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  • Ultimate beneficiary schedule

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    Notes for completing the Ultimate beneficiary (UB) schedule

    This schedule is relevant only for income years starting on or before 23 September 2007. For income years starting on or after 24 September 2007, trustees of closely held trusts must make a trustee beneficiary statement as part of the trust return. See the Trust tax return instructions for more details.

    A correct UB statement will be made where the trustee correctly states in writing the following information about shares of net income and tax-preferred amounts to which trustee beneficiaries are presently entitled – see columns 1 and 2 of the UB statement:

    • in the case of resident ultimate beneficiaries, the ultimate beneficiary’s name, address and tax file number – see column 3 of the UB statement
    • in the case of non-residents, the ultimate beneficiary’s name and address – see column 3 of the UB statement
    • the amount of the net income of the closely held trust, or of the tax-preferred amount of the closely held trust, that is attributable to each ultimate beneficiary – see column 5 of the UB statement
    • the type of ultimate beneficiary in respect of net income (see Types of ultimate beneficiaries) – see column 4 of the UB statement.

    Separate UB statements should be prepared for each trustee beneficiary of the closely held trusts (irrespective of whether there are ultimate beneficiaries of shares of net income or tax-preferred income, or whether the ultimate beneficiaries are known).

    If there is not enough space on the UB statement to answer item 1A, make as many photocopies as necessary of the blank UB statement. Complete item 1A and attach all copies to the UB schedule. Write the number of copies of the UB statement at item 1 on the schedule.

    Changes have been made to the reporting obligations for trustees of closely held trusts with effect from the first income year starting on or after 24 September 2007. For more information see the Trust tax return instructions.

    Transitional provisions apply from 1 July 2006 to 23 September 2007 to ensure that a trustee of a closely held trust is not liable to pay ultimate beneficiary non-disclosure tax under the former sections 102UK or 102UM of the ITAA 1936 in respect of a share of the net income of the trust in any of the following circumstances:

    • where the trustee has been taxed in respect of that share of net income, or the share is reasonably attributable to an amount in respect of which another trustee has been taxed, under subsection 98(4) of the ITAA 1936
    • to the extent the share is represented by or reasonably attributable to an amount which is liable to withholding tax under the new Subdivision 12-H in Schedule 1 to the TAA 1953 or
    • where the share is represented by or reasonably attributable to an amount which was liable to tax under section 255 of the ITAA 1936.

    Types of ultimate beneficiaries

    A trustee of a closely held trust is required to disclose the category to which an ultimate beneficiary of an amount belongs. These categories are:

    • Type P – the present entitlement case

    The person is a ‘listed person’ and is a trustee beneficiary of the closely held trust or is presently entitled to the amount of the closely held trust indirectly through one or more other trusts or partnerships.

    A listed person includes an individual or company (but only where the individual or company does not act as the trustee of a trust); a trust that is not closely held; a pooled superannuation trust, complying superannuation fund or complying approved deposit fund; and certain tax-exempt and charitable trusts.

    • Type N – the no present entitlement case

    The person is a trustee beneficiary or is the trustee of a trust and is presently entitled to the amount of the closely held trust indirectly, and no beneficiary of the trust of which the person is trustee is presently entitled to the amount of the closely held trust.

    • Type F – the full absorption case

    The person is the trustee of another closely held trust and is a trustee beneficiary or is presently entitled to a part of a share of the net income of the closely held trust indirectly, and the part of a share of net income of the closely held trust is absorbed by allowable deductions in working out the net income of the trust in which the person is trustee.

    Notes for Ultimate beneficiary schedule and payment advice

    General information

    Trustees of closely held trusts are required to disclose to the Commissioner of Taxation (the Commissioner) the identity of ultimate beneficiaries presently entitled to net income and tax-preferred amounts to which a trustee beneficiary is presently entitled, where the present entitlement was created after 4.00 pm on 13 August 1998. The disclosure must be made within a specified period after the end of the relevant income year.

    A ‘closely held trust’ is a discretionary trust or a trust where up to 20 individuals have fixed entitlements to a 75% or greater share of the income or of the capital of the trust.

    Where the trustee of a closely held trust does not correctly identify the ultimate beneficiaries of net income within the specified period, tax referred to as ultimate beneficiary non-disclosure tax is imposed on that part of the net income of the trust at the top marginal rate plus the Medicare levy. Tax is imposed at the same rate if there is no such ultimate beneficiary of that part of the net income.

    Where the trustee does not disclose the ultimate beneficiaries of tax-preferred amounts, tax is not imposed, but there may be offences under the TAA 1953.

    As noted on the previous page, changes have been made to the reporting obligations for trustees of closely held trusts from the first income year starting on or after 24 September 2007. For more information see the Trust tax return instructions.

    Also as noted on the previous page transitional provisions apply from 1 July 2006 to 23 September 2007 to ensure that in specified circumstances a trustee of a closely held trust is not liable to pay ultimate beneficiary non-disclosure tax under the former sections 102UK or 102UM of the ITAA 1936.

    What is the schedule for?

    This schedule enables trustees of closely held trusts to comply with the disclosure requirements in respect of ultimate beneficiaries to net income and tax-preferred amounts of the trusts. This is referred to in the tax laws as a ‘UB statement’.

    Who should complete this schedule?

    Trustees of closely held trusts with trustee beneficiaries presently entitled to a share of net income or tax-preferred amounts should complete this schedule.

    When must trustees forward this schedule to the Commissioner?

    Trustees to whom these measures apply are required to provide the Commissioner with correct UB statements within the ‘UB statement period’. The UB statement period is the period from the end of the relevant income year until the end of the period within which the trustee is required to furnish to the Commissioner the closely held trust’s return of income for that year.

    For example, if a trustee is required to furnish to the Commissioner the trust’s return by 31 October after the end of the income year, the UB statement period runs until 31 October.

    Notes for completing the UB schedule items 2 and 4(i)

    If the trustee does not know whether an ultimate beneficiary is presently entitled to a part of a share of net income, that amount should be included under items 2 and 4(i).

    Label L – Notional tax offset

    The amount of any ultimate beneficiary non-disclosure tax payable is reduced by the amount of any tax offset to which the trustee of the closely held trust would be entitled in an assessment under section 99A of the ITAA 1936 if it were assumed that the trustee were assessed and liable to pay tax under that section on that part of the share of net income.

    What is the payment advice for?

    The payment advice is to be used if the trustee of a closely held trust is liable to pay ultimate beneficiary non-disclosure tax.

    To whom does the liability to ultimate beneficiary non-disclosure tax fall?

    The trustee of the closely held trust is assessed and is liable to pay the tax. Where the trustee of the closely held trust is a corporate trustee, the trustee and the directors of the company are jointly and severally liable to pay the tax.

    Where ultimate beneficiary non-disclosure tax is imposed on a share of the net income of the closely held trust, the share of the net income is not included in the assessable income of the trustee beneficiary (so the amount flows on as a tax-preferred amount, not as assessable income).

    When is ultimate beneficiary non-disclosure tax due and payable?

    Ultimate beneficiary non-disclosure tax is due and payable 21 days after the end of the UB statement period or such later day as the Commissioner, in special circumstances, allows.

    How to pay ultimate beneficiary non-disclosure tax

    If you pay by BPAY® or direct credit you should still mail the completed Ultimate beneficiary schedule to:

    Deputy Commissioner of Taxation
    PO Box 1032
    Albury  NSW  2640

    ® Registered to BPAY Pty Ltd ABN 69 079 137 518

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    Last modified: 31 May 2018QC 17750