ATO Interpretative Decision
ATO ID 2002/93
Income Tax
Income: Trustee of a Trust with a Non-Resident Beneficiary (Interest income)FOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Whether the taxpayer, a trustee of a trust who is liable to be assessed for tax in respect of a non-resident beneficiary under section 98 of the Income Tax Assessment Act 1936 (ITAA 1936), should include in their assessable income an amount distributed to the non-resident beneficiary as interest, where withholding tax is payable on the interest.
Decision
No, the amount distributed to the non-resident beneficiary as interest, where withholding tax is payable on the interest, is excluded from the assessable income of the taxpayer trustee under section 128D of the ITAA 1936.
Facts
The taxpayer, a trustee of a trust, distributes an amount of interest to a non-resident beneficiary of the trust. The trustee withholds and pays the withholding tax on the interest.
The trustee is liable for tax in respect of the non-resident beneficiary.
Reasons for Decision
Section 128D of the ITAA 1936 excludes from assessable income certain income on which withholding tax is payable. Under subsection 128B(2) of the ITAA 1936 there is a liability to withholding tax by the trustee, on income consisting of interest paid to a non-resident, and under subsection 128C(1) of the ITAA 1936, the withholding tax is due and payable by the trustee.
The amount distributed to the non-resident beneficiary as interest is excluded from the assessable income of the trustee under section 128D of the ITAA 1936, as withholding tax is payable on the interest income.
Amendment History
| Date of Amendment | Part | Comment |
|---|---|---|
| 15 July 2016 | Legislative references | Include reference to section 98 |
| Related Public Rulings (including Determinations) | Include reference to IT2680 | |
| Related ATO Interpretive Decisions | Include reference to ATO ID 2002/94 | |
| Throughout ATO ID | Format and minor grammatical changes |
Year of income: Year ended 30 June 1999
Legislative References:
Income Tax Assessment Act 1936
section 98
subsection 128B(2)
subsection 128C(1)
section 128D
Related Public Rulings (including Determinations)
IT 2680
ATO ID 2002/94
Keywords
Non-resident beneficiaries
Non-resident interest withholding tax
Trusts
Trust beneficiaries
Trust distributions
Distributions to non-residents
ISSN: 1445-2782
| Date: | Version: | |
| 4 January 2002 | Original statement | |
| You are here | 15 July 2016 | Updated statement |
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