Payment of interest by taxpayer on distributions from certain non‑resident trust estates
102AAM Payment of interest by taxpayer on distributions from certain non‑resident trust estates
For the purposes of this section, if:
an amount is included in the assessable income of a taxpayer of a year of income (which year of income is in this section called the current year of income), being the year of income commencing on 1 July 1990 or a subsequent year of income, under section 99B in relation to a trust estate; and
the whole or a part of the amount so included in the taxpayer’s assessable income (which whole or part is in this section called the distributed amount) is attributable to:
if the trust estate was a listed country trust estate in relation to a particular non‑resident year of income of the trust estate (in this section called the non‑resident trust’s year of income)—so much of the income and profits of the trust estate of the non‑resident trust’s year of income as represents eligible designated concession income in relation to any listed country in relation to the non‑resident trust’s year of income; or
if the trust estate was not a listed country trust estate in relation to a particular non‑resident year of income of the trust estate (in this section also called the non‑resident trust’s year of income)—so much of the income and profits of the trust estate of the non‑resident trust’s year of income as has not been subject to tax in any listed country in a tax accounting period:
ending before the end of the non‑resident trust’s year of income; or
commencing during the non‑resident trust’s year of income;
then:
the distributed amount is the distributed amount of the non‑resident trust’s year of income; and
the taxpayer is the original taxpayer in relation to the distributed amount of the non‑resident trust’s year of income.
For the purposes of subsection (1), unless the contrary is established by the taxpayer:
a distributed amount in relation to a listed country trust estate in relation to a non‑resident trust’s year of income is taken to be wholly attributable to income and profits of the trust estate of that year of income that represent eligible designated concession income in relation to a listed country; and
a distributed amount in relation to a trust estate that was not a listed country trust estate in relation to a non‑resident trust’s year of income is taken to be wholly attributable to income and profits of the trust estate of that year of income that have not been subject to tax in any listed country in a tax accounting period.
This section does not apply to a distributed amount that is attributable to income or profits of the estate of a deceased person if the amount was paid to, or applied for the benefit of, the taxpayer within 3 years after the death of that person.
This section does not apply to a distributed amount that was included in the assessable income of a taxpayer of a year of income under section 99B in relation to a trust estate if, at all times during the year of income, the trust:
was a public unit trust; and
was not a controlled foreign trust.
Subject to this section, if the original taxpayer in relation to the distributed amount of the non‑resident trust’s year of income is:
a company or a natural person (other than a company or a natural person in the capacity of a trustee); or
the trustee of a public trading trust in relation to the current year of income; or
the trustee of a complying superannuation fund, a non‑complying superannuation fund, a complying approved deposit fund, a non‑complying approved deposit fund or a pooled superannuation trust in relation to the current year of income;
the taxpayer is liable to pay interest to the Commissioner in respect of the distributed amount of the non‑resident trust’s year of income, calculated under subsection (5), on the amount calculated using the formula:
Start formula open bracket Distributed amount times Applicable rate of tax close bracket minus FITO end formula
where:
Distributed amount means the distributed amount of the non‑resident trust’s year of income.
Applicable rate of tax has the meaning given by subsection (10).
FITO (Foreign income tax offset) means so much of any tax offset under Division 770 of the Income Tax Assessment Act 1997 to which the taxpayer is entitled as is attributable to the distributed amount of the non‑resident trust’s year of income.
Subject to this section, if:
the original taxpayer in relation to the distributed amount of the non‑resident trust’s year of income is the trustee of a trust estate who is liable to be assessed and pay tax under section 98, 99 or 99A in respect of a part of, or a share in, the net income of the trust estate; and
the whole or a part (which whole or part is in this subsection called the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income) of the part or share of the net income is attributable to the distributed amount of the non‑resident trust’s year of income;
the taxpayer is liable to pay interest to the Commissioner in respect of the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income, calculated under subsection (5), on the amount calculated using the formula:
Start formula open bracket Taxpayer’s portion of the distributed amount times Applicable rate of tax close bracket minus FITO end formula
where:
Taxpayer’s portion of the distributed amount means the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income.
Applicable rate of tax has the meaning given by subsection (10).
FITO (Foreign income tax offset) means so much of any tax offset under Division 770 of the Income Tax Assessment Act 1997 to which the taxpayer is entitled as is attributable to the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income.
Subject to this section, if:
the original taxpayer in relation to the distributed amount of the non‑resident trust’s year of income is the trustee of a trust estate or a partnership; and
the following conditions are satisfied in relation to another taxpayer (in this subsection called the actual taxpayer):
an amount is included in the assessable income of the actual taxpayer of a year of income under subsection 92(1) or section 97, 98A or 100;
the actual taxpayer is:
a company or a natural person (other than a company or a natural person in the capacity of a trustee); or
the trustee of a complying superannuation fund, a non‑complying superannuation fund, a complying approved deposit fund, a non‑complying approved deposit fund or a pooled superannuation trust in relation to the year of income; or
the trustee of a public trading trust in relation to the year of income; or
the trustee of a trust estate who is liable to be assessed and pay tax under section 98, 99 or 99A in respect of a part of, or a share in, the net income of a trust estate;
if sub‑subparagraph (ii)(A), (B), (C) or (D) applies—the whole or a part of the amount so included in the actual taxpayer’s assessable income (which whole or part is in this subsection called the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income) is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the distributed amount of the non‑resident trust’s year of income;
if sub‑subparagraph (ii)(E) applies—the whole or a part (which whole or part is in this subsection also called the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income) of the part or share of the net income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the distributed amount of the non‑resident trust’s year of income;
the actual taxpayer is liable to pay interest to the Commissioner in respect of the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income, calculated under subsection (5), on the amount calculated using the formula:
Start formula open bracket Taxpayer’s portion of the distributed amount times Applicable rate of tax close bracket minus FITO end formula
where:
Taxpayer’s portion of the distributed amount means the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income.
Applicable rate of tax has the meaning given by subsection (10).
FITO (Foreign income tax offset) means so much of any tax offset under Division 770 of the Income Tax Assessment Act 1997 to which the taxpayer is entitled as is attributable to the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income.
If:
paragraph 102UK(2)(b) or 102UM(2)(b) has the effect that the whole or a part of a share of the net income of a trust estate (the first trust estate) is not included in the assessable income of the trustee of another trust estate (the second trust estate); and
the whole or the part of the share (which whole or part is in this subsection called the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income) is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the distributed amount of the non‑resident trust’s year of income; and
if paragraph 102UK(2)(b) or 102UM(2)(b) were ignored, the second trust estate would be an interposed trust mentioned in applying subparagraph (4)(b)(iii) or (iv) of this section; and
this subsection does not also apply to the trustee of a trust interposed between the first trust estate and the non‑resident trust;
the trustee of the first trust estate is liable to pay interest to the Commissioner in respect of the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income, calculated under subsection (5), on the amount calculated using the formula:
Start formula open bracket Taxpayer’s portion of the distributed amount times Applicable rate of tax close bracket minus FITO end formula
where:
applicable rate of tax has the meaning given by subsection (10).
FITO (Foreign income tax offset) means so much of any tax offset under Division 770 of the Income Tax Assessment Act 1997 to which the trustee of the first trust would be entitled, in respect of the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income, if the taxpayer’s portion of the distributed amount of the non‑resident trust’s income were an amount in respect of which the trustee were liable to be assessed and to pay tax under section 99A.
taxpayer’s portion of the distributed amount means the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income.
Interest payable by a taxpayer under this section is to be calculated:
in respect of the period commencing at whichever of the following times is the latest:
the beginning of the first year of income of the taxpayer that begins after the end of the non‑resident trust’s year of income;
the beginning of the year of income of the taxpayer commencing on 1 July 1990;
if the taxpayer is a natural person (other than a natural person in the capacity of a trustee) who first commenced to be a resident of Australia at a time (in this subparagraph called the first residence time) on or after 1 July 1990—the beginning of the year of income of the taxpayer next following the year of income of the taxpayer in which the first residence time occurred;
and ending at the end of the assessment year of income; and
at the base interest rate.
Where the assessable income of a taxpayer of a year of income includes one or more of the following amounts in relation to one or more non‑resident years of income of a particular trust estate (which amounts are in this subsection called the principal amounts):
the distributed amount of the non‑resident trust’s year of income;
the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income;
the aggregate of the interest payable by the taxpayer in respect of the principal amounts is not to exceed the difference between:
the aggregate of the principal amounts; and
so much of the tax payable in respect of the year of income as is attributable to the aggregate of the principal amounts (ignoring any tax offset under Part 3‑6 of the Income Tax Assessment Act 1997).
For the purposes of this section, the extent to which an amount (in this subsection called the section 99B amount) included in the assessable income of a taxpayer of a year of income under section 99B in relation to a trust estate is attributable to an amount (in this subsection called the trust amount) covered by subparagraph (1)(b)(i) or (ii) is to be determined in accordance with the following paragraphs:
in all cases—distributions of income and profits of the trust estate are to be taken to have been made in the following order:
first, from income and profits of the earliest non‑resident year of income;
then, successively from income and profits of successive subsequent years of income;
if subparagraph (1)(b)(i) applies—the extent to which the amount (in this paragraph called the adjusted section 99B amount), being so much of the section 99B amount as is attributable to the income and profits of the trust estate of the non‑resident trust’s year of income, represents eligible designated concession income in relation to any listed country in relation to the non‑resident trust’s year of income is calculated using the formula:
Start formula Adjusted section 99B amount times start fraction Eligible designated concession income over Total income end fraction end formula
where:
Adjusted section 99B amount means the adjusted section 99B amount.
Eligible designated concession income means the number of dollars in the amount, being so much of the income and profits of the trust estate of the non‑resident trust’s year of income as represents eligible designated concession income in relation to any listed country in relation to the non‑resident trust’s year of income.
Total income means the number of dollars in the income and profits of the trust estate of the non‑resident trust’s year of income.
if subparagraph (1)(b)(ii) applies—the extent to which the amount (in this paragraph called the adjusted section 99B amount), being so much of the section 99B amount as is attributable to the income and profits of the trust estate of the non‑resident trust’s year of income, represents income and profits that have not been subject to tax in a listed country in a tax accounting period mentioned in that subparagraph is calculated using the formula:
Start formula Adjusted section 99B amount times start fraction Untaxed income over Total income end fraction end formula
where:
Adjusted section 99B amount means the adjusted section 99B amount.
Untaxed income means the number of dollars in the amount, being so much of the income and profits of the trust estate of the non‑resident trust’s year of income as is not subject to tax in any listed country in a tax accounting period mentioned in that subparagraph.
Total income means the number of dollars in the income and profits of the trust estate of the non‑resident trust’s year of income.
For the purposes of subsection (7), an amount of income or profits of a trust estate is to be taken to be distributed if the amount is paid to, or applied for the benefit of (within the meaning of section 99B), a beneficiary of the trust estate.
Where, apart from this subsection, the amount of interest that would be payable under this section by a taxpayer in respect of the distributed amount of a non‑resident trust’s year of income, or in respect of the taxpayer’s portion of the distributed amount of a non‑resident trust’s year of income, is less than 50 cents, interest is not payable by the taxpayer under this section.
For the purposes of this section, the applicable rate of tax in relation to a taxpayer is:
if the taxpayer is a company (other than a company in the capacity of a trustee)—the corporate tax rate for the year of tax to which the assessment year of income relates; or
in any other case—the maximum rate specified in the table in Part I of Schedule 7 of the Income Tax Rates Act 1986 that applies for the assessment year of income.
Paragraph (10)(b) has effect as if the maximum rate specified as mentioned in that paragraph was increased by 2 percentage points for assessment years of income that correspond to the temporary budget repair levy years (within the meaning of section 4‑11 of the Income Tax (Transitional Provisions) Act 1997).
For the purposes of the application of this section to a taxpayer, the assessment year of income is:
if subsection (2) or (3) applies—the current year of income; or
if subsection (4) applies—the year of income referred to in subparagraph (4)(b)(i).
For a taxpayer who is not a full self‑assessment taxpayer for the assessment year of income, the Commissioner must make an assessment of the interest payable by the taxpayer under this section.
If:
a taxpayer is a full self‑assessment taxpayer for the assessment year of income; and
the taxpayer lodges a return for that year;
then:
the Commissioner is taken to have made an assessment of the interest payable by the taxpayer under this section for the year, equal to the amount specified in the return as the interest so payable; and
If any interest is so payable, the return must specify the amount: see section 161AA.
the assessment is taken to have been made on the day on which the return is lodged; and
the return is taken to be a notice of that assessment given to the taxpayer by the Commissioner on that day.
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