• M Gross trust distributions

    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

    Did the SMSF receive, or was the SMSF entitled to receive, a share of net income from other trusts?

    No

    Leave M blank. Go to Calculation of assessable contributions.

    Yes

    Read on.

    Write at M the total share of net income that the SMSF received or was entitled to receive from other trusts. The amount at M cannot be a loss. Complete the code box to the right of M.

    A share of net income from a trust can include different types of income. Include at M all types of income that are included in a share of net income from another trust except:

    • capital gains (include these at A Net capital gain)
    • foreign income, including New Zealand franking company dividends and supplementary dividends (include it at D1 Gross foreign income)
    • a share of net income on which family trust distribution tax or trustee beneficiary non-disclosure tax has been paid (do not include anywhere in Section B: Income)
    • franking credits if the SMSF is not entitled to a corresponding tax offset (do not include these anywhere in the SMSF annual return)
    • non-arm's-length income of a complying SMSF (include it at U2 Net non-arm's-length trust income)

    If the share of net income from trusts included franking credits attached to dividends and the SMSF is entitled to a corresponding franking credits tax offset (see Entitlement to a franking credits tax offset), include the amount of the franking credit at M and also at either:

    • E1 Complying fund’s franking credits tax offset in Section D if the SMSF is a complying fund
    • C2 Rebates and tax offsets in Section D if the SMSF is a non-complying fund.

    If the share of net income from trusts included amounts subject to foreign resident withholding in Australia, include the SMSF's share of credit for foreign resident withholding at M and also at H2 Credit for tax withheld – foreign resident withholding in Section D.

    The share of net income at M may include payments from a closely held trust, including the SMSF's share of credits if any amounts were withheld because a TFN was not provided. If amounts were withheld because a TFN was not provided then the SMSF's share of credits for the withheld amounts are included at H5 Credit for TFN amounts withheld from payments from closely held trusts in Section D.

    If you include an amount at M that is exempt current pension income, also include it at Y Exempt current pension income.

    A distribution from a trust is non-arm's-length income if:

    • the SMSF does not have a fixed entitlement to income from that trust (e.g. it is a discretionary trust) or
    • the SMSF does have a fixed entitlement to income from that trust and the entitlement was acquired, or income was derived, under a non-arm's-length scheme and the share of net income from the trust is greater than what might otherwise have been expected had the parties been dealing with each other at arm’s length.

    Keep a record of the:

    • full name of the trust
    • TFN of the trust, and
    • amount paid by the trust to the SMSF.

    See also:

    Code

    You must print a letter from table 3 in the code box to the right of M Gross trust distributions if you write an amount at M.

    Print the letter from table 3 that best describes the type of trust from which you received the income you wrote at M. If this income is from more than one type of trust, print the letter that describes the type of trust from which you received the greatest amount of income.

    If you cannot identify the type of trust from which the SMSF received a share of net income, contact the trustee of that trust.

    Table 3: Trust type codes

    Code letter

    Type of trust

    D

    Deceased estate

    F

    Fixed trust (other than the fixed unit trusts and public unit trusts described at codes U, P and Q)

    A fixed trust is a trust in which persons have fixed entitlements to all of the income and capital of the trust at all times during the income year. The ‘fixed entitlement’ test operates in the manner described in Taxation Ruling TR 2006/7.

    H

    Hybrid trust

    A hybrid trust is a trust which is not a fixed trust but in which persons have fixed entitlements to income or capital of the trust during the income year. The ‘fixed entitlement’ test operates in the manner described in Taxation Ruling TR 2006/7.

    S

    Discretionary trust – where the main source of income of the trust is from service and management activities

    A discretionary trust is a trust:

    • which is neither a fixed trust nor a hybrid trust, and
    • under which a person or persons benefit from income or capital of the trust upon the exercise of a discretion by a person or persons, usually the trustee. 

     

    T

    Discretionary trust – where the main source of income of the trust is from trading activities

    I

    Discretionary trust – where the main source of income of the trust is from investment activities

    M

    Cash management unit trust

    A cash management unit trust is a unit trust which:

    • pools the funds of separate unit holders and
    • primarily invests in a range of short term securities.

     

    U

    Fixed unit trust
    (other than a public trust described in codes P or Q)

    A fixed unit trust is a fixed trust in which interest in the income and capital of the trust are represented by units.

    P

    Public unit trust – listed
    (other than a cash management unit trust)

    A public unit trust is a fixed unit trust which is a widely held unit trust (as defined in section 272-105 of Schedule 2F to the Income Tax Assessment Act 1936 at all times during the income year.

    Q

    Public unit trust – unlisted
    (other than a cash management unit trust)

    A public unit trust in which none of its units were listed for quotation in the official list of a stock exchange in Australia or elsewhere during the income year.

    Example: Trust distributions

    SMSF M received a share of net income from a publicly listed unit trust in 2014-15 which included:

    $ 700 franked dividends and
    $ 300 franking credits

    SMSF M reports:

    M Gross trust distributions $1,000

    Gross trust distributions code box P (Public unit trust)

    E1 Complying fund’s franking credits tax offset
    in Section D $ 300

    End of example
    Last modified: 15 Jan 2016QC 44344