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  • About question 13

    Question 13 image from Tax return for individuals (supplementary section) form

    Danger

    Do not show the following income at this item or you may be taxed incorrectly:

    • attributed foreign income and any other foreign source income from a partnership or trust; see questions 19 and 20
    • a net capital gain from a trust; see question 18
    • a capital gain or a capital loss in respect of your interest in a partnership or a partnership asset; see question 18
    • income from a corporate limited partnership; see question 11 in TaxPack 2011
    • income from a public trading trust or a corporate unit trust; see question 11 in TaxPack 2011
    • interest you received, or were credited with, from a joint account, where you quoted your individual tax file number to the financial institution; see question 10 in TaxPack 2011
    • that part of a distribution which relates to an amount of trust income on which family trust distribution tax has been paid (see question A4) or trustee beneficiary non-disclosure tax has been paid
    • rent derived jointly (or in common) with another person from a jointly held property where you were not a member of a partnership carrying on a business of renting out properties.
    End of danger

    Did you receive or were you entitled to:

    • income or a loss from a partnership
    • income from a trust (including a managed fund)
    • a credit for amounts of tax paid on or amounts withheld from partnership or trust income, or
    • a share of the national rental affordability scheme tax offset

    or
     

    did you have an interest in a trust that made a loss from primary production activities?

    If the partnership in which you were a partner paid you salary, wages or allowances, you must show that income at this item.

    If you received or were entitled to a share of the income of a trust (including a managed fund) you must show your share of the trust's net income (for tax purposes) at this item. The amount of your share of the trust's net income (for tax purposes) may be different from the actual distribution which you receive or are entitled to receive from the trust. Your trustee should provide you with details of your share of trust's net income in your trust statement of distribution or advice. If you have not been advised about your share of the trust's net income, contact your trustee.

    You must show at this item your share of the net income of a managed fund, including a cash management trust, money market trust, mortgage trust, unit trust or managed fund such as a property trust, share trust, equity trust, growth trust, imputation trust or balanced trust. If you are unsure whether you have invested in such a trust, check with your advisor or the entity in which you have invested.

    If you are the principal beneficiary of a special disability trust you are considered to be entitled to all the income of the trust.

    No

     

    Yes

    Read below.

    You need to know

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    If you have received or are entitled to an amount of income from a partnership or trust which includes a dividend with Australian franking credits from a New Zealand company, you may be eligible to claim the Australian franking credits. The instructions at question 20 - Foreign source income and foreign assets or property provide guidance on how to claim Australian franking credits from a New Zealand company. However, you cannot claim New Zealand imputation credits.

    If you have deferred non-commercial business losses from a prior year, you may be able to claim them this year if you operated the same or a similar business. The deferred non-commercial business loss deduction you can claim in 2010-11 may be reduced if:

    • you earned net exempt income in 2010-11, or
    • you have become bankrupt or were released from any debts by the operation of an Act relating to bankruptcy.

    Phone 13 28 66 for more information.

    If you were entitled to an amount of trust income at 30 June 2011, you need to include your share of the net income of the trust in your 2010-11 tax return even if you did not receive a distribution from the trust until after 30 June 2011. If you have not been advised about all of your trust entitlements, contact your trustee.

    Further Information

    If the trust income which you have received or are entitled to includes an amount described as tax-free, tax deferred, tax exempted or as a capital gains tax (CGT) concession, you must read the information on non-assessable payments in Guide to capital gains tax 2010-11 (NAT 4151) (While such amounts may not need to be included at this item, they may be relevant in determining the amount of a net capital gain you show at item 18 or may affect the cost base of your unit or trust interest).

    End of further information

    Do not show all categories of income from a partnership or trust at this item. If your partnership distribution or your trust statement of distribution or advice includes amounts of the following categories, show them at other items on your tax return:

    You should not receive a distribution of a net capital gain or a net capital loss from a partnership. For information about how a partner shows their share of a capital gain or capital loss, see Guide to capital gains tax 2010-11.

    Danger

    Access to income averaging for beneficiaries of trusts that report a loss

    The government has legislated to enable beneficiaries to continue to access income averaging in years where a primary production trust reports a loss.

    For more information, refer to Income averaging for beneficiaries of primary production trusts.

    These changes may also affect your eligibility to hold a farm management deposit.

    End of danger

    What you may need

    • A statement of distribution or advice from the partnership or trustee showing the following details in relation to your share of any distribution and your share of the trust's net income for tax purposes
    •  
      • the amount of any primary production income or loss and the amount of any non-primary production income or loss
      • the amount of attributed foreign income and other foreign source income
      • the amount of any income on which family trust distribution tax or trustee beneficiary non-disclosure tax has been paid
      • your entitlement to any of the following credits or tax offsets
        • credit for amounts of tax withheld because the partnership or trust failed to quote its Australian business number
        • credit for amounts of tax withheld by the trustee of a closely held trust because you did not provide your tax file number (TFN)
        • credit for amounts of tax withheld due to the imposition of non-resident withholding tax or managed-investment trust withholding tax from partnership or trust income you received when you were a resident
        • credit for amounts withheld from partnership and trust income as a result of the foreign resident withholding rules
        • share of the national rental affordability tax offset
        • allowable franking credits from franked dividends
        • credit for tax file number amounts withheld
        • credit for tax paid by the trustee
         
       
    • Details of any deductions you can claim against your partnership income or your share of the trust's net income that have not already been claimed by the partnership or trust
    • The publication Business and professional items 2011 (NAT 2543) which contains the Business and professional items schedule for individuals 2011 (NAT 2816). If you conducted a business activity as a partner in a partnership that resulted in a loss, or resulted in a loss after deducting your expenses, you must complete items P3 and P9 on the Business and professional items schedule for individuals 2011 in addition to item 13.
    Attention

    If you think that any details are wrong or are missing from the statement of distribution or advice you received from the partnership or trust, contact the managing partner or trustee.

    Foreign residents who have received a fund payment from a managed investment trust on which an amount was withheld should read New withholding arrangements for managed fund distributions to foreign residents.

    End of attention

    Completing this item

    Answer the following three questions first.

    If you were an Australian resident, you may be able to claim a credit for Australian withholding tax you have borne on any Australian source dividend, interest, royalty or payment from an Australian managed-investment trust included in the income of a non-resident trust to which you are entitled. A non-resident trust is a trust which, for all of the income year:

    • only has non-resident trustees, and
    • has its central management and control outside Australia.
    1. Were you an Australian resident in receipt of, or entitled to receive, Australian source income from a non-resident trust?
     

    No

    Yes

    If you were under a legal disability, you may be able to claim a credit for the tax that the trustee has paid on your share of the trust's net income. You are considered to be under a legal disability if:

    • you are under 18 years old on 30 June 2011
    • you are a person who is bankrupt
    • you have been declared legally incapable because of a mental condition, or
    • you are the principal beneficiary of a special disability trust and you are an Australian resident on 30 June 2011.
    1. Were you under a legal disability?
     

    No

    Yes

    If you were not an Australian resident, you may be able to claim a credit for the tax that the trustee has paid on your share of income from a resident trust.

    1. Were you a non-resident?
     

    No

    Yes

    If you answered No to all three questions, go to part A below.

    If you answered Yes to one or more of these questions, you will need to provide additional information. Print 'SCHEDULE OF ADDITIONAL INFORMATION - ITEM 13' at the top of a separate sheet of paper. Print your name, address, tax file number, the name of the trust, your share of income from the trust and any credits you are entitled to claim for that income, and explain your situation. Print X in the Yes  box at Taxpayer's declaration question 2a on page 12 of your tax return. Attach your schedule to page 3 of your tax return. Read below.

    Part A

    Were you a partner in a partnership that derived income or made a loss?

    No

    Go to part B below.

    Yes

    Read below

    Step 1

    Write the total of your share of primary production partnership income or loss at N item 13 on page 13 of your tax return. Do not show cents. If you have a loss, print L in the box at the right of N.

    Step 2

    Write the total of your share of non-primary production partnership income or loss (excluding any attributed foreign income or other foreign source income) at O item 13. Do not show cents. If you have a loss, print L in the box at the right of O.

    Step 3

    Complete items P3 and P9 on the Business and professional items schedule for individuals 2011 if the amount at N or O includes a loss from a business activity operated by one or more of your partnerships.

    Part B

    Did you receive or were you entitled to income from a trust?

    If you are the principal beneficiary of a special disability trust you are considered to be entitled to all of the income of the trust.

    No

    Go to part C below.

    Yes

    Read below.

    Your statement of distribution or advice from the trust should show separately your share of primary production and non-primary production income (excluding net capital gains and foreign income) included in the calculation of the trust's net income (for tax purposes). It will also show whether the trust made a loss in relation to either or both of these income categories. This information is needed for averaging purposes.

    You show your share of any primary production trust income or loss included in the calculation of the trust's net income at L item 13 on your tax return and your share of other trust income or loss included in the calculation of the trust's net income at the relevant item, either U item 13, or item 18, 19 or 20 on your tax return.

    If the trust made an overall loss for tax law purposes in 2010-11, the loss is retained in the trust. You will have no share of the net income of the trust.

    If you need help, phone 13 28 61.

    Step 1

    Write the total of your share of primary production trust net income or loss at L item 13 on your tax return. Do not show cents. If you have a loss, print L in the box at the right of L.

    Step 2

    Write at U the total of your share of non-primary production trust net income or loss. Include any share of credit (including franking credits from franked dividends) to be shown in the labels for share of credits from income covered in part E below. Exclude any:

    • net capital gain
    • attributed foreign income
    • other foreign source income.

    If you have a loss, print L in the box at the right of U.

    Part C

    Can you claim any deductions in relation to a distribution from a partnership or trust?

    No

    Go to part D below.

    Yes

    Read below.

    Remember, you cannot claim a deduction for amounts already claimed by the partnership or trust, or for expenses incurred in deriving exempt income or non-assessable non-exempt income (for example, expenses incurred in deriving distributions on which family trust distribution tax or trustee beneficiary non-disclosure tax has been paid).

    If you are the beneficiary of a discretionary trust you would not normally be able to claim a deduction for expenses you incurred in relation to your share of any net income of the trust under the general deduction provisions. This is because at the time you incurred the expense, you would not have been entitled to any income of the trust.

    If you made a prepayment of $1,000 or more for something to be done (in whole or in part) in a future income year, the amount you can deduct at X and Y may be affected by the rules relating to prepayments.

    Further Information

    For more information on prepayments, see Deductions for prepaid expenses 2011 (NAT 4170).

    End of further information

    If you have incurred debt deductions, such as interest and borrowing costs, in relation to a distribution from a partnership or trust of more than $250,000 (alone or combined with those of your associate entities) for 2010-11, the amount that you can deduct at X and Y may be affected by the thin capitalisation rules.

    Primary production deductions

    Step 1

    If you were a partner in a partnership that incurred eligible expenditure on landcare operations or water facilities, the partnership cannot claim the expenditure. Costs incurred by the partnership are allocated to each partner who can then claim the deduction.

    Write your share of the total of any such expenditure that relates to primary production income or loss from partnerships that you can deduct this year at I item 13 on your tax return.

    If a trustee incurred eligible expenditure on landcare operations or water facilities, only the trustee, not a beneficiary of the trust, can claim deductions for that expenditure.

    Further Information

    For further information on deductions for expenditure on landcare operations and water facilities, see Guide to depreciating assets 2010-11 (NAT 1996).

    End of further information

    Step 2

    Write at X item 13 the total of any other deductions (including non-commercial business losses deferred from a prior year) you can claim in relation to your share of:

    • primary production income or loss from a partnership, or
    • primary production income of a trust.

    If you were a partner in a partnership and you can claim a deduction in relation to your share of eligible expenditure incurred by the partnership on horticultural plants, grapevines, electricity connections or phone lines, include any such deduction that relates to primary production income or loss from a partnership at X. For information about deductions for expenditure on horticultural plants, grapevines, electricity connections and phone lines, see the Guide to depreciating assets 2010-11.

    Attention

    Include a non-commercial business loss deferred from a prior year business activity only if it relates to one of your current year partnership business activities which is the same as, or similar to, the prior year business activity which generated the loss. See the example below.

    End of attention

    Step 3

    From the list below, print the code letter in the TYPE box at the right of X that describes business losses from a prior year that you are claiming at X.

    Print D if the entire amount at X is a deferred non-commercial business loss from a prior year.

    Print P if only part of the amount at X is a deferred non-commercial business loss from a prior year.

    Leave the TYPE box blank if the amount at X does not include any deferred non-commercial business losses from a prior year.

    Non-primary production deductions

    Step 1

    If a partnership incurs eligible expenditure on landcare operations, the partnership cannot claim the expenditure. Costs incurred by the partnership are allocated to each partner who can then claim the deduction. Write your share of the total of any such expenditure that relates to non-primary production income or loss from partnerships that you can deduct this year at J item 13.

    If a trustee incurred eligible expenditure on landcare operations, only the trustee, not a beneficiary of the trust, can claim deductions for that expenditure. For more information on deductions for expenditure on landcare operations, see the Guide to depreciating assets 2010-11.

    Step 2

    Write at Y item 13 the total of other deductions (including non-commercial business losses deferred from a prior year) you can claim in relation to your share of:

    • non-primary production income or loss from a partnership, and
    • non-primary production income of a trust.

    If you were a partner in a partnership and you can claim a deduction in relation to your share of eligible expenditure incurred by the partnership on electricity connections, include any such deduction that relates to non-primary production income or loss from partnerships at Y item 13. For information about deductions for expenditure on electricity connections, see the Guide to depreciating assets 2010-11.

    Attention

    Note

    Include non-commercial business losses deferred from a prior year only if they relate to a partnership activity which is the same as, or similar to, your current year partnership activity.

    End of attention

    Step 3

    From the list below, print the code letter in the TYPE box at the right of Y that describes business losses from a prior year that you are claiming at Y.

    • Print D if the entire amount at Y is a deferred non-commercial business loss from a prior year.
    • Print P if only part of the amount at Y is a deferred non-commercial business loss from a prior year.

    Leave the TYPE box blank if the amount at Y does not include any deferred non-commercial business losses from a prior year.

    Example

    In 2009-10 Lisa deferred total non-commercial business losses of $6,000 from her share of partnership business activities made up of:

    • $5,000 from a furniture restoration business, and
    • $1,000 from a computer consultancy business.
     

    The partnership did not carry on the computer consultancy business in 2010-11. Lisa cannot include her $1,000 loss from the computer consultancy business at Y. This amount does not relate to a business activity which is the same as, or similar to, her current year partnership business activity.

    In 2010-11 Lisa's partnership distribution from the furniture restoration business was $2,000. Lisa includes the $2,000 at O, $5,000 as a deferred loss relating to the furniture restoration business at Y and prints D in the TYPE  box. Therefore, her net distribution from this partnership business activity is a loss of $3,000.

    Lisa must also show her $5,000 loss from the furniture restoration business at item 16 and against Deferred non-commercial business loss from a prior year at item P9 on the Business and professional items schedule for individuals 2011. She must also show the net distribution of the $3,000 loss from the furniture restoration business against Net loss at item P9.

    Lisa should keep a record of her $1,000 deferred loss from the computer consultancy business, as she may be able to claim it in a later year if that business starts again or she starts a similar business.

    Part D

    Working out net distribution from primary production and non-primary production

    Step 1

    Net primary production distribution

    Add the income amounts at N and L or deduct loss amounts (if any) and take away the amounts at I and X. Write the answer at item 13 Net primary production distribution on your tax return. Do not show cents.

    If your answer is a loss, print L in the LOSS box at the right of Net primary production distribution.

    If you have a total net loss from a partnership business activity, complete items P3 and P9 on the Business and professional items schedule for individuals 2011 in addition to item 13 on your tax return.

    Step 2

    Net non-primary production distribution

    Add the income amounts at O and U or deduct loss amounts (if any) and take away the amounts at J and Y. Write the answer at item 13 Net non-primary production distribution.

    If your answer is a loss, print L in the LOSS box at the right of Net non-primary production distribution.

    If you have a total net loss from a partnership business activity, complete items P3 and P9 on the Business and professional items schedule for individuals 2011 in addition to item 13 on your tax return.

    Attention

    If the partnership or trust income which you have received or to which you are entitled includes income from activities as an author of a literary, dramatic, musical or artistic work, inventor, performing artist, production associate or active sportsperson, you must also write the amount of this taxable professional income at Z item 24. You will not be taxed twice on this income. More information is available at question 24 - Other income.

    End of attention

    Part E

    Share of credits from income and tax offsets

    If the partnership or trust income you have shown at N, L, O or U item 13 on your tax return includes or is attributable to:

    • income from which an amount of tax was withheld because an Australian business number was not quoted; write your share of the distributed credit at P item 13 (show cents)
    • interest, dividends and unit trust distributions from which tax file number (TFN) amounts have been withheld; write the total of your share of credits for TFN amounts withheld at R item 13 (show cents)
    • payments from a closely held trust from which TFN amounts have been withheld; write the total of your credits for those amounts withheld at M item 13 (show cents)
    • income
      • you received when you were an Australian resident from which an amount of tax was withheld because of the imposition of non-resident withholding tax or managed investment trust withholding tax
      • you derived as a non-resident from which an amount of tax was withheld because of the operation of the foreign resident withholding rules;
        - write the total amount of these credits for amounts withheld at A item 13 (show cents)
       
    • national rental affordability scheme rent; write your share of national rental affordability scheme tax offset at B item 13 (show cents)
    • other credits for tax paid by a trustee on trust income; write the total of your share of credits for tax paid by a trustee at S item 13 (show cents).

    Franking credits

    Write the amount of your share of any allowable franking credits which you are entitled to claim as a franking tax offset through a partnership or trust at Q item 13. Show cents.

    You can only claim a share of a franking credit which relates to the share of a franked dividend paid to a partnership or trust which is indirectly included in the amount of partnership income or loss you show at O item 13, or in the amount of trust income you show at U item 13. Therefore, you cannot claim a franking credit for a dividend paid to the partnership or trust which was exempt income or non-assessable non-exempt income (for example, a distribution on which family trust distribution tax or trustee beneficiary non-disclosure tax has been paid).

    You cannot claim a share of a franking credit through a trust in the following circumstances:

    • the trust has an overall loss for tax purposes for 2010-11
    • you did not show an amount of income from the trust at U item 13, or
    • the amount of income from the trust you have shown at U item 13 is not attributable to the franked dividend which has generated the franking credit.

    In addition, in order to claim a franking credit in respect of a particular dividend both you and the partnership or trustee must be qualified persons in relation to that dividend, see Qualified person below.

    Qualified person

    There are rules (known as franking credit trading rules) designed to prevent the use of franking credits by persons who do not effectively own their shares or who only briefly own their shares. Under these rules, known as the 'holding period rule' and the 'related payments rule', you must satisfy certain criteria before you are considered to be a qualified person.

    If you derived dividends indirectly through a distribution from a partnership or trust (except a widely held trust) you need to determine what component of the trust or partnership distribution is attributable to a particular dividend, and then determine whether you have satisfied the holding period rule and the related payments rule in relation to that dividend.

    The trustee or the partnership itself must also have satisfied these rules.

    The holding period rule applies to shares bought on or after 1 July 1997. It applies to you if you (or the partnership or trust) sold shares within 45 days of buying them. It also applies to you if you (or the partnership or trust) entered into a risk reduction arrangement, such as a derivative transaction, within that time. The holding period is 90 days for certain preference shares.

    The related payments rule applies to arrangements entered into after 7.30pm (Australian Eastern Standard Time) on 13 May 1997. It applies to you (or the partnership or trust) if you were under an obligation to make a related payment for a dividend and you did not hold your shares 'at risk' during a specified qualifying period.

    Special rules apply if you are the beneficiary of a trust and the trustee has made a family trust election.

    If you are a beneficiary in a widely held trust, you are treated as holding an interest in all the shares or interests held by the trust. You are only required to satisfy the 45-day rule in relation to your interest in the trust as a whole, rather than in relation to each share in which you had an interest under the trust. The trustee should be able to advise if a particular trust qualifies as a widely held trust.

    If you failed to satisfy the holding period rule, and the related payments rule does not apply to you, you may still be entitled to a franking tax offset if you qualify for the small shareholder exemption. The small shareholder exemption applies provided that you do not exceed the franking tax offset ceiling of $5,000 on all your franking tax offset entitlements in a given year, whether received directly or indirectly through a partnership or trust.

    Further Information

    If any of these measures are likely to affect you, read You and your shares 2010-11 (NAT 2632).

    End of further information

    Check that you have …

    • Completed as necessary parts A, B, C, D and E
    • Attached to page 3 of your tax return your SCHEDULE OF ADDITIONAL INFORMATION - ITEM 13, if you need to send us one
    • Kept a record of each distribution with your other records. You need the following information: name and tax file number of the partnership or trust, amount and source of distribution, amount of any taxable professional income, amount and type of deductions claimed, and amount and type of any share of credits
    Attention

    If you received a distribution from a partnership or trust that is a small business entity, you may be eligible to claim the entrepreneurs tax offset. You may need to complete item T13 - Entrepreneurs tax offset.

    End of attention

    Where to go next

     
      Last modified: 16 Sep 2014QC 25502