ato logo

64 Income of the trust estate

Last updated 11 February 2019

Show at A the income of the trust estate for trust law purposes. This is the total distributable income of the trust that is legally available for distribution to trust beneficiaries in the income year. This calculation may depend on the terms of the trust and general trust law principles - you may need to carefully consider the trust deed, the trust accounts and relevant resolutions to determine what the trust's distributable income is.

If the income of the trust estate is a loss amount, then enter '0' at A.

A beneficiary who is presently entitled to a share of the income of the trust estate shown here at A item 64 will have an amount recorded at W item 65 statement of distribution.

The 2010 High Court of Australia case of Bamford clarified the meaning of 'income of the trust estate' and 'share of income'. In response to the judgment the ATO released a Decision Impact Statement, the key propositions contained in the DIS include:

  • the income of a trust estate for trust law purposes and its income for tax purposes are two different subject matters which do not necessarily correspond;
  • in subsection 97(1) of the Income Tax Assessment Act 1997 'income of the trust estate' takes its meaning from the general law of trusts and not from taxation law;
  • under the general law of trusts the concept of 'income' is governed by a set of rules designed to ensure that trustees fairly apportion the receipts and outgoings of a period between those entitled to income and those with an interest in capital;
  • the rules of apportionment adopted by the general law of trusts take the form of presumptions about whether particular receipts or outgoings constitute income or capital. The trust law presumptions can be displaced by express provision in the trust deed;
  • the apportionment of receipts and outgoings forms part of the processes in trust administration, whereby the 'surplus or distributable income' to which income beneficiaries may become presently entitled in respect of 'distinct year[s] of income' is ascertained (the 'distributable income').

See the Bamford Decision Impact Statement for further information.