division, the untaxed part is not included in the assessable income of the trustee beneficiary under section 97.
Note: Provisions dealing with the payment etc. of the tax under paragraph (a) (known as trustee beneficiary non‑disclosure tax) are set out in Subdivision D.
Amendment of incorrect statement
(2A) If:
(a) during the TB statement period in relation to a year of income, the trustee of a closely held trust makes and gives to the Commissioner a statement, that the trustee believes on reasonable grounds is a correct TB statement, about a share of the net income of the trust; and