• Section E: Former PPFs distributing under the transitional distribution rules

    Attention

    Warning:

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

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    Attention

    Complete this section if you are distributing under the transitional distribution rules.

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    14 Amount of trust income retained

    A Amount of trust income retained under private AF guideline 55 to reflect movements in the CPI

    Insert the amount of trust income retained to maintain the capital of the fund. Calculate this at the start of the current financial year to reflect movements in the CPI for the previous financial year.

    A former PPF distributing under the transitional rules can retain an amount of trust income to maintain the capital of the fund. This is calculated at the start of the current financial year, to reflect movements in the All Groups Consumer Price Index (CPI), published by the Australian Statistician for the previous financial year.

    The following example shows how to calculate the amount of trust income that may be retained:

    Example

    A private AF had capital of $300,000 at the end of the 2012–13 financial year – as a result, the capital at the start of the 2013–14 financial year was $300,000.

    During the 2013–14 financial year, franked dividends were $80,000 and refunds of franking credits were $20,000, making a total gross income of $100,000. The expenses totalled $5,000.

    The movements in CPI during the 2012–13 financial year were 1.5% (1.5% is only used here for illustrative purposes).

    See the calculation below.

    Franked dividends

    $80,000

    Refunds of franking credits

    $20,000

    Total gross income

    $100,000

    less: Total expenses

    ($5,000)

    Net income

    $95,000

    less: Income retained (1.5% movement in CPI x $300,000 opening capital)

    ($4,500)

    Income distributed

    $90,500

     

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    Find out more

    For more information, refer to private AF guidelines 52, 53, 54 and 55.

    End of find out more
    Last modified: 04 Jul 2014QC 41203