Streamlined trust tax return for custodians with non-resident beneficiaries
This information is for trustees who are:
- 'custodians' – that is, they provide a predominantly custodial or depository service (as defined in subsection 12-390 (9) in Schedule 1 to the Taxation Administration Act 1953)
- assessable under subsections 98(3) or 98(4) of the Income Tax Assessment Act (ITAA) 1936 for trust income that relates to non-resident beneficiaries.
These custodians can include in a single trust tax return the separate net incomes of multiple trust estates with non-resident beneficiaries.
The practical benefit is that when the resident custodian holds separate accounts for multiple unrelated clients of a non-resident global custodian (each of which may represent a separate trust estate), it will not be necessary to lodge a separate return for every trust estate.
How the streamlined arrangement works
If a custodian with subsections 98(3) or 98(4) liabilities has not previously lodged a return under this arrangement, please contact the Australian Taxation Office via LargeServiceTeam@ato.gov.au to request a specific identifier to be issued.
We will establish sub-accounts for each separate trust estate, based on the information provided by the custodian about their trustee relationships involving non-resident beneficiaries.
The custodian lodges a single tax return for what may comprise multiple trust estates. The return must include a separate statement of distribution for each beneficiary, but only with the information specified below.
This streamlined approach means that we may require additional information from time to time for our compliance assurance activities. This would be obtained under separate arrangements.
Completing the trust tax return
Use the trust tax return for the relevant income year but complete only the following items (based on the Trust tax return 2015):
- Tax file number (TFN) or specific identifier in lieu of TFN to identify the custodian in its capacity as trustee. This is created by request to the Australian Taxation Office at LargeServiceTeam@ato.gov.au
- Name of trust: name identifying the cluster of trusts (for example, ‘X Custodian Co as trustee for non-resident beneficiaries’)
- Current postal address: of custodian, as trustee
- Full name of the trustee to whom notices should be sent
- Daytime contact phone number: of custodian, as trustee
- Type of trust: ‘F’ for fixed trusts
- Is any tax payable by the trustee?
- Final tax return.
- 14 Other Australian income – give details: The total of all assessable income derived by the custodian in its trustee capacity for the non-resident beneficiaries shown in the return, including from capital gains. This is a specific departure from the usual requirement to report capital gains at a separate label.
- 15 Total of items 5 to 14: under the streamlined arrangement this must be the same as the value at item 14.
- 20 Net Australian income or loss – other than capital gains: under the streamlined arrangement this must be the same as the values at items 14 and 15.
- 26 Total net income or loss: this item is auto-filled by the system based on previous labels. Under the streamlined arrangement, the values at items 14, 15, 20 and 26 must be the same.
- 54 Statement of distribution: Complete a statement of distribution for each separate trust estate. Typically, these would relate to a global custodian in its separate capacities regarding different clients, or to direct non-resident individual or company beneficiaries.
- Name identifying the beneficiary of each trust estate: for example, 'Y Co global custodian as trustee for [name of non-resident client or group of clients]'.
- Business address of global custodian trustee: non-resident individual or non-resident company beneficiary.
- Assessment calculation code (label V): Code 138, 139 or 140 as applicable to the beneficiary type. Appropriate tax rates will be applied based on the codes. The streamlined arrangement will not affect the applicable tax rates relevant to section 98, with subsection 98(4) applying for each non-resident trustee beneficiary.
- Share of income from Primary production (label A) and/or Non-primary production (label B): Under the streamlined arrangement, the total of all labels A and/or B in the statements of distribution in the return should equal the total net income or loss figure at item 26.
- Non-resident beneficiary additional information (labels J and K).
- TB statement: for each trustee beneficiary (TB), indicate if you will be making a TB statement.
- Taxpayer's Declaration and/or Tax Agent's Declaration.
Lodging the return
Lodge the return with your usual client relationship contact, who will liaise with our investment trusts team.
Certain custodians can lodge a single trust tax return for the separate net incomes of multiple trust estates with non-resident beneficiaries.