• 8 Partnerships and trusts

    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 trust's income from a partnership includes income or a loss which the trust received, was entitled to receive or was entitled to deduct in respect of that partnership.

    The trust's income from a trust includes income the trust received or was entitled to receive as a beneficiary under a will, settlement, and deed of gift or other instrument of trust.

    Distributions from partnerships or trusts include the share of any:

    • TFN amounts withheld from interest, dividends and unit trust distributions
    • franking credits attached to franked dividends received indirectly from an Australian franking company, or
    • amounts withheld where an ABN was not quoted.

    Copy the details from any statements received from the partnerships and other trusts to worksheet 2. This is the trust's record if the Tax Office needs more details later.

    Attention

    Do not show any dividends or franking credits indirectly received that were attributable to distributions from a New Zealand franking company at this label. Show these amounts at item 23 Other assessable foreign source income.

    Do not include any payments and loans received from trustees or amounts that are debts forgiven by trustees that are treated as dividends under Division 7A of the ITAA 1936. Show these amounts at K item 12.

    Do not include foreign income or a capital gain in income distributions from partnerships and trusts at item 8. Show foreign income at:

    • item 22 Attributed foreign income, and
    • item 23 Other assessable foreign source income.

    Show net capital gains (including foreign capital gains) at item 21 Capital gains. Dividends received from listed investment companies are not distributions of net capital gains. For more information, see the Guide to capital gains tax 2010.

    End of attention

    To the extent that family trust distribution tax (FTDT) has been paid on income received by the trust from a partnership or other trust, that amount is excluded from the assessable income of the trust under section 271-105 of Schedule 2F to the ITAA 1936.

    To the extent that FTDT has been paid on income or capital of a trust to which the trust is presently entitled or which has been distributed to the trust, that income or capital is excluded from the assessable income of the trust under section 271-105 of Schedule 2F to the ITAA 1936.

    For more information about the circumstances in which FTDT is payable, see Family trust distribution tax.

    If the trust's share of income includes an amount received indirectly from a closely held trust on which trustee beneficiary non-disclosure tax (TBNT) has been paid, you do not need to include the amount in the trust's assessable income.

    Any losses or outgoings incurred in deriving an amount that is excluded from assessable income because FTDT or TBNT has been paid are not deductible. The trust cannot claim a tax offset for any franking credits attributable to the whole or a part of a dividend that is excluded from assessable income under these provisions.

    Primary production

    Distribution from partnerships

    Show at A the amount of primary production income or loss distribution from partnerships.

    If this amount is a loss, print L in the box at the right of the amount.

    Distribution from trusts

    Show at Z the amount of primary production income distribution from other trusts. Include income to which the trust became presently entitled in the income year but has not yet received. If this amount is a loss, print L in the box at the right of the amount. Show a loss at Z only if it is a component of an overall distribution of net income from the same trust.

    If this amount is not a loss, in the box at the right of Z print the code from Table 1 that best describes the type of trust from which the distribution is made. If this amount is from more than one type of trust, print the code that represents the trust with the greatest amount of distribution.

    Deductions relating to distribution in A and Z

    Show at S the trust's deductions for its own expenses relating to primary production distributions from partnerships or other trusts.

    If you have prepaid any expenses, the amount that you can claim at S may be affected by the prepayment provisions. For more information, see Deductions for prepaid expenses 2010.

    Expenses listed here that are costs associated with borrowing and servicing debt may not be allowable deductions under the thin capitalisation rules. For more information, see appendix 3. The disallowed amount reduces the amount that would otherwise be included at S.

    Net primary production distributions

    Show at this label the net result of partnership and trust distributions of primary production income.

    Write the total amount in the box at Net primary production distribution. If this amount is a loss, print L in the box at the right of the amount.

    Non-primary production

    Distribution from partnerships, less foreign income

    Show at B the amount of non-primary production income or loss distributions from partnerships. Include any share of credit for tax withheld from foreign resident withholding that is attached to the distribution. (You also include the share of credit at U item 8).

    If the amount at B is a loss, print L in the box at the right of the amount.

    If the distribution includes franked dividends from a franking entity, check the advice detailing the distribution to ensure that the amounts to be included at this label represent both the trust's share of the franked dividend and its share of the franking credit attached to the franked dividend. The franking credit is included at D item 8.

    Do not show any dividends or franking credits indirectly received attributable to distributions from a New Zealand franking company at this label. If the trust received dividends or franking credits indirectly from a New Zealand franking company, see item 23 Other assessable foreign source income.

    Attention

    If the trust received a distribution from a partnership and that partnership advised it claimed a deduction in respect of a listed investment company (LIC) capital gain amount, the trust is required to include its share of the deduction allowed to the partnership at item 14 Other Australian income.

    End of attention

    Distribution from trusts, less net capital gain and foreign income

    Show at R the amount of non-primary production income distributions from other trusts. Include any share of credit for tax withheld from foreign resident withholding that is attached to the distribution. (Include the share of credit for tax withheld from foreign resident withholding at U item 8.)

    If the distribution includes franked dividends from a franking entity, check the advice detailing the distribution to ensure that the amounts to be included at this label represent both the trust's share of the franked dividend and its share of the franking credit attached to the franked dividend. The franking credit is also included at D item 8.

    Do not show any dividends or franking credits indirectly received which were attributable to distributions from a New Zealand franking company at this label. If the trust received dividends or franking credits indirectly from a New Zealand franking company, see item 23 Other assessable foreign source income.

    Include income to which the trust became presently entitled in the income year but has not yet received. If this amount is a loss, print L in the box at the right of the amount. Show a loss at R only if the amount is a component of an overall distribution of net income from the same trust.

    If this amount is not a loss, in the box at the right of R print the code from table 1 that best describes the type of trust from which the distribution is made. If this amount is from more than one type of trust, print the code that represents the trust with the greatest amount of distribution.

    Attention

    If the trust received a distribution from another trust and that trust advised that it claimed a deduction in respect of a listed investment company (LIC) capital gain amount, the trust is required to include its share of the deduction allowed to the trust at item 14 Other Australian income.

    End of attention

    Deductions relating to distribution in B and R

    Show at T the trust's deductions for its own expenses for non-primary production distributions from partnerships or other trusts. If any expenses have been prepaid, the amount that you can claim at T may be affected by the prepayment provisions. For more information, see Deductions for prepaid expenses 2010.

    Expenses listed here that are costs associated with borrowing and servicing debt may not be allowable deductions under the thin capitalisation rules. For more information, see appendix 3. The disallowed amount reduces the amount that would otherwise go at T.

    If FTDT has been paid on income or capital of another trust or partnership that is distributed to the trust that income or capital is not included in the trust's assessable income. Do not show this at A, Z, B or R. You cannot claim a deduction for any losses or outgoings incurred in deriving an amount which is excluded from assessable income at S or T. For more information about the circumstances in which FTDT is payable see Family trust distribution tax.

    If trustee beneficiary non-disclosure tax (TBNT) has been paid in respect of an amount that would otherwise be assessable to the trust, that amount is excluded from the assessable income of the trust. Do not show that income at A, Z, B or R. You cannot claim a deduction for any losses or outgoings incurred in deriving an amount which is excluded from assessable income at S or T.

    Net non-primary production distribution

    Show at this label the net result of trust distributions of non-primary production income.

    Write the total amount in the box at Net non-primary production distribution. If this amount is a loss, print L in the box at the right of the amount.

    Share of credits from income

    Share of credit for tax withheld where ABN not quoted

    If the income shown at A, Z, B or R includes any share of amounts withheld where an ABN was not quoted, show the share of that credit at C.

    Share of franking credit from franked dividends

    Show at D the trust's share of any franking credits from a franking entity received through a partnership or other trust.

    Show franking credits received directly from a paying franking entity at M item 12.

    Do not show franking credits relating to a dividend received through a partnership or other trust if any of the following apply:

    • They were attributable to a distribution from a New Zealand franking company. If the trust received franking credits indirectly from a New Zealand franking company, see item 23 Other assessable foreign source income.
    • The holding period rule and related payments rule were not satisfied in relation to the dividend. For more information, see appendix 1.
    • FTDT has been paid on the dividend paid or credited by a company which has made an interposed entity election. The dividend is excluded from assessable income under section 271-105 of Schedule 2F to the ITAA 1936. A franking credit or tax offset cannot be claimed for any franking credit attached to that dividend. For more information about when FTDT is payable, see Family trust distribution tax.
    • Trustee beneficiary non-disclosure tax has been paid in respect of the dividend. A franking credit or tax offset cannot be claimed for any franking credit attached to that dividend.

    Share of credit for TFN amounts withheld from interest and dividends distributions

    Unless the trust claimed an exemption or lodged a TFN, the investment body may withhold amounts from interest, dividend distributions. These are called 'TFN amounts withheld'. The current rate is 46.5% of the payment made.

    Show at E the share of the net amount of TFN amounts withheld on interest dividends distributions relating to a distribution from a partnership or other trust. Credits for TFN amounts withheld are allowed in the assessments of the beneficiaries or trustees.

    Share of credit for tax withheld from foreign resident withholding

    Amounts may be withheld from some payments to specific recipients due to the operation of the foreign resident withholding measure. These payments relate to entertainment or sports activities, construction and related activities and casino gaming junket activities.

    Show at U the trust's share of any foreign resident withholding credits received from partnerships or other trusts. Ensure this amount is included in the gross distribution amount shown at B Distribution from partnerships, less foreign income or R Distribution from trusts, less net capital gain and foreign income.

    Last modified: 13 Aug 2014QC 22968