Distributions from trusts



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Gross distributions from trusts may include unfranked dividends, franked dividends, franking credits attached to these dividends, and other assessable distributions. Show the different components of distributions from trusts at N to Q.

If the distribution includes an amount of foreign income, including New Zealand dividends and supplementary dividends, show that portion of the distribution at D1 Gross foreign income and take it into account in calculating D Net foreign income.

Show any amounts subject to foreign resident withholding that were distributed to the fund from a trust. Show also the fund's share of credit from foreign resident withholding. You can claim a credit for the fund's share of credit from foreign resident withholding in the calculation statement at F2 Credit: foreign resident withholding item 12.

Show all income received from stapled securities as trust distributions at N to Q, including the different components at the appropriate labels (see below).

Any amount you show at N to Q cannot be a loss.

Consider whether any distributions received from a trust are part of a non-arm's length arrangement and whether the distribution received is greater than what might otherwise have been expected had the parties been dealing with each other at arm's length. See Taxation Ruling TR 2006/7 for further information. If the distributions received are not at arm's length, do not show these distributions at N to Q. Show these distributions at U Net non-arm's length income.

Do not show capital gains received from a trust at Q Trust distributions other amounts. Show them at A Net capital gain. For information on how to show a capital gain received from a trust at A, for example, how to gross up a capital gain for a trust distribution, see Guide to capital gains tax 2009.

Do not show distributions from PSTs at N to Q.

To the extent that family trust distribution tax has been paid on income or capital of a trust to which the fund is presently entitled or which has been distributed to the fund, exclude that income or capital from the assessable income of the fund (under section 271-105 of Schedule 2F to the ITAA 1936).

If the trustee beneficiary non-disclosure tax (TBNT) has been paid in respect of any part of a share of net income to which the fund is presently entitled or which has been distributed to the fund, that part of the share of net income is not included in the assessable income of the fund (under sections 102UK and 102UM of the ITAA 1936).

Any losses or outgoings incurred in deriving an amount which is excluded from assessable income because family trust distributions tax or TBNT has been paid are not deductible. A tax offset cannot be claimed by the fund for any franking credits attributable to the whole or a part of a dividend that is excluded from assessable income under these provisions.

Last modified: 25 Nov 2009QC 21714