Section 100A Reimbursement Agreements

One of the issues that continues to upset tax advisors is fiduciary distribution, particularly due to the dramatic increase in audit activities regarding Section 100A of the Income Tax Assessment Act 1936 and repayment agreements. This information is for trustees and beneficiaries of a trust for whom a beneficiary`s right (who is not subject to a legal impediment) to fiduciary income arises from a repayment agreement. However, Article 100A does not apply to agreements, arrangements or arrangements concluded in the course of an ordinary family or business activity. Reimbursement agreements do not include agreements entered into in the context of ordinary family transactions. “I`m going to give a number of easy-to-understand examples: what is a `repayment agreement`? What are the consequences? What are the possible exceptions? What are the potential benefits if Article 100A is not applicable?┬áTom said it. Section 100A of ITAA36 is a provision to combat counterfeiting. It aims to prevent trust from being derogated from by a repayment agreement. If, as part of a Division 7A loan (or an unpaid right held under the conditions described in PS LA 2010/4), the funds are recovered from the Trust and are withheld as working capital in the trust, the ATO would not consider this agreement to be a repayment agreement in the absence of other factors.

October 6, 2021