Working out the attributable income of a non-resident trust estate
To determine the attributable income of a non-resident trust estate you must first work out its net income. The net income of a trust estate is worked out as though the trust estate were an Australian resident and taxpayer. The foreign loss quarantining rules will, for instance, apply when working out the net income of the trust estate.
In working out the net income of a non-resident trust estate, you need to identify whether it is a broad-exemption listed country trust estate.
If it is a broad-exemption listed country trust estate, only the trust's eligible designated concession income is taken into account when working out the net income. The balance of the income of the trust estate is treated as exempt income.
If it is not a non-broad-exemption listed country trust estate, all its income or gains are included in working out its net income.
A non-resident trust estate is treated as a broad-exemption listed country trust estate if all the income of the trust estate - other than eligible designated concession income - is either subject to tax in a broad-exemption listed country or is assessable in Australia in the hands of the trustee or a beneficiary.
For income years commencing before 1 July 1997, the calculation of attributable income for listed country trust estates was the same as that described above for broad-exemption listed country trust estates. The list of countries used prior to 1 July 1997 is in attachment A of appendix 1.
Amounts that may be excluded from attributable income
In determining the attributable amount, the net income of a non-resident trust estate is reduced by the following amounts to the extent they relate to amounts included in the net income of the trust estate:
- amounts that have been included in the assessable income of a beneficiary under section 97 of the Act - that is, amounts to which a beneficiary is presently entitled
- amounts where the trustee of the non-resident trust estate has been assessed and is liable to pay tax under section 98 of the Act - for example, on behalf of a resident beneficiary under a legal disability
- amounts where the trustee of the non-resident trust estate has been assessed and is liable to pay tax under section 99 or 99A - for example, where the trust has undistributed Australian source income
- amounts paid to beneficiaries who are residents of a broad-exemption listed country if those amounts are paid during the year of income of the non-resident trust estate or within one month after the end of the year of income. These amounts must be subject to tax in a broad-exemption listed country in a tax accounting period ending before the year of income or commencing during the year of income
- franked dividends - that is, dividends paid by Australian companies or similar amounts paid by corporate unit trusts and public trading trusts, out of profits that have been subject to Australian tax
- amounts included in the assessable income of the trustee of a trust estate where a dividend is grossed up for dividend imputation purposes
- amounts received by a trustee from another trust estate to the extent that the amount has already been attributed to a transferor
- dividends received from a CFC that have been included in the assessable income of a taxpayer under section 458 of the Act - see chapter 1 of the guide
- amounts received by the trustee that are referable to the income or profits of a CFC that have been included in the assessable income of any resident taxpayer under the CFC measures
- income or profits of the trust estate - other than eligible designated concession income - that are subject to tax in any broad-exemption listed country in a tax accounting period ending before the end of, or commencing during, the year of income of the non-resident trust estate
- FIF income attributed to the trust estate for a notional accounting period of a company FIF if a share of the attributable income of the company FIF is included in your assessable income under the CFC measures for:
- a statutory accounting period coinciding with the notional account period of the company FIF or
- statutory accounting periods ending and commencing during the notional accounting period of the company FIF
- amounts of foreign tax or Australian tax paid by the trustee or a beneficiary on amounts included in the attributable income of the trust estate.
For a broad-exemption listed country trust estate, exclude only the amounts that relate to the part of the net income that consists of eligible designated concession income.