The AAT has held that 2 minor beneficiaries of a trust were not excepted persons and the income that was distributed to them in the 2012 income year was not excepted trust income.
The director of a trust settled a workers’ compensation claim in 2010 and received $400,000 under that settlement. He contributed the entire sum to a Trust. For the 2012 income year, the Trust returned net income of $16,433. It comprised $11,133 interest and $5,718 of excepted income from the worker’s compensation payment. The Trust made a number of distributions to its beneficiaries in the 2012 income year including $2,788 to each of Beneficiary A and Beneficiary B, both of whom were minors (ie persons under the age of 18). On 11 March 2013, the Commissioner issued notices of assessment to Beneficiaries A and B assessing both to be liable to pay $1,254.60 tax ie at a rate of 45%. The Tribunal upheld the Commissioner’s decision.
Read the full article in Issue 50 for 2014 of the Weekly Tax Bulletin. For further details about the Bulletin, click here.