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VIDEO · 12 OCTOBER 2022

It Depends – Capital distributions from foreign trusts

Cooper Grace Ward
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Link to video & transcript about distributions from foreign trusts and the amount that is subject to tax under section 99B.

AustraliaTax
Fletch Heinemann
Fletch Heinemann
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In this edition of 'It depends', partner Fletch Heinemann talks about distributions from foreign trusts and the amount that is subject to tax under section 99B.

Video Transcript

Welcome to It Depends. Today we're talking about distributions from foreign trusts.

What is section 99B?

In Australia we have a section called section 99B, which applies when there's particular distributions of capital from foreign trusts. Now section 99B is a particularly difficult section for income tax purposes because unlike most of our provisions it taxes capital amounts, not income. It was introduced in the 1970s to deal with the specific avoidance problem that was happening at the time where Australian residents had the ability to set up foreign trusts and accumulate income in those foreign trusts and then basically not pay any tax when those capital amounts were distributed to them as Australian resident beneficiaries. Now that all pre dated CGT and it also pre dated the

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