Issue
Can a 'trust distribution' made to the applicant be included in the calculation of the applicant's highest average salary (HAS) for reasonable benefit limit (RBL) purposes?
Decision
No. A 'trust distribution' made to the applicant cannot be included in the calculation of the applicant's HAS.
Facts
The applicant lodged a Transitional Reasonable Benefit Limit (TRBL) application form and now requests that the TRBLs be calculated on the basis that the HAS was understated in the original application.
The applicant requests that trust distributions received in the three years be included in the calculation of the HAS.
Reasons for Decision
The term 'salary' is defined in subregulation 47(1) of the Income Tax Regulations 1936 (ITR 1936) as: 'salary' , subject to subregulations (3) and (4), means salary, wages, commissions, bonuses, fees, allowances or gratuities paid to a person during a financial year, and includes: (a) subject to paragraph (k), other earnings; and (b) the amount that would be the value of a benefit to which section 57, 57A or 58 of the Fringe Benefits Tax Assessment Act 1986 applies if that benefit were not an exempt benefit; and (c) a payment made by a company by way of remuneration to a director of a company; and (d) in the case of a person who is an Australian citizen, or a resident of Australia- any amounts paid to the person from a source outside of Australia that would fall within this definition if they had been paid from a source in Australia; but does not include: (e) a distribution from a trust estate; or...
Paragraph (e) of subregulation 47(1) of the ITR 1936 specifically excludes from the definition of 'salary', a distribution from a trust estate. Consequently, the applicant's salary for the purposes of determining HAS does not include the trust distributions.