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Draft taxation determinations TD 2019/D6 and TD 2019/D7
Technical article

Draft taxation determinations TD 2019/D6 and TD 2019/D7

The Commissioner of Taxation has provided Pitcher Partners the opportunity to comment on two Draft Taxation Determinations (TD 2019/D6 and TD 2019/D7). The full submission is available below.

What are the Draft Taxation Determinations about?

TD 2019/D6 and TD 2019/D7 asks how the current tax legislation operates where a capital gain made by a resident trust (or a trustee of such a trust) is distributed to a non-resident beneficiary of the trust.

Why are we submitting comment?

Pitcher Partners has a client base that includes closely and privately held groups that often include trusts.  If these Draft Taxation Determinations are finalised, they will have a material effect on these groups.

What have we said in our submission back to The Commissioner of Taxation?

We have suggested that in their current form the Draft Tax Determinations are not consistent with Australian tax policy and that an existing limitation within the current legislation should be applied so that non-resident beneficiaries of resident trusts are not assessed on foreign sourced capital gains of a resident trust.

If the Commissioner does not apply this suggestion, we have proposed that an administrative practice be put in place to allow non-resident taxpayers certainty in accessing tax refunds, and, rather than applying the rulings in a retrospective manner, that the application date should be set allowing sufficient time for the Government to consider legislative change to clarify the ongoing operation of the law.

To read the full response made, you can access a full copy of the submission by clicking here.

This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

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Responses to queries submitted via this form (“Response”) are produced by Pitcher Partners Advisors Proprietary Limited and are prepared for the exclusive use and benefit of those who are invited, and agree, to participate in the CRITICAL POINT NETWORK service. Responses provided, or any part thereof, must not be distributed, copied, used, or relied on by any other person, without our prior written consent. Any information provided is intended to be of a general nature and prepared without taking into account your objectives, circumstances, financial situation or particular needs. Any information provided does not constitute personal advice. If you act on anything contained in a Response without seeking personal advice you do so at your own risk. In providing this information, we are not purporting to act as solicitors or provide legal advice. Any information provided by us is prepared in the ordinary course of our profession and is based on the relevant law and its interpretations by relevant authorities as it stands at the time the information is provided. Any changes or modifications to the law and/or its interpretation after this time could affect the information we provide. It is not possible to guarantee that the tax authorities will not challenge a transaction or to guarantee the outcome of such a challenge if one is raised on the basis of the information we provide. To the maximum extent permitted by law, Pitcher Partners will not be liable for any loss, damage, liability or claim whatsoever suffered or incurred by any person arising directly or indirectly out of the use or reliance on the information contained within a Response. We recommend you seek a formal engagement of our professional services to consider the appropriateness of the information in a Response having regard to your objectives, circumstances, financial situation or needs before proceeding with any financial decisions. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.
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