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Re: Is a foreign trustee tax resident if the directors, shareholders and CMC are also resident?

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Newbie

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  1. If a trust makes a capital gain on the sale of shares and distributes the capital and income to a beneficiary (who is Australian resident), is he entitled to a 50% CGT exemption?
  2. Consider the case where the corporate trustee is a foreign company (incorporated overseas), but the director, shareholder are citizens and residents of Australia and the CMC (centre of management control) is in Australia.
  3. According to the ATO*, in case 2, the foreign trustee would be Australian tax resident for tax purposes so presumably the beneficiary is still entitled to the 50% CGT discount – correct?
  4. Would there be any negative tax outcomes from this structure?

*https://www.ato.gov.au/Business/International-tax-for-business/In-detail/Residency/Residency-requir...

1 ACCEPTED SOLUTION

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Best answer

Community Manager

Replies 0

Hi @rodneydanger,

 

Thanks for your patience, our specialists have given us the following information.

 

This Tax determination 2017/23 talks about foreign trusts and the application of CGT discounts to beneficiaries.  


That ATO view applies to a foreign trust for CGT purposes; we don’t take into consideration the nature of incorporation location of the trustee.


We cannot comment about tax outcomes in other countries for entities incorporated in other country.  


Which structure you decide to use is a decision that we cannot assist with, you would need to make your own decision.


If you require further information we would suggest contacting our early engagement area.

 

Thanks

 

KylieS

 

2 REPLIES 2

Community Manager

Replies 0

Hi rodneydanger,

 

We are going to look into this one for you and will get back to you as soon as we can.

 

Thanks

 

KylieS

Highlighted

Best answer

Community Manager

Replies 0

Hi @rodneydanger,

 

Thanks for your patience, our specialists have given us the following information.

 

This Tax determination 2017/23 talks about foreign trusts and the application of CGT discounts to beneficiaries.  


That ATO view applies to a foreign trust for CGT purposes; we don’t take into consideration the nature of incorporation location of the trustee.


We cannot comment about tax outcomes in other countries for entities incorporated in other country.  


Which structure you decide to use is a decision that we cannot assist with, you would need to make your own decision.


If you require further information we would suggest contacting our early engagement area.

 

Thanks

 

KylieS