Show download pdf controls
  • When a beneficiary is presently entitled

    Understanding when a beneficiary is 'presently entitled' is an important concept that affects who declares declaring income and who pays any tax payable:

    • If a beneficiary is presently entitled to income of a deceased estate then they are responsible for declaring any income and paying any tax due.
    • If a beneficiary is not presently entitled to income of a deceased estate then the deceased estate trustee is responsible for declaring any income and paying any tax due.

    Beneficiaries are presently entitled to the income of a deceased estate if they have:

    • an indefeasible, absolutely vested interest in the income – in other words, they have a claim or interest in the income that can't be defeated by another person
    • the right to demand immediate payment of the income – this means that beneficiaries can be presently entitled even though they may not have actually received an income distribution.

    This means that a beneficiary may be presently entitled before they receive the actual payment or distribution.

    Find out about:

    Superannuation death benefits and death benefit termination payments you receive as the executor are considered income to which no beneficiary is presently entitled.

    On this page:

    Work it out each year

    The question of whether any beneficiary is presently entitled to the net income of the deceased estate is determined on the last day of each income year (30 June). A beneficiary who is presently entitled at 30 June is assessed on their share of the net income for the whole of the income year.

    The income is assessable in the year the present entitlement arose, not in the year the amount is received. For example, if a beneficiary was presently entitled to the deceased estate income on 30 June 2018 but did not receive it until September 2018, they are personally assessable on that amount in the year ended 30 June 2018, not in the year ended 30 June 2019.

    Provide information to beneficiaries

    All beneficiaries need the following information to prepare their own tax returns:

    • their share of trust income to which they were presently entitled
    • the amount of their entitlement that was paid to someone else for their benefit
    • the assessable income amount
    • their share of franking credits associated with any dividends in the trust distribution.

    Beneficiaries presently entitled but under a legal disability

    Beneficiaries presently entitled but under a legal disability also need to know the amount of tax you've paid on their behalf. They are entitled to receive a tax credit for this so that the same amount isn't taxed twice.

    Non-resident beneficiaries

    Non-resident beneficiaries will also need to know the amount of:

    • interest in their distribution and the withholding tax paid
    • unfranked dividends in their distribution and the withholding tax paid
    • franked dividends in their distribution
    • tax you have paid on their behalf.

    Next step:

    Last modified: 27 Jun 2019QC 40484