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  • Beneficiaries that the trust reports and pays for

    As the executor, if you have made a distribution you declare income on behalf of a:

    In these cases, you'll receive a notice of assessment for the deceased estate. The name on the notice of assessment depends on whether the beneficiary has a TFN:

    • If they have a TFN, the notice of assessment will include their name.
    • If they don't have a TFN, the notice of assessment will include their beneficiary reference number

    Example - beneficiary reference number

    Jan Lee dies and her executor distributes income to her three children including two minors, Evelyn and Robert. Evelyn has a TFN but Robert doesn't. The executor reports their income and receives their notices of assessment:

    • Evelyn's is addressed to 'Trustee for the estate of the late Jan Lee / Evelyn Lee'.
    • Robert's is addressed to 'Trustee for the estate of the late Jan Lee / 003'
    End of example

    Beneficiary under a legal disability

    A beneficiary is under a legal disability if any of the following apply:

    • The beneficiary is a minor; that is, under 18 years old at 30 June of the relevant income year.
    • The beneficiary is bankrupt.
    • The beneficiary is declared legally incapable because of a mental condition.

    If the beneficiary is presently entitled but under a legal disability, the deceased estate is liable to pay tax on their behalf. You'll be assessed for tax separately for each beneficiary in this category. The general individual income tax rates apply, as do the Medicare levy and Medicare levy surcharge.

    Normally, unearned income of minors is subject to tax at higher rates and a lower tax-free threshold. However, ordinary tax rates apply to income from a deceased estate.

    The deceased estate is also entitled to tax offsets to which the beneficiary would be entitled – such as the dependent spouse, medical expenses, and private health insurance tax offsets. We automatically calculate and apply the low-income tax offset if the beneficiary' income is below the relevant threshold.

    You'll need to include a statement with the Trust tax return showing the type and amounts of tax offsets claimed.

    Non-resident beneficiary

    If the beneficiary is presently entitled and a non-resident of Australia for tax purposes:

    • you are liable to pay tax on their share of the trust income at the non-resident tax rates
    • no Medicare levy is payable.

    Don't include interest and dividends in the non-resident beneficiary's trust income –these are taxed through a non-resident withholding tax. The withholding tax rate depends on the country and whether the income is interest or dividends. You don't need to include fully franked dividends as they are not subject to withholding tax.

    See also:

    Last modified: 01 Jul 2020QC 49908