6Secondary taxable amounts

6 Secondary taxable amounts

(1) Where: (a) a primary taxable amount exists in relation to the trustee of a trust estate in relation to a year of income; and (b) either of the following conditions is satisfied: (i) the trust estate ceased to exist before the commencement of this Act; (ii) the trust estate has ceased to exist after the commencement of this Act and an assessment of the trust recoupment tax payable on the primary taxable amount was not made before the trust estate ceased to exist; a secondary taxable amount of an amount equal to the primary taxable amount shall be taken to exist in relation to the eligible beneficiaries class in relation to the year of income. (2) Where: (a) a primary taxable amount exists in relation to the trustee of a trust estate (in this subsection referred to as the relevant trust estate) in relation to a year of income; (b) during the period (in this subsection referred to as the relevant period) after the time when the tax avoidance scheme to which the primary taxable amount relates was entered into and before the time of service of any notice of assessment in respect of trust recoupment tax payable on the primary taxable amount: (i) any beneficial interest in the relevant trust estate was sold; or (ii) any beneficial interest in another trust estate that at any time during the relevant period was a holding trust estate in relation to the relevant trust estate was sold; and (c) the Commissioner is of the opinion that, by reason of a circumstance mentioned in paragraph (b), it would be unreasonable that the trustee of the relevant trust estate be liable to pay trust recoupment tax on the primary taxable amount; the following provisions have effect: (d) a secondary taxable amount of an amount equal to the primary taxable amount shall be taken to exist in relation to the eligible beneficiaries class in relation to the year of income; (e) the trustee of the relevant trust estate is not liable, and shall be deemed never to have been liable, to pay trust recoupment tax on the primary taxable amount. (3) Where: (a) there remains unpaid an amount of trust recoupment tax payable by the trustee of a trust estate on a primary taxable amount that exists in relation to the trustee in relation to a year of income and the Commissioner is of the opinion that the trust recoupment tax, or part of the trust recoupment tax, is unlikely to be paid; or (b) a trust estate ceases to exist at a time when there remains unpaid an amount of trust recoupment tax payable by the trustee on a primary taxable amount that exists in relation to the trustee in relation to a year of income; a secondary taxable amount shall be taken to exist in relation to the eligible beneficiaries class in relation to the year of income of an amount equal to the amount of the unpaid trust recoupment tax multiplied by 2.22. (4) Subject to subsection (5), for the purposes of the application of subsection (1), (2) or (3) in relation to a primary taxable amount, the eligible beneficiaries class includes each person who has derived, or might reasonably be expected to derive, a benefit that would not have been derived, or might reasonably be expected not to have been derived, if the primary trust income in relation to the primary taxable amount had not been derived. (5) In subsection (4), a reference to a benefit shall be read as not including a reference to: (a) a benefit referred to in paragraph 5(1)(d) derived by a beneficiary to whom paragraph 5(1)(f) applies; and (b) a benefit derived by a person (not being a person who at any time after the time when the tax avoidance scheme to which the primary taxable amount relates was entered into was an associate of the trustee of the trust estate in relation to which the primary taxable amount exists) from a transaction the parties to which were dealing with each other at arm’s length in relation to the transaction. (6) For the purposes of the application of this Act in relation to trust recoupment tax payable or paid on a secondary taxable amount, the eligible beneficiaries class in relation to the secondary taxable amount shall not be taken to include any person who was not included in that class at the time when the notice of assessment in respect of the trust recoupment tax was served. (7) For the purposes of this section, a trust estate is a holding trust estate in relation to another trust estate at a particular time if the trustee of the first‑mentioned trust estate has a beneficial interest in the other trust estate at that time. (8) For the purposes of subsection (7), where the trustee of a trust estate has a beneficial interest in a second trust estate and the trustee of the second trust estate has a beneficial interest in a third trust estate (including a beneficial interest that the trustee of the second trust estate has in the third trust estate by another application or other applications of this subsection), the trustee of the first‑mentioned trust estate shall be deemed to have a beneficial interest in the third trust estate. (9) In this section, unless the contrary intention appears, trust recoupment tax includes late payment tax and penalty tax.