• Trust categories

    There are four categories of trusts for PAYG instalment purposes:

    • broadly held resident investment unit trusts
    • absolutely entitled trusts
    • corporate unit trusts and public trading trusts
    • other trusts (including family discretionary trusts).

    The rules for working out your proportion of instalment income from the different types of trusts are outlined below.

    Broadly held resident investment unit trusts

    A trust must satisfy very strict requirements to be a broadly held resident investment unit trust. If a trust meets the requirements and it has more than 50 unit-holders, the beneficiaries account for their trust income on a cash basis.

    If you are a beneficiary of such a trust, your instalment income must include any amount the trust has distributed to you, or applied for your benefit, in the instalment period. You include the amount even if it is assessable income of an earlier or later year and regardless of whether the amount is trust income or trust capital.

    Absolutely entitled trusts

    To be included in this category, a trust must meet all three tests:

    • Beneficiaries must be absolutely entitled to the assets of the trust.
    • Beneficiaries must have a vested and indefeasible interest in the trust income.
    • The only active duties the trustee has involve dealing with the trust income and property as directed by the beneficiaries.

    If you are a beneficiary of an absolutely entitled trust, you include in your instalment income your proportion of the instalment income earned by the trust in the period. You work out your proportion based on your vested and indefeasible interest in the trust income.

    Corporate unit trusts and public trading trusts

    If you are a beneficiary of a corporate unit trust or a public trading trust, your instalment income must include any amount the trust has distributed to you in the instalment period.

    Other trusts (including family discretionary trusts)

    If you are a beneficiary of a trust other than those outlined above, you must also include a proportion of the instalment income earned by the trust for the period.

      Last modified: 12 Aug 2016QC 16276