Instructions to complete items 6 to 9 in the tax return relating to income of the trust, excluding foreign income.
6 Tax withheld
Item 6 deals with the following:
Tax withheld where ABN not quoted
Print at label T Tax withheld where ABN not quoted the total of amounts withheld from income subject to withholding where an ABN was not quoted. This amount equals the sum of the amounts shown in the tax withheld boxes on the Non-individual PAYG payment summary schedule 2023.
For instructions on completing the schedule, see Non-individual PAYG payment summary schedule 2023.
Do not include any share of amounts withheld that is a distribution from another trust or partnership where an ABN was not quoted. Print this at item 8 Partnership and trusts – label C Share of credit for tax withheld where ABN not quoted.
If you show an amount of tax withheld at label T, you need to declare, as appropriate, the corresponding gross income at:
- item 5 – label C Gross payments where ABN not quoted
- item 5 – label D Gross payments where ABN not quoted.
Credit for tax withheld – foreign resident withholding
Complete this entry only if the trust is a non-resident trust and the amount was withheld in Australia and remitted to us.
Print at label U Credit for tax withheld - foreign resident withholding (excluding capital gains) the total amount of tax withheld from payments subject to foreign resident withholding. Do not include any share of foreign resident withholding credits distributed to the trust from other trusts or partnerships.
Do not include at label U any amount for foreign resident capital gains withholding. This amount should be shown at item 21 Capital gains – label B Credit for foreign resident capital gains withholding amounts.
If you claim a credit at label U for tax withheld under foreign resident withholding, you must show the corresponding gross payments amount at item 5 – label B Gross payments subject to foreign resident withholding (excluding capital gains).
8 Partnerships and trusts
Item 8 deals with the following:
The trust’s income from a partnership includes income or a loss that the trust received, was entitled to receive, or was entitled to deduct in respect of that partnership.
The trust’s income from other trusts includes the trust's share of the net income (for tax purposes) of the other trusts, which generally corresponds to the percentage share of the other trust's distributable income that the trust received or was entitled to receive as a beneficiary under a will, settlement, deed of gift, or other instrument of trust.
Distributions from partnerships or shares of the net income of other trusts may include or be attributable to the partnership or trust's share of any:
- TFN amounts withheld from interest, dividends, and unit trust distributions
- franking credits attached to franked dividends received indirectly from an Australian franking company
- amounts withheld where an ABN was not quoted.
Copy the details from any statements of distribution or advice received from the partnerships and other trusts to Worksheet 2. This is the trust’s record if we need more details later.
If the partnership or trust statement of distribution or advice includes an amount described as dividends or franking credits from a New Zealand franking company, do not include these at item 8. Show these amounts at item 23 Other assessable foreign source income.
Do not include any payments and loans received from trustees or amounts that are debts forgiven by trustees that are treated as dividends under Division 7A of the ITAA 1936. Show these amounts at item 12 Dividends – label K Unfranked amount.
If the partnership or trust statement of distribution or advice includes amounts described as foreign income or capital gains, do not include these at item 8.
Show foreign income at either:
- item 22 Attributed foreign income
- item 23 Other assessable foreign source income.
Show net capital gains (including foreign capital gains) at item 21 Capital gains.
Amounts of foreign resident capital gains withholding should be shown at item 21 – label B Credit for foreign resident capital gains withholding amounts.
Dividends received from listed investment companies (LIC) are not distributions of net capital gains. For more information, see Guide to capital gains tax 2023.
To the extent that FTDT has been paid on income or capital to which the trust is presently entitled or has been distributed from or received from a partnership or other trust, an amount is excluded from the assessable income of the trust under section 271-105 of Schedule 2F to the ITAA 1936.
For more information on the circumstances that FTDT is payable, see Family trust distribution tax.
If the trust receives or is presently entitled to a share of income which includes an amount, received indirectly from a closely held trust, on which trustee beneficiary non-disclosure tax (TBNT) has been paid, you do not need to include the amount in the trust’s assessable income.
Any losses or outgoings incurred in deriving an amount that is excluded from assessable income because FTDT or TBNT has been paid are not deductible. The trust cannot claim a tax offset for any franking credits attributable to the whole or a part of a dividend that is excluded from assessable income.
If the TOFA rules apply to the trust, include at item 8 Partnerships and trusts the trust's share of all primary production and non-primary production income distributed from partnerships or included in the net income (for tax purposes) of other trusts and deductions relating to such amounts. This includes amounts from financial arrangements subject to TOFA rules.
If what you show at this item includes an amount that is brought to account under the TOFA rules, also complete item 31 Taxation of financial arrangements (TOFA).
Primary production
Distribution from partnershipsPrint at label A Distribution from partnerships the amount of primary production (PP) income or loss distribution from partnerships.
If this amount is a loss, print L in the box at the right of the amount.
Share of net income from trustsPrint at label Z Share of net income from trusts the trust's share of primary production income which has been included in the net income (for tax purposes) of other trusts. The statement of distribution or advice from the other trusts should separately show this amount. This amount should include the trust's share of primary production income which has been included in the net income of other trusts where the trust became presently entitled to primary production income of other trusts in the income year but has not yet received it.
If the trust's share of primary production income included in the net income of other trusts is zero because the other trust has made a loss from its primary production activities, print L in the box at the right of the amount. Show a loss at label Z only if it is a component of an overall distribution of net income from the same trust.
If this amount is not a loss, in the box at the right of label Z print the code from table 1 that best describes the type of trust from which the distribution is made. If this amount is from more than one type of trust, show the code that represents the trust with the greatest amount of distribution.
Note: Do not use code ‘V - CCIV sub-fund trust’ at 8Z – Share of net income from trusts. All references to trust code ‘V’ and 'CCIV sub-fund trust' within table 1 should be disregarded in determining the appropriate trust code.
Deductions relating to amounts shown at A and ZPrint at label S Deductions relating to amounts shown at A and Z the trust’s deductions for its own expenses relating to primary production distributions from partnerships. Also show at label S the trust's deductions for its own expenses in deriving its share of primary production income which has been included in the net income (for tax purposes) of other trusts. Expenses incurred on behalf of those other trusts are not able to be deducted by the trust.
If you have prepaid any expenses, the amount that you can claim at label S may be affected by the prepayment provisions. For more information, see Deductions for prepaid expenses 2023.
Expenses listed here that are costs associated with borrowing and servicing debt may not be allowable deductions under the thin capitalisation rules. For more information, see Appendix 3. The disallowed amount reduces the amount that would otherwise be included at label S.
Net primary production amountPrint at label Net primary production amount the net result of adding the trust’s partnership distributions of primary production income and the trust's share of primary production income that has been included in the net income (for tax purposes) of other trusts less allowable deductions related to that income.
If this amount is a loss, print L in the box at the right of the amount.
Non-primary production
Distribution from partnerships, less foreign incomePrint at label B Distribution from partnerships, less foreign income the amount of non-primary production income or loss from partnerships. Include any share of credit for tax withheld in Australia due to foreign resident withholding that is attached to the distribution. (Also include the share of credit at label U Share of credit for tax withheld – foreign resident withholding (excluding capital gains) but do not include amounts subject to foreign resident capital gains withholding).
If the amount at label B is a loss, print L in the box at the right of the amount.
If the distribution includes franked dividends from a franking entity, check the statement of distribution or advice detailing the distribution to ensure that the amounts to be included here represent both the trust’s share of the franked dividend and its share of the franking credit attached to the franked dividend. The franking credit is also included at label D Share of franking credits from franked distributions. Franked distributions received from a partnership are shown at label B and not at label F Franked distributions from trusts.
Do not show any dividends or franking credits indirectly received attributable to distributions from a New Zealand franking company here. If the trust received dividends or franking credits indirectly from a New Zealand franking company, see item 23 Other assessable foreign source income.
If the trust received a distribution from a partnership and that partnership advised that it claimed a deduction in respect of a LIC capital gain amount, the trust is required to include its share of the deduction allowed to the partnership at item 14 Other Australian income – give details.
Share of net income from trusts, less capital gains, foreign income and franked distributionsPrint at label R Share of net income from trusts, less capital gains, foreign income and franked distributions the trust's share of the non-primary production income, which was included in the net income (for tax purposes) of other trusts. The statement of distribution or advice from the other trusts should separately show this amount. Include any share of credit for tax withheld in Australia due to foreign resident withholding that is attached to the distribution. (Also include the share of credit for tax withheld from foreign resident withholding at label U Share of credit for tax withheld - foreign resident withholding (excluding capital gains) but do not include amounts subject to foreign resident capital gains withholding).
The trust's franked distributions from trusts and its share of the franking credits referrable to those franked distributions (the franking credit 'gross-up') are no longer included at the amount shown at label R. These amounts are now included at label F Franked distributions from trusts. For more instructions on this amount, see Franked distributions from trusts. However, these amounts are still relevant to working out whether the overall share of net income (for tax purposes) from non-primary production activities is a positive amount. Unfranked distributions are still shown at label R.
In working out the trust's share of non-primary production income included in the net income (for tax purposes) of other trusts, amounts to which the trust became presently entitled in the income year but has not yet received should also be taken into account.
Although for tax purposes a trust cannot distribute a loss, in certain circumstances a trust may have made a loss in relation to its non-primary production activities and yet still have a positive amount of net income because its share of primary production income included in the net income for tax purposes is positive. In these circumstances, for the purposes of certain provisions relating to primary producers, it may be necessary to identify where the trust's share of net income from another trust related to non-primary production activities is a loss, and record this at label R.
If the trust's share of non-primary production income which was included in the net income (for tax purposes) of another trust is a loss, print L in the box at the right of the amount. Show a loss at label R only if the amount is a component of an overall distribution of net income from the same trust. The loss at label R should be adjusted for any amounts shown at label F and G Deductions relating to franked distributions from trusts in label F relating to franked distributions from trusts.
If this amount is not a loss, in the box at the right of label R print the code from table 1 that best describes the type of trust from which the distribution is made. If this amount is from more than one type of trust, print the code that represents the trust with the greatest amount of distribution.
Note: Do not use code ‘V - CCIV sub-fund trust’ at 8R – Share of net income from trusts, less capital gains, foreign income and franked distributions. All references to trust code ‘V’ and 'CCIV sub-fund trust' within table 1 should be disregarded in determining the appropriate trust code.
Deductions relating to amounts shown at label B and RPrint at label T Deductions relating to amounts shown at B and R the trust’s deductions for its own expenses relating to non-primary production distributions from partnerships. Also show at label T the trust's own expenses incurred in deriving its share of non-primary production income which has been included in the net income (for tax purposes) of other trusts, except those deductions which are directly related to the earning of franked distributions from trusts which are shown at label G Deductions relating to franked distributions from trusts in label F. Expenses incurred on behalf of those other trusts are not able to be deducted by the trust.
If any expenses have been prepaid, the amount that you can claim at label T may be affected by the prepayment provisions. For more information, see Deductions for prepaid expenses 2023.
Expenses listed here (and where relevant at label G relating to franked distributions from trusts) that are costs associated with borrowing and servicing debt may not be allowable deductions under the thin capitalisation rules. For more information, see Appendix 3. The disallowed amount reduces the amount that would otherwise be included at label T or where relevant at label G.
If FTDT has been paid on income or capital of another trust or partnership that the trust is entitled or which has been distributed to the trust, an amount is excluded from the trust's assessable income under section 271-105 of Schedule 2F to the ITAA 1936. Do not show this at label A, Z, B, R or F. You cannot claim a deduction for any losses or outgoings incurred in deriving an amount that is excluded from assessable income at label S, T or G. For more information on the circumstances that FTDT is payable, see Family trust distribution tax.
If TBNT has been paid in respect of an amount that would otherwise be assessable to the trust, that amount is excluded from the assessable income of the trust. Do not show that income at label A, Z, B, R or F. You cannot claim a deduction for any losses or outgoings incurred in deriving an amount which is excluded from assessable income at label S, T or G.
Franked distributions from trustsPrint at label F Franked distributions from trusts the trust's share of the franked distribution (described as franked dividends, franked distributions, or attributable franked distributions), plus its share of the franking credit attached to the franked distribution. The franking credit is also included at label D Share of franking credits from franked distributions. Unfranked distributions are shown at label R Share of net income from trusts, less capital gains, foreign income and franked distributions.
A franked distribution is a distribution that has a franking credit attached to it and includes both fully and partially franked distributions. If the trust's share of the non-primary production income included in the net income of other trusts includes an amount described as franked dividends, franked distributions or attributable franked distributions, check the statement of distribution or advice detailing the distribution to ensure that the amounts to be included at this entry represent both the trust’s share of the franked distribution and its share of the franking credit attached to the franked distribution (the franking credit 'gross-up').
Do not show any share of another trust's non-primary production income included in the net income of that other trust that includes any dividends or franking credits indirectly received which were attributable to distributions from a New Zealand franking company at this entry. Instead, see item 23 Other assessable foreign source income.
If the trust received, or was entitled to receive, income from another trust, and that income included a franked distribution (dividend) paid by a LIC, the total franked distribution should be shown at label F.
If the trust received, or was entitled to receive, income from another trust, and that trust advised that it claimed a deduction in respect of a LIC capital gain amount, the trust is required to include an amount equal to its share of the deduction allowed to the trust at item 14 Other Australian income – give details.
Deductions relating to franked distributions from trusts in label FPrint at G Deductions relating to franked distributions from trusts in label F the trust's deductions for its own expenses incurred in deriving its share of the franked distributions from trusts at label F Franked distributions from trusts. The amount of deductions which can be claimed at label G may be also be limited in circumstances such as those described above, for example by the prepayment and thin capitalisation rules, or because an amount shown at label F was excluded from the trust's assessable income.
Net non-primary production amountPrint at label Net non-primary production amount the net result of adding the partnership distributions of non-primary production income and the trust's share of non-primary production income included in the net income (for tax purposes) of other trusts, less deductions related to that income, plus the amount of the franked distributions from trusts, less the deductions relating to the franked distributions from trusts.
If this amount is a loss, print L in the box at the right of the amount.
Share of credits from income
Share of credit for tax withheld where ABN not quotedIf the income shown at label A, Z, B, R or F includes any share of amounts that have had tax withheld where an ABN was not quoted, show any share of credit for the tax withheld at label C Share of credit for tax withheld where ABN not quoted. The trust or partnership statement of distribution or advice should separately disclose this amount.
Share of franking credits from franked distributionsPrint at label D Share of franking credits from franked distributions the trust’s share of any franking credits from a franking entity received indirectly through a partnership or other trust.
Show franking credits received directly from a paying franking entity at item 12 Dividends – label M Franking credit.
Do not show franking credits relating to a franked dividend received indirectly through a partnership or other trust if any of the following apply:
- They were attributable to a distribution from a New Zealand franking company. If the trust received franking credits indirectly from a New Zealand franking company, see item 23 Other assessable foreign source income.
- The holding period rule and related payments rule were not satisfied in relation to the dividend. For more information, see Appendix 1.
- FTDT has been paid on the dividend paid or credited by a company that has made an interposed entity election. The dividend is excluded from assessable income under section 271-105 of Schedule 2F to the ITAA 1936. A franking credit or tax offset cannot be claimed for any franking credit attached to that dividend. For more information on when FTDT is payable, see Family trust distribution tax.
- Trustee beneficiary non-disclosure tax (TBNT) has been paid on a dividend that is included in a share of net income which the trust, as a trustee beneficiary, is presently entitled to, or which has been distributed to the trust. You cannot claim a tax offset for any franking credits attributable to the dividend.
Unless an entity claimed an exemption or quoted a TFN, an investment body may withhold amounts from interest, dividends or income of a unit trust to which a beneficiary is presently entitled. These are called TFN amounts withheld. The current rate is 47% of the payment made.
Print at label E Share of credit for TFN amounts withheld from interest, dividends and unit trust distributions the trust's share of any credit for TFN amounts withheld from amounts of interest, dividends and income of unit trusts to which a beneficiary is presently entitled that are received from partnerships or other trusts. Credits for TFN amounts withheld are allowed in the assessments of the beneficiaries or trustees.
Credit for TFN amounts withheld from payments from closely held trustsWhere a beneficiary of a closely held trust does not provide their TFN to the trustee, the trustee may be required to withhold from payments or distributions.
Print at label O Credit for TFN amounts withheld from payments from closely held trusts any amounts withheld by a trustee of a closely held trust because a TFN was not provided.
Share of credit for tax withheld – foreign resident withholding (excluding capital gains)Print at label U Share of credit for tax withheld – foreign resident withholding (excluding capital gains) the trust’s share of any foreign resident withholding credits received from partnerships or other trusts. Ensure this amount is included in the gross distribution amount at label B Distribution from partnerships, less foreign income or label R Share of net income from trusts, less capital gains, foreign income and franked distributions.
Amounts may be withheld in Australia from some payments made to certain partnerships or trusts due to the operation of the foreign resident withholding measure. These payments relate to entertainment, sports activities, construction, related activities and casino gaming junket activities.
Do not include amounts of foreign resident capital gains withholding at label U. These should be shown at item 21 Capital gains – label B Credit for foreign resident capital gains withholding amounts.
Do not include a share of tax paid under subsection 98(4) from other trusts.
9 Rent
Former STS taxpayers still using the STS accounting method
If the trust is eligible and has chosen to continue using the STS accounting method, calculate label F Gross rent, G Interest deductions, and H Other rental deductions on the STS accounting method.
For more information, see Appendix 13.
Small business entities
Depreciating assets used in rental properties are generally excluded from the small business entity depreciation rules on the basis the assets are part of property that is subject to a depreciating asset lease.
For more information, see Small business entity concessions.
If the sole reason you derived income jointly (or in common) with another person was that you were a part owner of a property available for rent, but you were not in a trust carrying on a business of renting out properties, do not show any income or deductions from that rental property at this item. Print your share of the income or deductions at item 21 Rent of your Tax return for individuals (supplementary section) 2023 or the relevant items of the company, trust or fund tax return or the self-managed superannuation fund annual return.
For more information to help you work out whether you are carrying on a business, see TR 97/11 Income tax: am I carrying on a business of primary production?
Gross rent
Print at label F Gross rent the gross amount of rental income. This item cannot be a loss.
Rental income includes booking or letting fees, bond monies if the trust becomes entitled to retain them, any insurance payouts that compensate for lost or forgone rent, and reimbursements from tenants of deductible expenses incurred.
If the trust is registered for GST, and GST is payable in relation to rental income, exclude the GST from gross rent at label F.
Show rent from foreign sources at item 23 Other assessable foreign source income.
Lease premium received from a CGT eventA capital gain or a capital loss made from the receipt of a lease premium is shown at item 21 Capital gains.
For more information on CGT events involving leases, see Guide to capital gains tax 2023.
Interest deductions
Print at label G Interest deductions the total deductible amount of interest expense incurred in earning the rental income.
If borrowed monies are used to finance a property investment, interest paid on the borrowing generally is deductible. However, to the extent that the loan is used or refinanced for a private purpose, you must apportion the interest expense to account for the private use.
The thin capitalisation rules may apply to reduce interest deductions. These rules place a limit on the amount of interest and other borrowing costs that can be deducted for Australian tax purposes. For more information, see Appendix 3. The disallowed amount reduces the amount that would otherwise be included at label G.
If the TOFA rules apply to the trust, include all interest expenses incurred on monies borrowed to finance a property: this includes interest expense from financial arrangements subject to the TOFA rules at label G.
Capital works deductions
Print at label X Capital works deductions the total capital works deductions amount for rental buildings and structural improvements, such as fences, retaining walls and sealed driveways.
For more information on capital works deductions, see Appendix 5.
Other rental deductions
Print at label H Other rental deductions the total of other deductible expenses incurred in earning rental income.
If the trust is registered for GST and GST is payable in relation to rental income, exclude any input tax credit entitlements that arise in relation to expenses from the amount shown at label H.
Expenses listed here that are costs associated with borrowing and servicing debt may not be allowable deductions under the thin capitalisation rules; see Appendix 3. The disallowed amount reduces the amount that would otherwise be shown at label H.
Deductions for the decline in value of depreciating assets used to earn rental income are generally shown at label H. However, if the trust has allocated some of these assets to a low-value pool, you may need to record deductions at item 18 Other deductions; see Appendix 6.
Net rent
Print at Net rent the net amount of any rent. If this amount is a loss, print L in the box at the right of the amount.
For more information, see Rental properties 2023.
Tax agents who lodge trust tax returns through PLS must complete the Partnerships and trusts rental property schedule 2023 if item 9 Rent is completed. The schedule is only available to tax agents who lodge via PLS, if you are lodging a paper version of the trust return, you do not have to complete the schedule.
Continue to: Income excluding foreign income – items 10 to 15