• Working out your proportion

    Formula

    There is a formula for working out your proportion of the trust's instalment income.

    You need to know the amounts for A, B and C of the formula below to work out what proportion of the trust's instalment income to include in our own instalment income for the current period.

    You can use the trust's most recent tax return to find the information you need.

    These amounts need to be updated when a future trust tax return is lodged, usually once a year, or when the most recent trust tax return is amended.

    Formula

    • (A ÷ B) × C

    A is your assessable income from the trust for the last income year. This amount is shown on the trust's tax return at item 54.

    B is the trust's instalment income for the last income year. This is generally the trust's gross ordinary income. It is the total of the amounts shown on the trust's tax return at the following items:

    • 5: Total business income
    • 8: Distribution from partnerships (items A and B only), and Distribution from trusts (items Z and R only)
    • 9: Gross rent (item F only)
    • 10: Forestry managed investment scheme (item Q only)
    • 11: Gross interest (item J only)
    • 12: Dividends received (items K and L only)
    • 14: Other Australian income
    • 23: Other assessable foreign source income (item B only)
    • 31: Taxation of financial arrangements (TOFA) made up of total TOFA gains (label M) less TOFA losses (label N). Only include if this is a positive amount.

    C is the trust's instalment income for the current period. You can obtain this amount from the trustee or the trust's records for each instalment period as it may change from one period to the next.

    There may be times when the result is zero (for example, because the trust incurred a loss in an earlier year). In these cases, you need to estimate a fair and reasonable amount of current instalment income from the trust.

    You can use the trust's most recent tax return to find the information you need to calculate using the formula.

    There is a worksheet at the end of these instructions you can use to help work out your proportion of your trust's instalment income. If you are a beneficiary of more than one trust, you must include an amount for each trust.

    Example

    This example is based on the Trust tax return.

    Example: Working out your share of your trust's instalment income

    Jill conducts a clothing business as a sole trader. She is also one of three beneficiaries of a discretionary trust operating a building business. Jill is required to pay PAYG instalments and we have notified her of an instalment rate.

    Jill reports and pays her PAYG instalments every quarter. She works out her PAYG instalments using Option 2 (instalment rate × instalment income).

    Jill needs to work out her proportion of instalment income from the trust, and the amounts she has earned in her own capacity.

    To work out her proportion of the trust's instalment income, Jill needs to know the amounts for A, B and C of the formula:

    • A: assessable income from the trust for the last income year
    • B: the trust's instalment income for the last income year
    • C: the trust's instalment income for the current period.

    Jill obtains the first two amounts from the trustee or from the trust's tax return for the most recent year for which she has an assessment, as shown below.

    Jill's assessable income from the trust for the last income year is 45,000. This is shown at item 54 label B on the trust's tax return (Share of income – Non primary production).

    Item 54 on the Trust tax return with label B completed with 45,000

    The amount Jill includes at B in the formula above is the trust's gross ordinary income. This is the total of the amounts shown at the following items on the trust's tax return:

    5 Business income and expenses
    The amount is $200,000 at label H (Other business income)

    Item 5 on the Trust tax return with label H and total business income completed with 200,000

    Plus

    8 Partnerships and trusts
    The amount is $4,000 at label B (Non-primary production - Distribution from partnerships, less foreign income)

    Item 8 on the Trust tax return with label B completed with 4,00

    Plus

    9 Rent
    The amount is $5,400 at label F (Gross rent)

    Item 9 on the Trust tax return with label F completed with 5,400

    Plus

    10 Forestry managed investment scheme income
    The amount is nil – label G is left blank

    Plus

    11 Gross interest, including Commonwealth Government loan interest
    The amount is $230 at label J

    Item 11 on the Trust tax return with label J completed with 230

    Plus

    12 Dividends
    The amount is $56 at label L (Franked amount)

    Item 12 on the Trust tax return with label L completed with 56

    Plus

    14 Other Australian income
    The amount is $230 at label O

    Item 14 on the Trust tax return with label O completed with 230

    Plus

    23 Other assessable foreign source income, other than income shown at Item 22
    The amount is nil - label B is left blank

    Plus

    31 Taxation of financial arrangements
    The amount is nil so label M and N are left blank

    Taxation of financial arrangements (TOFA)

    As the trust in this example is a mature TOFA entity, only the net TOFA income needs to be included in instalment income. Jill calculates the net TOFA income by first reducing her instalment income by the value of gross TOFA income that has been received. Then she adds back the net TOFA amount. The net TOFA amount is calculated as TOFA gains (label M) less TOFA losses (label N). Jill includes the result as it is a positive amount.

    The total trust instalment income for the last income year, as shown at the above items on the trust's tax return, is $209,686.

    The trust's instalment income for the current period is $69,400. This amount is for building services.

    Jill's proportion of the trust's instalment income for the quarter is:

    ($45,000 ÷ $209,686) × $69,400 = $14,893

    Jill adds $14,893 to her instalment income from her clothing business when working out her instalment income for the period.

    End of example

    Worksheet

    Use this worksheet to work out your proportion of the trust's instalment income. This worksheet is based on the Trust tax return.

    Calculating your proportion of your trust's instalment income

     


    Item

    Total

    A

    Your assessable income from the trust for the last income year (item 54)

    $

    B

    Trust's instalment income for the last income year

     


    Total business income (item 5)

    $

    Distribution from partnerships (items 8A and 8B)

    $

    Distribution from trusts (items 8Z and 8R)

    $

    Gross rent (item 9F)

    $

    Forestry managed investment scheme income (item 10Q)

    $

    Gross interest (item 11J)

    $

    Dividends received (items 12K and 12L)

    $

    Other Australian income (item 14O)

    $

    Other assessable foreign source income (item 23B)

    $

    Taxation of financial arrangements (TOFA), which is total TOFA gains (label 31M) less TOFA losses (label 31N).

    $

    C

    Trust's instalment income for the current period

    $

    Your proportion of the trust's instalment income is:

    (A ÷ B) × C =

    ($............... ÷ $ ................) × $............... = $ .................

    $

    See also:

      Last modified: 22 Feb 2017QC 16276