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    This chapter provides information on trusts, as reported on their trust income tax returns. A trust exists where a person, the 'trustee', is under an obligation to hold property or derive income for the benefit of another person or persons, known as 'beneficiaries'. This obligation usually arises under the express terms of a trust, but may also be imposed by court order or declaration, or by the operation of law. Although the trustees hold the legal title to the property, they must deal with it in accordance with the terms of the trust for the benefit of the beneficiaries.

    Beneficiaries can include public and charitable institutions, and the potential beneficiaries of a discretionary trust can include people not yet born.

    A trust is not a legal entity and generally does not pay tax in its own right. In general terms, it is the beneficiaries who are subject to tax on their share of the net income of the trust (or can claim a deduction for their share of any trust loss). Certain public unit trusts are taxed as companies, and are therefore not included in the statistics of this chapter.

    The trustee is generally only taxed on the proportion of the net income of the trust that is accumulated in the trust or that relates to certain types of beneficiaries (such as those beneficiaries who are under a legal disability). That is, broadly speaking, the trustee is taxed on that part of the net income of the trust for tax purposes that is not assessable to a beneficiary. The net income of the trust is generally assessable to the trustee or the beneficiaries in the income year in which it is derived by the trust.

    An annual tax return must be lodged for a trust, regardless of the amount of income derived by the trust, even if it derives nil income or incurs a loss for tax purposes.

    Overview

    For the 2009-10 income year:

    • 702,078 trusts lodged returns, a 6.4% increase from 2008-09
    • total net income or loss reported by trusts was $123.8 billion, a 19.5% increase from 2008-09
    • trusts reported total business income of $295.2 billion, a 5.8% increase from 2008-09
    • total trust business expenses were $285.5 billion, a 0.3% decrease from 2008-09.
     
      Last modified: 01 May 2012QC 25367