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24
May
  • Posted By : Administrative
  • Category: Income
  • Comments: 0

WHAT ARE DISENTITLING EVENT? EXPLAIN THE DISENTITLING EVENTS IN CASE OF TRUSTS?

'Disentitling event' occurs when a taxpayer who would otherwise be eligible to elect to spread abnormal income over a period of years may become ineligible.
A disentitling event happens if: 

  • You die;
  • You become bankrupt or insolvent;
  • You have permanently departed from Australia; 
  • You carry on a primary production business to which the election relates.

Disentitling events in case of trusts
In the case of a trust, disentitling event happens at either the trustee or beneficiary level before the trustee has made a relevant election, then he/she cannot make the election.

The disentitling event happens at the trustee or beneficiary level after the trustee has made an election, the trust's assessable income for the income year must include-

  •   Income from the disposal or death of livestock; 
  • The insurance recovery for the loss of livestock or trees.

The Taxation Commissioner may make a determination that certain disentitling events have not happened if it is fair and reasonable to do so having regard to certain factors and the disentitling event that occurred at the beneficiary level.

You can make an application to Taxation Commissioner to make a determination that certain disentitling events did not happen at the beneficiary level. However, there is no specific application form. You must submit it in a written format that may allow you to make an election, or continue with an existing election.


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