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Tax on funds received from an overseas Trust

Newbie

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Whilst working in PNG, I paid contributions to the AON Master Trust PNG, (a PNG Superanuation company) for several years.  During all that time I was a Tax resident of Australia.  I am looking for information on the the tax implicatons when the monies from the fund is brought to Australia.  I understand that Professional advice should be obtained, and will be, but in the interim I would like to gain a better understanding.

 

From the ATO website @  ATO Authorisation Number: 1051618374747   ("Edited version of private advice" - NOT BINDING)  a person seeking ATO advice with similiar circumstances was advised that the AON Master Trust PNG is NOT viewed by the ATO as foreign superanuation fund, but viewed as a Trust.  That advice states that the general tax rules relating to trust income apply, namely 99B of of the ITAA 1936.

 

Whilst the advice ran for several pages, for that persons situation, the final paragraph states:

"We confirm that a withdrawal of an amount that represents amounts deposited by you and your employer into the Trust would come within paragraph 99B(2)(a) of the ITAA 1936. Distributions, to the extent that they come within subsection 99B(2) of the ITAA 1936, would be excluded from amounts assessable under subsection 99B(1) of the ITAA 1936.

 

However we also confirm, the income accumulated in the Trust (paid to you as a resident taxpayer) that is normally taxable in Australia and had not previously subjected to tax in Australia would be assessable to you under subsection 99B(1) of the ITAA 1936".

 

QUESTION:

Does this advice suggest that:

A) the funds withdrawn from AON (The Trust) previously paid by either the employee or the employer would be EXCLUDED from being accessable for tax purposes (ie one would not pay tax on the deposited funds withdrawn), and that:

B) the interest accrued (income accumulated) by the AON (The Trust) account over the years would BE accessable for Tax purposes (ie one would pay tax on the whole of the interest earned by the deposits less fees and that Countries Tax).

 

The answer might be seen as obvious, but to this writer, delving into paragraph 99B(2)(a) and 99B(1) is somewhat confusing.  Thanks in advance for your insight.

 

 

 

 

 

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Most helpful response

ATO Community Support

Replies 1

Hi @AFSEQ,

 

Wow, what a deep dive you've done on this! It's fantastic to see you're making so sure to have all the information before making a financial choice.

 

You've got the right idea - you definitely need to request a private ruling of your own, as private rulings are exactly that - private, so only the applicant can rely on it for advice.

 

Your interpretation is correct.

 

The first paragraph you've given refers to funds withdrawn by you that were placed there by super-esque mechanisms, and that they would not be assessable income in Australia.

 

The second paragraph you've quoted states that all earnings that come from in the trust (generally referred to as "associated earnings" for super) would be assessable income in Australia.

 

You can find out how to apply for a private ruling on our website.

2 REPLIES 2

Most helpful response

ATO Community Support

Replies 1

Hi @AFSEQ,

 

Wow, what a deep dive you've done on this! It's fantastic to see you're making so sure to have all the information before making a financial choice.

 

You've got the right idea - you definitely need to request a private ruling of your own, as private rulings are exactly that - private, so only the applicant can rely on it for advice.

 

Your interpretation is correct.

 

The first paragraph you've given refers to funds withdrawn by you that were placed there by super-esque mechanisms, and that they would not be assessable income in Australia.

 

The second paragraph you've quoted states that all earnings that come from in the trust (generally referred to as "associated earnings" for super) would be assessable income in Australia.

 

You can find out how to apply for a private ruling on our website.

Newbie

Replies 0

BlakeATO

 

Thanks very much for taking the time to post a very informative reply, it is exactly written in the style of information that I was after (ie: easier to read and understand than the "gobbledyg*ok" of Tax Leglislation that mere phlebs like myself struggle with).

 

And your information regards Private Rulings is great advice not only for myself, but for those in the myiard of the different situations from the one that I described.

 

Cheers