• Distributions from trusts

    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

    The fund’s share of net income from trusts may include foreign income, capital gains, unfranked distributions, franked distributions, and franking credits referrable to these distributions and other amounts.

    Show the different components of the net income from trusts as follows:

    • foreign income, including New Zealand franking company dividends and supplementary dividends, at D1 Gross foreign income and take it into account in calculating D Net foreign income unless it is non-arm’s length income of a complying superannuation fund, complying ADF or a PST in which case include it at U Net non-arm’s length income
    • capital gains at A Net capital gain unless and to the extent that the net capital gain reflects a non-arm’s length capital gain in which case show it at U Net non-arm’s length income; for information on how to show a capital gain received from a trust at A, for example, how to gross up a trust capital gain, see the Guide to capital gains tax 2013
    • other amounts at N to Q
      • any amount you show at N to Q cannot be a loss
      • income from stapled securities received as trust distributions is shown at N to Q as appropriate.
       

    Share of credits

    Show at H2 Credit for tax withheld - foreign resident withholding item 12 the fund’s share of any foreign resident withholding credits received from trusts.

    Show at H3 Credit for tax withheld –where TFN not quoted the fund’s share of any credit for TFN amounts withheld from interest, dividends or income of a unit trust to which the fund was presently entitled from another trust.

    Show at H5 Credit for TFN amounts withheld from payments from closely held trusts item 12, any amounts withheld by a trustee of a closely held trust because the fund had not provided its TFN to the trustee.

    Non-arm’s length income

    Determine whether any share of net income from a trust is either from a trust in which the fund does not have a fixed entitlement to income, or is part of a non-arm's length arrangement and whether the share of net income from the trust is greater than what might otherwise have been expected had the parties been dealing with each other at arm's length. See TR 2006/7 for further information.

    If the share of net income from a trust is either from a trust in which the fund does not have a fixed entitlement to income, or is not at arm's length, do not show the share of net income from this trust at N to Q. Show the amount at U Net non-arm’s length income.

    Do not show distributions from PSTs at N to Q.

    FTDT and TBNT

    To the extent that FTDT has been paid on income or capital included in the fund’s share of net income from a trust, do not include that income or capital in the fund’s assessable income (section 271-105 of Schedule 2F to the ITAA 1936).

    To the extent the fund’s share of net income from a trust includes an amount on which TBNT has been paid, do not include that amount in the fund’s assessable income.

    Any losses or outgoings that the fund incurred in deriving an amount that is excluded from assessable income because FTDT or TBNT has been paid are not deductible.

    The fund cannot claim a franking credit tax offset for any franking credits attributable to the whole or a part of a dividend that is excluded from assessable income because FTDT or TBNT has been paid.

    TOFA

    Even if the TOFA rules apply to the fund, show at N or Q the fund’s share of all net income from trusts. This includes amounts in respect of financial arrangements subject to the TOFA rules.

    If what you show at N or Q includes an amount brought to account under the TOFA rules, also complete item 16 Taxation of financial arrangements (TOFA).

    See also:

    Guide to the taxation of financial arrangements (TOFA) rules

    Last modified: 02 Jun 2014QC 35420