ATO Interpretative Decision

ATO ID 2002/94 (Withdrawn)

Income Tax

Income: Trustee of a Trust with a Non-Resident Beneficiary (Unfranked Dividends)
FOI status: may be released

This ATO ID is withdrawn. This ATO ID is a straight application of the law. Guidance on the view contained in this ATO ID can be found in Rules on particular amounts in net income (QC 19548).

This document has changed over time. View its history.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 unfranked dividends, where withholding tax is payable on the unfranked dividends.

Decision

No, the amount distributed to the non-resident beneficiary as unfranked dividends, where withholding tax is payable on the unfranked dividends, is excluded from the assessable income of the trustee under section 128D of the ITAA 1936.

Facts

The taxpayer, a trustee of a trust, distributes an amount of unfranked dividend to a non-resident beneficiary of the trust. The trustee withholds and pays the withholding tax on the unfranked dividends.

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(1) of the ITAA 1936 there is a liability to withholding tax by the trustee, on income consisting of dividends 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 unfranked dividends is excluded from the assessable income of the trustee under section 128D of the ITAA 1936, as withholding tax is payable on the dividend income.

Date of decision: 4 January 2002

Year of income: Year ended 30 June 1999

Legislative References:
Income Tax Assessment Act 1936
   subsection 128B(1)
   subsection 128C(1)
   section 128D

Keywords
Non-resident individuals
Non-resident beneficiaries
Non-resident dividend withholding tax
Trusts
Trust beneficiaries
Trust distributions
Distributions to non residents
Unfranked dividends

Business Line: Private Groups and High Wealth Individuals

Date of publication: 30 January 2002

ISSN: 1445-2782

history

	Date:	Version:
	4 January 2002	Original statement
You are here	25 January 2018	Archived

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