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  • Section 6: Trust amounts

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    The notional assessable income of a CFC may include certain trust amounts arising for the CFC in the statutory accounting period. There are three types of trust amounts:

    • amounts derived as a beneficiary of a trust estate where the CFC is presently entitled to a share of the net income of the trust estate
    • other amounts paid to, or applied for the benefit of, the CFC by the trustee of a trust estate, and
    • amounts attributed to the CFC under the transferor trust measures.
    CFC a beneficiary of a trust - present entitlement

    Where the CFC is presently entitled to a share of the net income of a trust estate, the CFC must include the share of the net income in notional assessable income. The calculation of the net income of the trust estate is made under the existing trust provisions of the Act. The modifications that apply in working out the net income of a trust are similar to those that apply for working out notional assessable income and notional allowable deductions of the CFC - see section 3, section 4 and section 5.

    Additional modifications that apply when working out the net income of a trust are outlined below.

    Trust is a resident of the same country as the CFC

    A trust estate is treated as a resident of the same country as the CFC.

    Dividends

    A dividend will not be notional exempt income of a trust unless the dividend is paid out of previously attributed income.

    Trust is treated as a resident trust estate

    A trust is treated as an Australian resident trust estate or a resident unit trust for the purposes of the capital gains tax provisions.

    Modifications to capital gains tax provisions

    The modifications to the capital gains tax provisions - see section 4 - that provide for the removal of the exemption for assets acquired before 20 September 1985 do not apply in working out the net income of a trust. Consequently, the capital gains tax provisions apply to assets acquired by a trust after 19 September 1985.

    Transferor trust measures

    The transferor trust measures apply in working out the attributable income of a CFC. See chapter 2 to determine whether the CFC will have an amount attributed to it.

    Last modified: 18 May 2020QC 19443