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Section 99B

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Section 99B can treat payments to, or amounts applied for the benefit of, resident beneficiaries (including loans) as assessable income, subject to some reductions to the assessable amount (see the 2019 case, Campbell).

Most notably, amounts drawn from the corpus of the trust are not assessable except to the extent they are attributable to amounts that would have been taxable had they been derived by a resident taxpayer.

The potential application of s 99B is often overlooked, but in our experience it is a provision that the ATO is relying on more than has historically been the case — especially since Taxation Determinations TD 2017/23 and TD 2017/24.  Those TD’s set out the ATO’s position that distributions of capital gains from non-taxable Australian property by a foreign trust to a resident are treated as assessable income under section 99B and not as a capital gain (for more information, click here).

To view Campbell and Commissioner of Taxation [2019] AATA 2043, click here.

For more information, you can view our recent webinar on Section 99B (presented by Partner Jonathan Ortner and Senior Associate Peter Scott) below.