Issue
Can income of a non-resident trust estate be attributed under section 102AAZD of the Income Tax Assessment Act 1936 (ITAA 1936) to a trustee of the deceased estate of a natural person who was an attributable taxpayer in relation to a non-resident trust estate, in the year of the person's death?
Decision
No, the income of a non-resident trust estate cannot be attributed under section 102AAZD of the ITAA 1936 to the trustee of the deceased estate (the executor) of a person who transferred property or services to a non-resident trust, because the executor is not an attributable taxpayer.
Facts
A natural person (the taxpayer) was an attributable taxpayer in relation to a non-resident trust estate in a particular year of income. The taxpayer died part way through the financial year (1 July to 30 June).
Reasons for Decision
An entity is an attributable taxpayer in relation to a year of income if the entity has transferred property or services to a non-resident trust (sub-subparagraph 102AAT(1)(a)(i)(C) or sub-subparagraph 102AAT(1)(a)(ii)(B) of the ITAA 1936).
The executor of the estate of a deceased attributable taxpayer is generally not an attributable taxpayer unless the executor has transferred property or services to a non-resident trust estate through the exercise of a power of appointment or of a discretion by the executor.
There are no 'successor' rules for the case of the death of a natural person who has transferred property or services. That is, no provision deems an executor to be an attributable taxpayer when a previous transfer of property or services was made by the deceased taxpayer.
In the absence of 'successor' rules, the executor of the deceased estate, having a separate legal personality to the taxpayer, cannot be subject to attribution by virtue of a previous transfer of property or services by the taxpayer.
Amendment History
Date of Amendment Part Comment 24 October 2014 Issue Insert 'estate' after 'non-resident trust' Facts Change to consistent use of past tense Reason for Decision Reword second paragraph for clarity
Date of Amendment | Part | Comment
24 October 2014 | Issue | Insert 'estate' after 'non-resident trust'
Facts | Change to consistent use of past tense
Reason for Decision | Reword second paragraph for clarity