• Statements of distribution

    Attention

    The information disclosed in the statement of distribution will need to be provided to each beneficiary to whom that information relates to allow them to complete their own tax return.

    A trustee who needs to provide annual reports under the Trustee Beneficiary (TB) Rules or the TFN Withholding Rules will be able to do so by completing the information in the statement of distribution.

    Before completing the statement of distribution please see the information at Appendix 12.

    Failure to make a correct TB statement may result in liability for trustee beneficiary non-disclosure tax (TBNT), currently imposed at the rate of 46.5%.

    End of attention

    Has the trust received an employment termination payment (ETP) or superannuation lump sum?

    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

    Include death benefit ETPs and superannuation lump sums on the statement of distribution at B at the end of item 65, on page 15 of the tax return, at Income to which no beneficiary is presently entitled and in which no beneficiary has an indefeasible vested interest, and the trustee's share of credit for tax deducted.

    The trustee is liable to pay the tax, if any, on these amounts. The amount of tax payable by the trustee depends on the components of the ETP or superannuation lump sum and the extent that the dependants of the deceased benefit from the estate. For more information on ETPs and superannuation lump sums see item 13 Superannuation lump sums and employment termination payments.

    Has the trust received a listed investment company (LIC) capital gain amount?

    If the following persons or entities are beneficiaries and the trustee claimed a deduction in respect of a LIC capital gain amount in calculating the trust's net income for tax purposes, the trustee must advise these beneficiaries of their share of the deduction:

    • trustee of a trust
    • trustee of a superannuation entity
    • company (including a life insurance company)
    • partnership.

    Each beneficiary's share of the deduction is so much of that deduction that is reflected in their share of the net income of the trust.

    Is a beneficiary presently entitled to a share of the income of the trust estate?

    The way the net income of a trust is taxed will depend on whether there are beneficiaries presently entitled to a share of the income of a trust estate and whether the trust has derived capital gains or franked distributions which the trustee has 'streamed' to specific beneficiaries. Absent the trustee making certain beneficiaries specifically entitled to amounts of capital gains or franked distributions, a resident beneficiary who is presently entitled to a share of the income of the trust estate (for trust purposes) and is not under a legal disability is assessed on the same percentage share of the net income (for tax purposes) of the trust.

    There are a number of steps in determining whether a beneficiary is presently entitled to a share of the income of the trust.

    Step 1 - Calculate the income of the trust available for distribution

    The first step is to determine the total income of the trust that was legally available for distribution to trust beneficiaries in the income year (the 'distributable income'). The calculation of the trust's distributable income will depend largely on the terms of the trust and general trust law principles. You will therefore need to carefully consider the trust deed, the trust accounts and relevant resolutions to determine what the trust's distributable income is.

    Step 2 - Determine the beneficiary's entitlement to distributable income

    The next step is to determine the amount of the trust's distributable income to which the beneficiary was presently entitled at any time during the year even if it has been paid or applied on their behalf. A beneficiary's entitlement to income may be prescribed by the deed or it may depend on the exercise of a trustee's discretion.

    A beneficiary will be deemed to be presently entitled to the income of a trust estate if they have an 'indefeasible vested interest' in that income. An indefeasible interest is simply one that cannot be defeased or brought to an end or varied (for example, it is not able to be varied by the exercise of a power by the trustee or another person). A vested interest is one that presently exists. However, it can be either a present right or one that can be enjoyed in the future.

    The principal beneficiary of a special disability trust is considered to be presently entitled to all of the net income of the trust.

    Step 3 - Calculate the beneficiary's percentage share of the distributable income

    A beneficiary's entitlement to the distributable income is then converted to a percentage 'share' of the total distributable income. This percentage share is relevant in working out the amount of the trust's net income (for tax purposes) that is assessed to a beneficiary (or to the trustee on the beneficiary's behalf where the beneficiary is under a legal disability or is a non-resident at the end of the income year). It is also relevant to the allocation of certain types of income, tax credits and other trust amounts to beneficiaries.

    A beneficiary will also be taken to be presently entitled to any income they are paid or that is applied on their behalf, at the discretion of the trustee.

    Danger

    Recent law changes applicable from the 2010-11 income year allow the streaming of franked distributions and capital gains to 'specifically entitled' beneficiaries for tax purposes.

    End of danger

    Recent law changes applicable from the 2010-11 income year allow the streaming of franked distributions and capital gains to beneficiaries for tax purposes. Broadly, beneficiaries who are made 'specifically entitled' to the trust's capital gains will be taken to have made capital gains referable to so much of those gains included in the trust's net income (with appropriate adjustments for any CGT discounts or concessions). Beneficiaries who are made 'specifically entitled' to the trust's franked distributions will be assessed on so much of those distributions included in the trust's net income, as well as on any corresponding franking credits.

    In these circumstances, to work how much of the balance of the trust's net income for tax purposes (that is, excluding capital gains and franked distributions that any entity is specifically entitled to) is assessed to relevant beneficiaries or the trustee, in a practical sense the trustee will need to use the beneficiaries (or trustee's) 'adjusted Division 6 percentage' share instead of their percentage share of distributable income calculated above. The adjusted Division 6 percentage ignores any franked distributions and capital gains that any entity is specifically entitled to.

    These law changes do not apply to managed investment trusts unless they choose for them to apply.

    Trusts that are not subject to the new law or that are not in receipt of franked distributions or capital gains during the income year will not have to calculate an 'adjusted Division 6 percentage' and instead will just use each beneficiary's percentage share of distributable income calculated above.

    Similarly, for trusts in receipt of capital gains or franked distributions, if no beneficiaries (or the trustee) are specifically entitled to such amounts, the two percentage shares will be the same.

    Further Information

    Please refer to Improving the taxation of trust income for further information about these changes.

    End of further information

    Is there income of the trust estate to which no beneficiary is presently entitled?

    Include at the end of item 65, on page 15 of the tax return, at Income to which no beneficiary is presently entitled that part of the net income of the trust at item 26 Total net income or loss that has not been assessed to a beneficiary and has not been assessed to the trustee on behalf of a beneficiary:

    • who is presently entitled to a share of the income of the trust but is not a resident at the end of the income year, or
    • who is presently entitled to a share of the income of the trust but is under a legal disability.

    Generally, to work out the amount to record at A, B, F, G and H at the end of item 65, convert the amount of the trust's distributable income to which no beneficiary is presently entitled as a percentage of the total distributable income and multiply this result by the component of the trust's net income that relates to each entry.

    As a result of recent legislative changes, if the trust (other than a Managed Investment Trust that has not chosen to be subject to the changes) has beneficiaries (or the trustee) that are 'specifically entitled' to amounts of capital gains or franked distributions, the amount recorded at A, B, F, G and H at the end of item 65 will need to be calculated having regard to the 'adjusted Division 6 percentage' share of the income of the trust.

    Please refer to Improving the taxation of trust income for further information about these changes.

    The trustee also prints X in the Yes box at Is any tax payable by the trustee? on page 2 of the trust tax return.

    The trustee is assessable under section 99A of the ITAA 1936 and is liable to pay tax at the highest marginal rate on that part of the net income of the trust that has not been assessed to a beneficiary or to the trustee on a beneficiary's behalf. The applicable tax rate is the highest marginal rate of tax for resident individuals.

    However, section 99A of the ITAA 1936 will not apply if the Commissioner thinks it would be unreasonable for the special rate of tax to apply to the net income of a trust estate that:

    • resulted from the will or intestacy of a deceased person
    • consists of property either of a bankrupt vested in the official receiver in bankruptcy or that is being administered under Part XI of the Bankruptcy Act 1966 (as amended).
    • consists of property that was transferred to the trustee for the benefit of the beneficiary
      • by way of, or in satisfaction of a claim for, damages for loss of parental support, personal injury, disease, or physical or mental impairment
      • by way of workers or criminal injury compensation
      • directly as a result of the death of a person and from the proceeds of a life assurance policy, a superannuation fund or an employer of the deceased person
      • out of a public fund established and maintained exclusively for the relief of persons in necessitous circumstances
      • as a result of a family breakdown.
       

    Where the Commissioner exercises his discretion that it would be inappropriate for section 99A to apply to the trust for an income year, the trustee will pay tax at concessional rates.

    For deceased estates that are resident trust estates and in respect of which the Commissioner has exercised his discretion, the general individual rates apply for the year the deceased died and the following two years. The trustee also has the benefit of the full tax-free threshold of $6,000. For the fourth and subsequent years different progressive rates apply as shown in table 9.

    For other resident trust estates in respect of which the Commissioner has exercised his discretion to not apply section 99A in assessing the trustee, the concessional rates shown in table 9 also apply.

    Table 9

    Amount of trust net income assessable to trustee ($)

    Tax on column 1 ($)

    % on excess (marginal rate)

    416

    Nil

    50

    594

    89

    15*

    37,000

    5,550

    30

    80,000

    18,450

    37

    180,000

    55,450

    45

    *Income from $595 to $37,000 is taxed at a flat rate of 15%.

    If you would like the Commissioner's discretion to be exercised, submit full details in support of the request. Also provide:

    1. details of the balance sheet capital accounts
    2. if shares are held in private companies and special rights attach directly or indirectly to those shares, a statement showing the name of the company, the class and paid-up value of the shares, details of the special rights, and whether those rights have been exercised during the year
    3. if a loan has been made to or by the trust, a statement showing the nature of the debt, the terms of the loan and the borrower's or lender's full name, address and family relationship, if any, to the beneficiaries; to obtain the Commissioner's discretion, this information need not be furnished for public securities, debentures in public companies and loans made in normal commercial transactions where the parties are at arm's length; if relatives of the beneficiaries or other persons not at arm's length have made loans to a private company in which the trust holds shares, or to a partnership in which the trustee is a partner, full details must also be given for such loans
    4. if a person, other than in a purely commercial transaction at arm's length, has directly or indirectly transferred money or property to the trust, conferred benefits on the trust or conferred special privileges on the property of the trust, the full name and address of the person and the family relationship, if any, of that person to the beneficiaries
    5. the names of any other trusts to which the person in 3 or 4 has contributed in the ways mentioned in those sub-paragraphs or in which the beneficiaries of the trust lodging this tax return are interested
    6. details of property which has been transferred to a trust by a relative of the beneficiaries, and income from that property which must or may be used to pay for that property.
    7. If the Commissioner has exercised his discretion in relation to an earlier income year of the trust, you are not required to request the Commissioner to reconsider this for each subsequent income year unless material changes have occurred. In this case, you must provide a statement on a separate sheet of paper advising what material changes have occurred.

    Attach the statement to the tax return and print X in the Yes box at Have you attached any 'other attachments'? at the top of page 1 of the tax return.

    Can trust capital gains be reduced by the CGT discount and/or the small business 50% reduction where there is income to which no beneficiary is presently entitled?

    If the trustee is assessable under section 99A of the ITAA 1936 on some or all of the net income of the trust, capital gains included in that part of the trust's net income are not eligible for the CGT discount and the small business 50% reduction (see section 115-222 of the ITAA 1997).

    If the trustee is assessable under section 99A of the ITAA 1936 on some or all of the net income of the trust and the amount on which the trustee is assessed includes a capital gain to which either the CGT discount or the small business 50% reduction has been applied (but not both), work out the amount assessable to the trustee under section 99A as if the part attributable to the capital gain was double the amount it actually is.

    If the trustee is assessable under section 99A of the ITAA 1936 on some or all of the net income of the trust and the amount on which the trustee is assessed includes a capital gain to which both the CGT discount and the small business 50% reduction have been applied, work out the amount assessable to the trustee under section 99A as if the part attributable to the capital gain was four times the amount it actually is.

    Provide a statement on a separate sheet of paper showing details of the amount assessable under section 99A using the above method. Attach the statement to the tax return and print X in the Yes box at Have you attached any 'other attachments'? at the top of page 1 of the tax return.

    Completing item 65

    The total of the amounts at N, A, B, F, G and H on this statement equals the amount at item 26 Total net income or loss, except in the case of certain ETPs, as covered in item 13 Superannuation lump sums and employment termination payments, in the case where a beneficiary's or a trustee's share of franking credits at N has been reduced because of an entitlement to a foreign income tax offset and in the case where part of the net income is not taxable either to the trustee or beneficiary.

    If part of the net income is not taxable to either the trustee or a beneficiary, for example, where it is not attributable to sources in Australia and it relates to a share of income that a non-resident beneficiary is entitled to, not in its capacity as a trustee, attach a statement highlighting this to the tax return. Print X in the Yes box at Have you attached any 'other attachments'? at the top of page 1 of the tax return, and include the information outlined at Non-resident beneficiaries.

    If part of a distribution is not taxable to either the trustee or a beneficiary, for example, the distribution to a non-resident beneficiary includes dividends, interest or royalties on which withholding tax has been paid or withheld, franked dividends, or a distribution to a foreign resident which requires an Australian managed investment trust to withhold an amount, attach a statement highlighting this to the tax return and print X in the Yes box at Have you attached any 'other attachments'? at the top of page 1 of the tax return, and include the information outlined at Non-resident beneficiaries.

    Trust losses

    A trust cannot distribute an overall trust loss. In these circumstances there will be no income of the trust estate to which any beneficiary can be presently entitled (which will generally result in the trustee being assessed on any net income of the trust for tax purposes, if there is any). However:

    • a beneficiary still may be able to be made specifically entitled to (and assessed in respect of) a capital gain if it forms part of the capital of the trust rather than being included in the calculation of trust income; and
    • you may still need to record certain information in the statements of distribution for the purposes of certain primary production concessions (see below at Share of Income A and B).

    If the trust has overall income, but has a negative net income for tax purposes, it cannot distribute that tax loss to beneficiaries.

    Beneficiary details

    If the number of beneficiaries exceeds five

    For paper tax returns, if there are more than five beneficiaries, photocopy extra pages and complete the statement of distribution for each additional beneficiary.

    Attach the additional beneficiary details to the tax return and print X in the Yes box at Have you attached any 'other attachments'? at the top of page 1 of the tax return.

    Complete the statement of distribution even for those beneficiaries under a legal disability on whose behalf the trustee will be assessed.

    Beneficiary 1, Beneficiary 2, Beneficiary 3, Beneficiary 4, Beneficiary 5

    For each beneficiary presently entitled or having an indefeasible and vested interest in trust income, show:

    • for individuals
      • tax file number
      • full name including title, surname or family name, given names
      • residential address (street address not PO Box)
      • date of birth
      • entity type code
       
    • for non-individuals
      • tax file number
      • full name of entity (for example ABC Trust)
      • business address (street address not PO Box)
      • entity type code
       

    Entity Type

    Print the appropriate code for the beneficiary entity type:

    • C for Company
    • F for Fund
    • I for Individual
    • P for Partnership
    • S for Self managed super fund
    • T for Trust

    Please ensure you complete these details fully and in the correct area. As an example, if the beneficiary is a company complete:

    Tax File Number, 123 456 789

    Entity Type, C

    Non-individual name, John Smith Pty Ltd

    Business address, 123 Brown Street

    Suburb/town, Melbourne

    State/territory, Vic

    Postcode, 3000

    Assessment calculation code V

    Insert an assessment calculation code from appendix 13 for each beneficiary presently entitled to a share of the income of the trust (even those beneficiaries under a legal disability on whose behalf the trustee will be assessed), and also for income to which no beneficiary is presently entitled and in which no beneficiary has an indefeasible vested interest.

    Bankrupt estates are lodged under assessment calculation code 37.

    Credit for tax withheld - foreign resident withholding L

    Show each beneficiary's share of credit for tax withheld where income of the trust is subject to foreign resident withholding.

    Except for relevant trusts which have made beneficiaries specifically entitled to franked distributions or capital gains, you work out a beneficiary's share of the credit by multiplying the amount of tax withheld by the beneficiary's percentage share of the trust income. Show whole dollars only.

    For trusts which have made beneficiaries specifically entitled to franked distributions or capital gains, you generally work out a beneficiary's share of the credit by multiplying the amount of tax withheld by their 'adjusted Division 6' percentage share. Show whole dollars only.

    If there is trust income to which no beneficiary is presently entitled, show that share of the amount of tax withheld at L under Income to which no beneficiary is presently entitled at the end of item 65.

    If the trust has no net income, the beneficiaries are not entitled to a share of the credit for tax withheld. Instead, show the sum of the amounts withheld at L under Income to which no beneficiary is presently entitled at the end of item 65.

    The total of the amounts at L must equal the total amount of credit shown on the tax return at U item 6 and U item 8.

    Note: you only complete this entry if the trust is a non-resident trust and the amount was withheld in Australia and remitted to the ATO.

    Australian franking credits from a New Zealand company N

    Include at N the beneficiary's share of the Australian franking credit received from a New Zealand company, including any amounts received through another trust or a partnership. The beneficiary's share of this credit is broadly calculated as the sum of

    • the credit attaching to any part of the relevant distribution from the New Zealand company to which the beneficiary is 'specifically entitled'; plus
    • the beneficiary's 'adjusted Division 6 percentage' of the credit attaching to any part of the relevant distribution to which no beneficiary is 'specifically entitled'.

    The amount at N is not necessarily the amount that can be claimed by each beneficiary.

    If the beneficiary is under a legal disability, the trustee will be assessed (see above). In these circumstances, include at N in the beneficiary's statement of distribution the amount of Australian franking credits attached to a New Zealand dividend allowed to the trustee.

    If there are relevant distributions to which no beneficiary is presently entitled, include the trustee's share of the Australian franking credits attached to a dividend paid by a New Zealand company at N under Income to which no beneficiary is presently entitled at the end of item 65. The trustee's share is worked out in the same way as their share of the franking credit on a franked distribution by an Australian company (see below).

    Under section 220-405 of the ITAA 1997, the Australian franking credits may be reduced by the relevant part of the supplementary dividend paid by the New Zealand company if:

    • the supplementary dividend was paid in connection with the franked dividend
    • the beneficiary under a legal disability or trustee is entitled to a foreign income tax offset because the franked dividend is included in their assessable income. For more information, see appendix 1.

    Share of income A and B

    Show each beneficiary's share of the trust's primary production income and non-primary production income included in the net income of the trust.

    The trust's primary production income is generally indicated at items 5 Business income and expenses and 8 Partnerships and trusts, less any primary production deductions.

    The trust's non-primary production income is the amount shown at item 26 Total net income or loss, less primary production income as calculated above, amounts attributable to capital gains (shown at item 21 Capital gains) and Foreign income included at items 22 Attributed foreign income and 23 Other assessable foreign income (all of which are shown at separate labels in the Distribution Statement).

    The amount shown at A is worked out by multiplying the Primary Production income by the beneficiary's percentage share of the trust's income or 'adjusted Division 6 percentage' share (in the case of relevant trusts with capital gains or franked distributions that any beneficiary (or the trustee) is 'specifically entitled' to in full or in part).

    For trusts that did not receive franked distributions either directly or indirectly through a partnership or trust during the income year and did not have any capital gains that any beneficiary (or the trustee) was specifically entitled to, the amount shown at B is worked out by multiplying the Non-Primary Production income by the beneficiary's percentage share of the trust's income.

    Attention

    The Non-Primary Production income amount shown at B will need to be worked out differently if the trust:

    • is a relevant trust with capital gains or franked distributions that any beneficiary (or the trustee) is 'specifically entitled' to in full or in part; or
    • is a managed investment trust that has not elected to apply the new streaming provisions.
    End of attention

    Legislation has recently been enacted that makes changes to allow the streaming of franked distributions and capital gains to beneficiaries for tax purposes. The amendments apply from the 2010-11 income year and introduce the concept of 'specific entitlement' that broadly ensures that a beneficiary (or trustee assessed on behalf of a beneficiary) that has been streamed a franked distribution by the Trustee and will receive the benefits of that distribution is assessed on the amount of the franked distribution included in the net income of the trust and on the franking credits attached to that distribution (the gross-up amount). Similar rules apply in respect of any capital gains of the trust.

    These law changes do not apply to managed investment trusts unless they choose for them to apply.

    For relevant trusts with capital gains or franked distributions that any beneficiary (or the trustee) is 'specifically entitled' to in full or in part, the amount shown at B in respect of a beneficiary should include:

    • any franked distributions to which the beneficiary is 'specifically entitled', to the extent to which those distributions formed part of the net income of the trust estate for tax purposes plus any attached franking credits; plus
    • the beneficiary's 'adjusted Division 6 percentage' share of any part of the franked distributions of the trust to which no beneficiary is 'specifically entitled' to the extent to which those distributions formed part of the net income of the trust estate for tax purposes, plus any attached franking credits; plus
    • the beneficary's 'adjusted Division 6 percentage' of all other non-primary production income of the trust.

    The total amount of franking credits included at this label should equal the total of the credits shown at D in the statement of distribution at this item less any amount already recorded at N in the statement of distribution).

    Further Information

    For further information, see Improving the taxation of trust income.

    End of further information

    For MIT's that have not elected to apply the new streaming changes the amount at B Non-Primary productionincome will also be required to be worked out differently if the MIT received any franked distributions (either directly or indirectly via a partnership or another trust) during the income year. For each beneficiary:

    • multiply the Non-Primary Production income by the beneficiary's percentage share of the trust's income;
    • subtract the beneficiary's proportionate share of franking credits included in the trust's net income (calculated as an amount equal to the total franking credits included in the trust's net income (at D item 8, and at M item 12 and D item 23) multiplied by the beneficiary's percentage share of the trust income), and
    • add the beneficiary's share of franking credits that reflect their trust entitlement to the franked distributions (calculated as the total of the credits shown at D in the statement of distribution at this item less any amount already recorded at N in the statement of distribution).

    If the shares or interests are not held at risk as required under the holding period and related payments rules, or there is other manipulation of the imputation system, do not include the relevant franking credits here or at D in the statement of distribution at this item.

    Note that the amounts shown at A and B under any calculation method may be different from the primary production and non-primary production income actually distributed to the beneficiary, or which they were entitled to receive from the trust.

    If the trust made a loss from its primary production or non-primary production activities, print L in the box after the amount. Note that as trusts cannot distribute losses, the total of the amounts shown at N, A, B, F, G and H should be a positive amount.

    Beneficiaries of primary production trusts that report a loss

    New law has recently been enacted to restore the pre-Bamford position that enabled primary production beneficiaries to continue to access income averaging and hold a Farm Management Deposit in years where a primary production trust reports a loss for trust purposes.

    The new law applies from the 2010-11 income year and may affect what you show at A Primary production for a beneficiary where the trust has made a loss for trust purposes.

    What you are required to show at A will depend on the type of trust that has made the loss for trust purposes.

    If the trust is one in which the manner or extent to which each beneficiary of the trust can benefit from the trust is not capable of being significantly affected by the exercise, or non exercise, of a power, then show '0' at A Primary production for each beneficiary who would have been presently entitled to a share of the income of the trust for that year had there been some income available for distribution. These beneficiaries will be able to access income averaging and hold Farm Management Deposits, subject to relevant eligibility requirements.

    For other trusts that have made a loss for trust purposes, the trustee must choose the beneficiaries who will potentially be able to access income averaging and hold Farm Management Deposits by being treated as primary producers.

    The trustee can choose up to 12 beneficiaries to be treated as primary producers for income averaging purposes. However, if the number of individual beneficiaries of the trust who accessed income averaging in the 2009-10 income year was greater than 12, then the trustee can choose up to that number of beneficiaries for the 2010-11 income year.

    For each beneficiary that is chosen, show '0' at A Primary production for that beneficiary.

    The trustee can also choose up to 12 beneficiaries to be treated as primary producers for the purposes of holding Farm Management Deposits. If the number of individual beneficiaries of the trust who were able to hold Farm Management Deposits in the 2009-10 income year was greater than 12, then the trustee can choose up to that number of beneficiaries for the 2010-11 income year.

    Where a beneficiary has been chosen to be treated as a primary producer for the purposes of holding a Farm Management Deposit but has not been chosen to be so treated for income averaging purposes, do not show anything at A Primary production for that beneficiary.

    The choices made by the trustee must be in writing and signed by both the trustee and the chosen beneficiary. The choices must be made by the time that the trust return is lodged unless the Commissioner allows a later time.

    For more information go to www.ato.gov.au and search for 'income averaging' or 'farm management deposits'.

    Credit for tax withheld where ABN not quoted C

    Show each beneficiary's share of credit for tax withheld where an ABN was not quoted.

    Except for relevant trusts which have made beneficiaries specifically entitled to franked distributions or capital gains, you work out a beneficiary's share of the credit by multiplying the amount of tax withheld by the beneficiary's percentage share of the trust income. Show whole dollars only.

    For trusts which have made beneficiaries specifically entitled to franked distributions or capital gains, you generally work out a beneficiary's share of the credit by multiplying the amount of tax withheld by their 'adjusted Division 6' percentage share. Show whole dollars only.

    If there is trust income to which no beneficiary is presently entitled, show that share of the amount of tax withheld at C under Income to which no beneficiary is presently entitled at the end of item 65.

    If the trust has no net income, the beneficiaries are not entitled to a share of the credit for tax withheld. Instead, show the sum of the amounts withheld at C under Income to which no beneficiary is presently entitled at the end of item 65.

    The total of C amounts for each completed statement of distribution equals the sum of any credit claimed at:

    • T Tax withheld where ABN not quoted item 6
    • C Share of credit for tax withheld where ABN not quoted item 8.

    Franking credit D

    For trusts that did not make any beneficiary (or the trustee) specifically entitled to any franked distributions or capital gains, the amount shown at D is worked out by multiplying the total franking credits included in the trust's net income (at D item 8, and at M item 12 and D item 23) multiplied by the beneficiary's percentage share of the trust income.

    Attention

    The amount shown at B will need to be worked out differently if the trust:

    • is a relevant trust with capital gains or franked distributions that any beneficiary (or the trustee) is 'specifically entitled' to in full or in part; OR
    • is a managed investment trust that has not elected to apply the new streaming provisions.
    End of attention

    For relevant trusts with capital gains or franked distributions that any beneficiary (or the trustee) is 'specifically entitled' to in full or in part, the amount shown at D in respect of a beneficiary should include:

    • any franking credits attaching to franked distributions to which the beneficiary is 'specifically entitled', to the extent to which those distributions formed part of the net income of the trust estate for tax purposes; plus
    • the beneficiary's 'adjusted Division 6 percentage' share of any franking credits attaching to any part of the franked distributions forming part of the net income of the trust estate, to which no beneficiary is 'specifically entitled'.

    For MIT's that have not elected to apply the new streaming changes show at D each beneficiary's share of franking credits for franked distributions received by the trust (including dividends flowing to the trust via a partnership or another trust).

    • A beneficiary's share of the franking credit on a franked distribution will depend on their entitlement to the distribution, having regard to the trust deed and any relevant trustee resolution. To work out the beneficiary's entitlement to the franked distribution where it has come via one or more trusts or partnership, then you will need to work out the entitlements to the franked distribution of each interposed entity through which the dividend flowed.
    • If only some of the beneficiaries to whom the income of the trust has been distributed are entitled to benefit from the franked distribution, then only those beneficiaries will have a share of the franking credits. To work out a beneficiary's share, express their entitlement to the franked distribution as a percentage of the total franked distribution. Multiply the result by the amount of franking credits on that dividend.
    • Show '0' at D for any other beneficiary who is presently entitled to a share of the trust's distributable income but that entitlement does not comprise or include the franked dividend.

    If the trustee is assessable on a part of the net income under section 99 or 99A the trustee may have a share of the franking credit on the dividend. To work out the trustee's entitlement, express that part of the dividend in respect of which no beneficiary has an entitlement as a percentage of the total dividend. Multiply the result by the amount of the franking credit on that dividend at D under Income to which no beneficiary is presently entitled at the end of item 65.

    Except as explained below, the total of D amounts for each completed statement of distribution must equal the sum of franking credits claimed at:

    • D Share of franking credit from franked dividends item 8
    • M Franking credit item 12
    • D Australian franking credits from a New Zealand company item 23.

    If the shares or interests are not held at risk as required under the holding period and related payments rules, or there is other manipulation of the imputation system, do not include the relevant franking credits at D.

    Note that under section 220-405 of the ITAA 1997, the Australian franking credits from a New Zealand company may be reduced by the relevant part of the supplementary dividend paid by the New Zealand company if:

    • the supplementary dividend was paid in connection with the franked dividend
    • the beneficiary under a legal disability or trustee is entitled to a foreign income tax offset because the franked dividend is included in their assessable income. For more information, see appendix 1.

     

    Further Information

    For further information, see Improving the taxation of trust income.

    End of further information

    TFN amount withheld E

    Show each beneficiary's share of credit for amounts withheld from payments of interest, dividends and unit trust distributions by investment bodies because the recipient did not quote a TFN.

    Except for relevant trusts which have made beneficiaries specifically entitled to franked distributions or capital gains, you work out a beneficiary's share of the credit by multiplying the amount of tax withheld by the beneficiary's percentage share of the trust income. Show whole dollars only.

    For trusts which have made beneficiaries specifically entitled to franked distributions or capital gains, you generally work out a beneficiary's share of the credit by multiplying the amount of tax withheld by their 'adjusted Division 6' percentage share. Show whole dollars only.

    If there is trust income to which no beneficiary is presently entitled, show that share of the credit for the TFN amounts withheld at E under Income to which no beneficiary is presently entitled at the end of item 65.

    If the trust has no net income, the beneficiaries are not entitled to a share of the credit for the TFN amounts withheld at E under Income to which no beneficiary is presently entitled at the end of item 65.

    The total of E amounts for each completed statement of distribution must equal the sum of TFN amounts withheld on interest, dividends and unit trust distributions at:

    • E Share of credit for TFN amounts withheld from interest, dividends and unit trust distributions item 8
    • I TFN amounts withheld from gross interest item 11
    • N TFN amounts withheld from dividends item 12.

    Share of credit for TFN amounts withheld from payments from closely held trusts O

    Show at O each beneficiary's share of credit for any amount withheld by the trustee of a closely held trust from a distribution made to you as a trustee beneficiary, because a TFN was not provided.

    Except for relevant trusts which have made beneficiaries specifically entitled to franked distributions or capital gains, you work out a beneficiary's share of the credit by multiplying the amount of tax withheld by the beneficiary's percentage share of the trust income. Show whole dollars only.

    For trusts which have made beneficiaries specifically entitled to franked distributions or capital gains, you generally work out a beneficiary's share of the credit by multiplying the amount of tax withheld by their 'adjusted Division 6' percentage share. Show whole dollars only.

    If there is trust income to which no beneficiary is presently entitled, show that share of the credit for the TFN amounts withheld from payments from closely held trusts at O under Income to which no beneficiary is presently entitled at the end of item 65.

    If the trust has no net income, the beneficiaries are not entitled to a share of the credit for tax withheld. Instead, show the sum of the amounts withheld at O under Income to which no beneficiary is presently entitled at the end of item 65.

    The total of O amounts for each completed statement of distribution must equal the sum of TFN amounts withheld on closely held trust distributions shown at O item 8 partnerships and trusts in the trust return.

    Do not show at O amounts you have withheld as the trustee of a closely held trust, from payments or distributions where the beneficiary has not provided their TFN to you. These should be reported at T (Total TFN amounts withheld from payments).

    For more information regarding the TFN Withholding Rules for closely held trusts, see TFN withholding for closely held trusts.

    Net capital gain F

    Show at F each beneficiary's share of the trust's net capital gain in whole dollars only.

    Legislation has recently been enacted that makes changes to allow the streaming of franked distributions and capital gains to beneficiaries for tax purposes. The amendments apply from the 2010-11 income year and introduce the concept of 'specific entitlement' that broadly ensures that a beneficiary (or trustee assessed on behalf of a beneficiary) that has been 'streamed' a capital gain by the Trustee and will receive the benefits of that gain is assessed on the so much of that capital gain as is included in the net income of the trust. Similar rules apply in respect of any franked distributions of the trust.

    These law changes do not apply to managed investment trusts unless they choose for them to apply.

    For trusts subject to the new legislation, the amount shown at F is the sum of the beneficiary's share of capital gains to which the beneficiary is 'specifically entitled', to the extent that it forms part of the net income of the trust estate for tax purpose, plus the beneficiary's 'adjusted Division 6 percentage' share of any capital gains to which no beneficiary is 'specifically entitled', to the extent they form part of the net income of the trust.

    Further Information

    For further information, see Improving the taxation of trust income.

    End of further information

    For MIT's that have not elected to apply the streaming changes, the amount shown at F is determined by multiplying the beneficiary's percentage share of the income of the trust by the trust's net capital gain.

    If there is trust income to which no beneficiary is presently entitled, show that share of the trust's net capital gain at F under Income to which no beneficiary is presently entitled at the end of item 65.

    The recently enacted legislation which provides for the streaming of capital gains and franked distributions for tax purposes includes an option for eligible trustees to choose to be assessed on capital gains of the trust in certain circumstances. If this option applies, show that share of the trust's net capital gain at F under Income to which no beneficiary is presently entitled at the end of item 65

    Show at F each beneficiary's share of the trust's net capital gain in whole dollars only.

    Further Information

    For further information, see Improving the taxation of trust income.

    End of further information

    To help a trustee record the information required see worksheet 5.

    The total F amounts from each completed statement of distribution would generally equal the amount at A Net capital gain item 21 unless the trust has deductible expenses or revenue losses that have properly been applied against the net capital gain in working out the net income of the trust. To complete their own tax returns and meet their capital gains tax obligations, beneficiaries will need the following information:

    • a dissection of their share of the trust's net capital gain according to:
      • capital gains from collectables and all other capital gains
      • whether capital losses have been applied against a capital gain
      • whether any capital gains are discount capital gains
      • whether any capital gains have been reduced by the small business 50% reduction and/or any of the other small business CGT concessions
      • details of the amount and type of any capital gains to which they are specifically entitled.
       
    • details of any non-assessable payment made in the income year in respect of an interest in the trust (CGT event E4 section 104-70 of the ITAA 1997). The details should indicate the extent to which the payment is attributable to each of the following:
    •  

     

    Further Information

    For information about the small business concessions, see the publication Capital gains tax (CGT) concessions for small business - overview.

    For more information about capital gains tax, see the Guide to capital gains tax 2011 (NAT 4151).

    End of further information

    Attributed foreign income G

    Show each beneficiary's share of attributed foreign income in whole dollars only. This amount is worked out by multiplying a beneficiary's percentage share of trust income by the total attributed foreign income of the trust.

    If there is trust income to which no beneficiary is presently entitled, show that share of the trust's attributed foreign income at G under Income to which no beneficiary is presently entitled at the end of item 65.

    The total G amounts for each completed statement of distribution must equal the sum of any attributed foreign income shown at item 22 Attributed foreign income on the trust tax return.

    If the beneficiary was not a resident of Australia at any time during the income year, see Non-resident beneficiaries.

    Other assessable foreign source income H

    Show each beneficiary's share of other assessable net foreign source income in whole dollars only. This amount is worked out by multiplying a beneficiary's percentage share of trust income by the total of the trust's other assessable net foreign source income.

    The total of H amounts for each completed statement of distribution must equal the amount of net foreign source income shown at V Net item 23 on the trust tax return.

    If the beneficiary was not a resident of Australia at any time during the income year see Non-resident beneficiaries.

    Foreign income tax offsets I

    Show each beneficiary's share of foreign income tax offsets at I.

    This amount is worked out by multiplying a beneficiary's percentage share of trust income by the total of the trust's foreign income tax offsets.

    If there is trust income to which no beneficiary is presently entitled, show that share of the trust's foreign income tax offset at I under Income to which no beneficiary is presently entitled at the end of item 65.

    The total of I amounts for each completed statement of distribution must equal the amount of foreign income tax offsets shown at ZForeign income tax offset item 23 on the trust tax return.

    Share of National Rental Affordability Scheme tax offset R

    Show each beneficiary's share of the NRAS tax offset (include cents).

    A beneficiary's share of the NRAS tax offset will depend on their entitlement to the NRAS rent derived by the trustee (or flowing to the trustee via a partnership or another trust) having regard to the trust deed and any relevant trustee resolution.

    The beneficiary's entitlement to the NRAS rent is expressed as a percentage of the total NRAS rent derived from all rental dwellings covered by the certificate issued by the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs. To work out the beneficiary's entitlement to the NRAS rent where it has come via one or more trusts or partnership, you will need to work out the entitlements to the NRAS rent of each interposed entity in the chain through which the amount flowed.

    • The beneficiary's percentage entitlement is then multiplied by the amount of the tax offset stated in the certificate relating to those dwellings (or the tax offset amount stated in any amended certificate).

    If only some of the beneficiaries to whom the income of the trust has been distributed are entitled to benefit from the NRAS rent, then only those beneficiaries will be entitled to the offset.

    If the trustee is assessable on a part of the net income under section 99 or 99A the trustee may be entitled to the NRAS offset. To work out the trustee's entitlement, express that part of the NRAS rent in respect of which no beneficiary has an entitlement as a percentage of the total NRAS rent derived from all rental dwellings covered by the certificate. Multiply the result by the amount of the tax offset stated in the certificate at R under Income to which no beneficiary is presently entitled at the end of item 65.

    A trustee may also be entitled to the NRAS offset if the trust does not have any net income for the year (see section 380-20 of the ITAA 1997). Record the trustee's entitlement at R under Income to which no beneficiary is presently entitled at the end of item 65.

    The total of the amounts shown at R for each completed statement of distribution must equal the amount of NRAS tax offset entitlement shown at F item 62 on the trust tax return. Include cents.

    Last modified: 13 Aug 2014QC 24223