For future fiduciary distributions, consultants must take into account the position of the ATO published since 2014. In practice, this may mean whether the model of past distributions made as part of a client`s tax planning strategy can be pursued – or if the risk of the ATO wanting to enforce the provisions of the repayment agreement is too high. Section 100A only applies if there is a restitution agreement within the meaning of s100A. Repayment agreements do not include agreements made in ordinary family matters. The court added that s 100A can apply if an agreement reduces or eliminates the tax debt of a third party. This information is intended for agents and beneficiaries of a trust for which a beneficiary`s (not legal) right to the trust`s income comes from a repayment agreement. However, to the extent that a beneficiary`s right arises from a repayment agreement, it is not taken into account under Section 100A of the Income Tax Assessment Act 1936 (ITAA 1936). This means that net income that would otherwise be estimated to the beneficiary (or agent on his behalf) is instead entrusted to the agent at the maximum tax rate. A substantial exclusion from the definition of a „repayment agreement“ is an agreement made in the context of an ordinary business or family transaction. An area of particular concern to advisors should be taken care of by clients who have adopted washing facilities. The ATO guidelines highlight in the diagram following a specific agreement that the ATO considers to be a refund agreement. Section 100A of ITAA36 is an anti-avoidance provision.
It is intended to prevent trust from being suppressed by a refund agreement. The Bundesgerichtshof has decided that s100A does not apply only to existing trust agreements. And that the section may apply to trusts created on the basis of repayment agreements elsewhere. Basically and in the event of cancellation, there is a refund agreement when: Section 100A does not apply to the income right of a beneficiary who is a minor. Moreover, even after William turned 18 (and ceased to be a minor), the ATO accepts that this is an ordinary family business and therefore does not consider the agreement to be a refund agreement. This agreement would generally constitute a repayment agreement if it were envisaged that the beneficiary who is currently entitled to fiduciary income would pay less tax than the person who actually benefited from the economic benefits of that income would have been. The benefit under a repayment contract may be the payment of money, the transfer of ownership (including selection measures) or an estate, interest, rights or powers in ownership or on the provision of services. To be a refund agreement, the purpose of the agreement must be to reduce or avoid tax. In FCT v. Prestige Motors Pty Ltd (1998) 82 FCR 195, the Tribunal considered two agreements. He was the agent of an auto retail store.
The Tribunal considered these two agreements to be repayment agreements, as they are not explained as ordinary business transactions. In the recently withdrawn PS LA trust repayment agreement, ATO officials are required to specify with particular precision the nature and scope of the so-called repayment agreement, indicating that the agreement leaves no uncertainty and may be interpreted in secular terms as a remarkably obvious „confidence tripping“ system. The result of the repayment agreement is that the distribution benefits a non-profit party (it benefits the agent).