Discretionary trusts, non-TAP gains, and foreign beneficiaries
Source: Taxation In Australia Journal Article
Published Date: 1 Jun 2020
The Australian tax system differentiates between residents and non-residents. In the context of fairness, those who contribute to the system should also benefit from the system. As non-residents are typically unable to benefit from government spending in the same way as residents, many would consider it only fair that these individuals are not subject to the same scope of taxation as those who reside in Australia. With this in mind, parliament introduced Div 855 ITAA97. The effect of Div 855 is relatively simple. It seeks to narrow the range of assets that are subject to Australian capital gains tax for foreign residents. While the intent of the provisions is apparent, that is, foreign residents should not be subject to Australian tax on non-taxable Australian property (TAP) assets, the complexity arises where a foreign resident receives a distribution of a non-TAP capital gain via a resident discretionary trust.
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- Published By: Adam Crowley
- Published On:1 Jun 2020
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