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Resources on demand

2022 Tax Masterclass – Receiving capital from foreign trusts? How to advise on the tax issues caused by section 99B.

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We have recently seen an increase in tax problems where Australian residents receive capital distributions from foreign trusts.


Sometimes this has happened when a trust has been established overseas, beneficiaries of the trust immigrate to Australia, and then want to receive a distribution from the trust.

In other cases, Australian residents have ‘inherited’ amounts from overseas relatives – sometimes through a deceased estate, sometimes as capital from a discretionary trust.


The effect of section 99B is particularly nasty because it taxes the capital – not the income – of the foreign trust. It also potentially applies to loans.

In this session, partner Fletch Heinemann will work through a series of case studies to examine:

  • how to identify when section 99B will apply
  • the types of trusts and funds that are caught by section 99B
  • how to calculate the amount taxed under section 99B, taking into account the ATO’s position on capital losses and net capital gains
  • when foreign income tax offsets will be available
  • the interaction of section 99B and the residency of the trust
  • alternatives that would result in section 99B not applying.

After this session, you should be in a position to advise clients who expect to receive a capital distribution from a foreign trust on the tax consequences, and how to manage any tax risk.