Chartered Accountants Australia and New Zealand (CA ANZ), together with other accounting and tax bodies (together, the Joint Bodies), have lodged a submission on:

• the draft Taxation Determination (TD 2024/D2) Income tax: factors taken into account in applying the exceptions to section 99B of the Income Tax Assessment Act 1936 contained in paragraphs 99B(2)(a) and 99B(2)(b) (Draft TD)
• the draft Practical Compliance Guideline (PCG 2024/D1) Section 99B of the Income Tax Assessment Act 1936 (Cth) – ATO compliance approach (Draft PCG).

Subject to certain exceptions, section 99B provides for the inclusion in a beneficiary's assessable income, of amounts (being trust property) paid to, or applied for the benefit of, that beneficiary, where the beneficiary was an Australian tax resident at any time during the income year in which the amount was paid or applied.

The Joint Bodies welcome the ATO’s draft guidance on section 99B which will help clarify when section 99B may need to be considered by Australian resident beneficiaries of non-resident trusts, and the expectations regarding record-keeping and substantiation, including the compliance approach for certain low-risk arrangements.

We welcome the ATO’s approach to only allocate compliance resources to the application of section 99B to trusts that at some time have been a non-resident trust.

The compliance saving measures contained in the Draft PCG will assist taxpayers in complying with section 99B. Nevertheless, we have provided some comments requesting some further clarity in relation to a number of the examples in the Draft PCG.