However, an agreement reached in the context of an ordinary family or business transaction is excluded from the definition of a repayment agreement. The ATO is again interested in the refund agreements that have been confirmed in its “What Attracts Our Attention” list of October 27, 2015. This follows the ATO`s ongoing focus on the repayment agreements set out in its guidelines published in July 2014. This time, however, the ATO argues that certain fiduciary distributions, which can be interpreted as part of legitimate tax planning, do fall within the scope of the repayment agreement provisions, with particularly serious consequences. The ATO says that the guide was provided at the request of practitioners and developed in relation to them. It was designed to fill a gap in ATO`s information products. The guide also includes FAQs, z.B the existence of trust at the time of agreement; Beneficiary of the repayment agreement; Time to change. Therefore, consideration should be given to the possible application of 100A to these distributions, particularly if they are not paid for a period of time. The ATO has unlimited time to conduct an assessment in accordance with Section 100A. 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. If this provision applies, trust distributions are subject to the administrator`s maximum tax rate under Section 99A. In addition, the ATO has unlimited time to conduct a Section 100A assessment.
The entitled person is not necessarily a party to the repayment agreement. The court of Idlecroft Pty Ltd v. European Commissioner for Taxation 2005 ATC 4647; 60 ATR 224 stated that the provision that the agreement must be concluded “with respect to a beneficiary” does not require the beneficiary to be a party to the agreement. In this case, the beneficiaries` rights were generated by the implementation of the fiduciary act, but Section 100A was considered applicable because the relevant provisions of the facts were triggered as a result of the restitution agreement. If the word is correct on the street, section 100A will soon be the next big goal of the ATO for its audits on trusted distributions. Overall, Section 100A may apply when a beneficiary is currently entitled to fiduciary income, but another beneficiary (or agent) benefits from that fiduciary income – and one of the purposes of the agreement is to pay less tax. Expect agreements involving EUS, distribution to adult children and distribution of loss units to fall under the ATO microscope. However, there is a certain pause: a “normal family or business business” is excluded from Section 100A. Section 100A does not apply to the income of a minor beneficiary. 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. Where Division 7A applies to an unpaid fee created on December 16, 2009 and the funds withheld are used as working capital for the trust, the ATO will generally not seek to devote compliance resources to the consideration of whether Section 100A would also apply to that agreement.