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Taxing times for foreign resident beneficiaries

Taxing times for foreign resident beneficiaries

Neil Lamb and Steve Plant discuss two draft taxation determinations which may disincentivise foreign resident investors.


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The Australian Taxation Office (ATO) has released two draft taxation determinations which may have the effect of bringing non-residents into the Australian tax net, notwithstanding that there is no gain sourced in Australia. This would seem to act as a disincentive to foreign resident investors and may provoke restructuring of current holdings to preserve the tax profile of current investments. There may also be wider consequences for managed investment trusts that do not benefit from deemed fixed trust status as Attribution Managed Investment Trusts (AMITS).

In a nutshell

The ATO has stated that it does not consider that foreign residents are entitled to disregard capital gains on non-taxable Australian property (non-TAP) when distributed by an Australian resident non-fixed trust in Draft Taxation Determination TD 2019/D6.

An associated Draft Taxation Determination TD 2019/D7 concludes that the source concept is not relevant in determining whether the gain is assessable to the non-resident or trustee.

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