1 Is Person B treated as an agent of Person C for Australian income tax purposes under section 960-105?
No Question 2 Will Person B (in the capacity as administrator of Person A's deceased estate) be treated, for Australian income tax purposes, as a trustee of a trust estate under Division 6? Answer Yes Question 3 Will the Commissioner form the opinion that it's unreasonable that section 99A applies to assess Person B (in the capacity as administrator of Person A's deceased estate) on net income of the trust estate? Answer Yes Question 4 Will interest income and dividend income Person B is assessed on (in the capacity as trustee) be excepted trust income under section 102AG (where Person C is made presently entitled to that income before turning 18)? Answer Yes This ruling applies for the following period : 1 July XXXX to 30 June YYYY
1. Person A resided and was domiciled in the Netherlands at Person' A's death. 2. Person B is an Australian citizen and resident. 3. Person C is Person A's child and is a foreign resident. 4. Person A's entire estate was in the Netherlands and had no assets in Australia. 5. Person C is the sole beneficiary of Person A's last will. 6. Person A's estate will be administered for Person C until Person C is 21 years. 7. Under Dutch law, the testamentary administration of an estate isn't a testamentary trust. 8. Person B accepted appointment as sole executor and sole administrator of Person A's will. 9. After all the estate assets had been sold and all its debts and liabilities paid, Person B's (Australian) bank account received the residual estate funds. 10. Person B has used most of the estate funds to buy shares in Australian public companies in Person B's own name, and the residual funds remain in an Australian bank account in Person B's name.
11. Person B expects that over the ruling period the estate funds will earn income from bank interest, dividends from shares, and capital gains from selling shares. 12. Person B supported the ruling application with a copy of a translation of Person A's will. We treated this document as being incorporated in the facts and circumstances of the ruling. Assumptions Person B, in Person B's capacity as administrator of Person A's deceased estate, won't: • acquire money or property from other sources (other than under Person A's will) • derive income from any sources other than investments of money or property derived from Person A's will, or the sale of that property.
Income Tax Assessment Act 1936 section 6 section 97 section 98 section 99 section 99A section 102 section 102AG Income Tax Assessment Act 1997 section 960-105
In these reasons: • unhyphenated provisions (e.g. section 6, section 102AG) are in the Income Tax Assessment Act 1936 • hyphenated provisions (e.g. section 960-105) are in the Income Tax Assessment Act 1997 • Division 6 and Division 6AA are both in the Income Tax Assessment Act 1936. Question 1 Is Person B treated as an agent of Person C for Australian income tax purposes under section 960-105? Answer No Summary 13. Person B won't be treated as Person C's agent, because under Australian law Person B has legal title to the assets in Person A's estate. Explanation Section 960-105 may treat an Australian entity as agent for an overseas principal where the agent holds the principal's money. 14. Sections 995-1 and section 6 say that the Income Tax Assessment Act 1997 and the Income Tax Assessment Act 1936 apply to some entities that aren't agents in the same way as the Acts apply to agents, referring to section 960-105. 15. Subsection 960-105(1) says this Act applies to an entity as if the entity were an agent of another entity (known as the principal) if: a) the principal is outside Australia, and
b) the entity is in Australia and, on behalf of the principal, holds money of the principal or has control, receipt, or disposal of money of the principal. 16. Subsection 960-105(2) says the Act, or a provision of this Act, applies to an entity as if the entity were an agent of another entity if the Commissioner determines in writing that the entity is the agent or sole agent of the other entity for the purposes of this Act or of that provision. Section 960-105 doesn't apply to treat Person B as Person C's agent because under Australian law Person B has title to the estate assets. 17. Person B is in Australia and Person C is outside Australia. 18. This means section 960-105 would apply to treat Person B as an agent of Person C if Person B, on behalf of Person C, held Person C's money, or had the control, receipt, or disposal of Person C's money.
19. We don't think this condition is met. Person B holds the money and shares forming Person A's deceased estate in Person B's own name (i.e. Person B in a personal capacity). Under Australian law, Person B has legal title to Person A's deceased estate, subject to an obligation to deal with the estate assets on behalf of Person C. Therefore, we don't think Australian law would recognise Person C as the legal owner of the estate assets. It isn't Person C's money yet and won't be until the administration concludes when Person C turns 21. This means Person B (as estate administrator) doesn't hold Person C's money, or have the control, receipt, or disposal of Person C's money. 20. Since the condition about holding, controlling, receiving, or disposing of the principal's money isn't met, subsection 960-105(1) doesn't apply to treat Person B as Person C's agent.
21. We don't think how Dutch law characterises a fiduciary administration is relevant to this question. Since all estate money and assets are in Australia, and recorded in Person B's name, we think Australian law, rather than Dutch law, will determine whether Person B holds (or has the control, receipt, or disposal of) Person C's money for the purposes of section 960-105. 22. We don't see any reason to make a determination under subsection 960-105(2). Person B has title to estate assets, and Person C is a beneficiary under the estate, so Person B would be treated as a trustee of a trust estate under Division 6 for reasons we explain in the reasons for our answer to Question 2. We don't see any reason to depart from that treatment by determining that Person B is instead an agent of Person C. 23. Since subsection (1) doesn't apply, and we haven't made a determination under subsection (2), section 960-105 doesn't apply to treat Person B as an agent. Question 2 Will Person B (in the capacity as administrator of Person A's deceased estate) be treated, for Australian income tax purposes, as a trustee of a trust estate under Division 6? Answer Yes Summary
24. Division 6 applies to Person B because Australian tax law will treat Person B as the trustee of a resident trust estate. Explanation Division 6 assesses trustees and beneficiaries of trust estates on the net income of a trust estate. 25. Division 6 assesses trustees and beneficiaries of trust estates on the net income of a trust estate. We'll summarise the general effect of the relevant provisions. • Beneficiaries who are presently entitled to a share of the trust income, and aren't under a legal disability, are assessed on a share of the net income of the trust estate. See section 97. • Where the beneficiary is presently entitled but under a legal disability, the trustee is assessed instead. See section 98. • Sections 99 and 99A assess the trustee of a resident trust estate on net income that isn't assessed under section 97 or 98, and also doesn't represent income to which a beneficiary is presently entitled that's attributable to both a) a period where the beneficiary was a non-resident and b) foreign-sources.
• Subsection 95(2) says a trust estate shall be taken to be a resident trust estate if the trustee was a resident, or central management and control of the trust estate was in Australia, at any time during the income year. 26. ATO guidance in TR 2012/D1 [1] says: • 'trust estate' while not defined, is generally taken to be trust property (or estate vested in a trustee) [83-84] • 'presently entitled' means a present legal right to demand and receive payment. [107] 27. Section 6 says 'trustee' in addition to every person appointed or constituted trustee by act of parties, by order, or declaration of a court, or by operation of law, includes: a) an executor or administrator, guardian, committee, receiver, or liquidator; and b) every person having or taking upon himself the administration or control of income affected by any express or implied trust, or acting in any fiduciary capacity, or having the possession, control, or management of the income of a person under any legal or other disability.
28. The general law meaning of trustee covers a person (the trustee) who holds property (the trust property) for another person (a beneficiary) while under a personal obligation to deal with that property for the benefit of beneficiaries. [2] Person B is a trustee of a trust estate under Division 6. 29. We think Person B is a trustee of Person A's deceased estate for Australian tax law purposes. Person B is a trustee under section 6 as the executor or administrator of Person A's deceased estate. Further, Person B is a trustee at general law, because Person B has legal title to the cash and shares forming Person A's deceased estate but is obliged under Person A's will to hold the estate assets on Person C's behalf until Person C turns 21. The estate property would be property of the trust estate for Division 6 purposes. Person B is an Australian resident, so the trust estate will be a resident trust estate under subsection 95(2). Division 6 will apply to work out the tax treatment for income from the estate assets. Question 3
Will the Commissioner form the opinion that it's unreasonable that section 99A applies to assess Person B (in the capacity as trustee of Person A's deceased estate) on net income of the trust estate? Answer Yes Summary 30. The Commissioner will form the opinion that it's unreasonable for section 99A to apply to Person B, because the administration resulted from Person A's will, and no property came from another source. Explanation Section 99A doesn't apply where the Commissioner forms the opinion that it's unreasonable that the section applies. 31. Sections 99 and 99A assess the trustee on net income that isn't assessed under section 97 or 98, [3] and also doesn't represent income to which a beneficiary is presently entitled that's attributable to both a) a period where the beneficiary was a non-resident and b) foreign-sources. 32. The effect of sections 99 and 99A is to apply the top marginal rate unless the Commissioner forms the opinion that this is unreasonable. • Section 99A has the effect of assessing the trustee at the top marginal rate. [4]
• Section 99 has the effect of assessing the trustee as if the trustee were an individual, potentially without the benefit of the tax-free threshold. (For a deceased estate, the tax-free threshold may be available if the deceased person died less than three years before the end of the relevant income year.) [5] • Section 99 only applies when section 99A doesn't apply. • Subsection 99A(2) says section 99A doesn't apply where, for listed types of trust estates, the Commissioner is of the opinion that it would be unreasonable that section 99A should apply. The types of estates relevantly include trust estates that result from a will or an order of a court that varied or modified the provisions of a will. 33. Subsection 99A(3) says in forming an opinion for the purposes of subsection (2), the Commissioner shall have regard to listed circumstances. Broadly, they include the circumstances in which the trust estate acquired or was lent property, derived income, or received benefits, rights, or privileges. The Commissioner shall have regard to other matters, if any, as he or she thinks fit.
The Commissioner has formed the opinion that it's unreasonable for section 99A to apply. 34. To the extent Person C (as the sole beneficiary) isn't presently entitled to net income of Person A's deceased estate, all income must be assessed to Person B under section 99A unless the Commissioner forms the opinion that it's unreasonable for the section to apply. 35. The Commissioner has formed the opinion that it's unreasonable to apply section 99A to Person B as trustee of Person A's deceased estate. We characterise Person B's administration as a trust estate that resulted from Person A's will. The only property in the trust estate is money from Person A's deceased estate, and shares that Person B bought out of that money. The trust estate is being maintained for a single beneficiary (Person C) until that beneficiary turns 21. We see no tax avoidance purpose. We think it's appropriate that section 99 should apply in this situation, rather than section 99A. 36. Since the Commissioner has formed the opinion under subsection 99A(2), section 99 rates will apply rather than section 99A. Question 4
Will interest income and dividend income Person B is assessed on (in the capacity as trustee) be excepted trust income under section 102AG (where Person C is made presently entitled to that income before turning 18)? Answer Yes Summary 37. Interest income and dividend income derived from investments of property Person B received under Person A's will (and to which Person C is made presently entitled before Person C turns 18) will qualify as excepted trust income under section 102AG. This question and the answer won't be relevant if the trustee chooses not to make Person C presently entitled to trust income before Person C turns 18 (and instead accumulates that income). Explanation Division 6AA taxes trustees on a child's share of trust income at the top marginal rate unless the income qualifies as 'excepted trust income' under section 102AG'. 38. Division 6AA has rules that, in effect, tax income derived by children (either directly or as a share of trust income to which they are made presently entitled) at the top marginal rate, [6] unless the income falls within certain excepted categories.
39. Division 6AA isn't relevant where a child beneficiary isn't presently entitled to trust income (for example, because the trustee chooses to accumulate the income). 40. For trust income, where the beneficiary is a prescribed person (essentially meaning a person under 18), [7] subsection 102AG(1) says Division 6AA applies to so much of the beneficiary's share of the net income of the trust estate as (in the Commissioner's opinion)is attributable to assessable income of the trust estate that isn't excepted trust income. 41. One relevant category of excepted trust income is income derived by the trustee of a trust estate from the investment of any property that devolved for the beneficiary's benefit from the estate of a deceased person: see subparagraph 102AG(2)(d)(i). 42. Another category of excepted trust income is income derived by the trustee of a trust estate from the investment of any property that, in the Commissioner's opinion, represents accumulations of assessable income that was excepted trust income: see paragraph 102AG(2)(e). Income Person B derives from Person A's estate will qualify as excepted trust income under section 102AG.
43. Income Person B derives from Person A's estate would be excepted trust income under section 102AG. The property in Person A's estate is either a) money that devolved upon Person B for Person C's benefit from Person A's deceased estate, or b) shares bought with that money. Any bank interest or dividends from this property would qualify as being either income derived by Person B: • from the investment of property that devolved for the Person C's benefit from the estate of a deceased person, or • from the investment of property representing accumulations on that property. 44. We've assumed that Person B, in Person B's capacity as administrator, won't: • acquire money or property other than under Person A's will, or • derive income from sources other than investments of property, or the sale of property, received under Person A's will. 45. Therefore, while Person C is a prescribed person, any bank interest and dividends to which Person C's made presently entitled will qualify as excepted trust income under section 102AG.
46. This question, and our answer, will only be relevant if Person C becomes presently entitled to trust income at any point before Person C turns 18. > [1] Draft Taxation Ruling TR 2012/D1 Income tax: meaning of 'income of the trust estate' in Division 6 of Part III of the Income Tax Assessment Act 1936 and related provisions. [2] Heydon, JD and Leeming, MJ (2016) Jacob's Law of Trusts in Australia, 8 th edn, LexisNexis Butterworths Australia ('Jacob's Law of Trusts') at [1.04 and 1.10] accessed at https://advance.lexis.com on 19 August 2025. [3] As mentioned in our answers to Question 2 (at paragraph 25), section 97 assesses presently entitled beneficiaries who aren't under a legal disability, while section 98 assesses trustees where beneficiaries are presently entitled but are under a legal disability. [4] See subsection 12(9) of the Income Tax Rates Act 1986. [5] See subsection 12(6) of the Income Tax Rates Act 1986 read with Part 1 of Schedule 10 to that Act . For more information about the taxation of deceased estates, see the ATO website at
https://www.ato.gov.au/individuals-and-families/deceased-estates/doing-trust-tax-returns-for-the-deceased-estate/tax-rates-deceased-estate or visit https://www.ato.gov.au and search for QC 49909. [6] See sections 13 and 15 of the Income Tax Rates Act 1986 read with Schedules 11 and 12 to that Act. [7] Broadly, a 'prescribed person' is a minor, unless falling within a category of 'excepted persons'. See section 102AC.