• Non-resident beneficiary additional information

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    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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    Tax Laws Amendment (2007 Measures No. 3) Act 2007 amended Division 6 of the ITAA 1936 to extend the taxation of trustees to situations where a non-resident trustee beneficiary is presently entitled to income of the trust.

    Under Division 6, a trustee will be liable to pay tax in relation to:

    • shares of net income of non-resident companies and individual beneficiaries not being trustees; both these amounts are shown at JNon-resident beneficiary additional information s98(3) assessable amount item 65
    • share of net income of a trust where a beneficiary who is presently entitled to the income of the trust is itself a trustee and is a non-resident at the end of the income year. These amounts are shown at K Non-resident beneficiary additional information s98(4) assessable amount item 65.

    Section 98(3) assessable amount

    Non-resident company beneficiaries assessable amount J

    If you have entered assessment calculation code 139 (non-resident company beneficiaries) at V, you must include an amount at J.

    Show the assessable amount under section 98 of the ITAA 1936 if the trustee is assessable on a share of the net income of the trust on behalf of a non-resident company beneficiary. Show whole dollars only. Generally, for beneficiaries who have been non-residents for the entire year, the assessable amount will exclude income subject to withholding tax (unfranked dividends, interest and royalties)and fully franked dividends, but will include all other Australian source income, including capital gains. Do not include any capital gains for which the trustee is not liable to pay tax underSubdivision 855-A of the ITAA 1997.

    If the share of the net income assessed to the trustee under subsection 98(3) includes a discounted capital gain made by the trust estate, the assessable amount includes double the discounted capital gain (see section 115-220 of the ITAA 1997). This ensures that a trustee assessed on behalf of a non-resident company beneficiary does not get the benefit of the CGT discount. Do not include the capital gain in the assessable amount if the gain is one for which the trustee is not liable to pay tax under Subdivision 855-A of the ITAA 1997.

    If the beneficiary is a non-resident at the end of the year and has not been a non-resident for the entire year, show clearly in a separate schedule full details of the share of net income for the year. The amount to show at J will include the additional capital gain amount under section 115-220, the beneficiary's share of net income from the trust attributable to the period that the beneficiary was a resident as well as the beneficiary's share of the net income attributable to Australian sources for the period the beneficiary was a non-resident. It will not include income subject to withholding tax (unfranked dividends, interest and royalties), and fully franked dividends. Do not include any capital gains for which the trustee is not liable to pay tax under Subdivision 855-A of the ITAA 1997.

    Non-resident individual beneficiaries assessable amount J

    If you have entered assessment calculation code 138 (non-resident individual beneficiaries) at V, you must include an amount at J. Show the assessable amount under section 98 of the ITAA 1936 if the trustee is assessable on a share of the net income of the trust on behalf of a non-resident individual beneficiary not under a legal disability. Show whole dollars only. Generally, for non-resident beneficiaries who have been non-resident for the entire year, the assessable amount will not include income subject to withholding tax (unfranked dividends, interest and royalties), fully franked dividends, and distributions to a foreign resident which requires an Australian managed investment trust to withhold an amount, but will include all other Australian source income, including capital gains. Do not include any capital gains for which the trustee is not liable to pay tax under Subdivision 855-A of the ITAA 1997.

    If the beneficiary is a non-resident at the end of the year but has not been a non-resident for the entire year, you will have printed X in the Yes box at A item 29. It is important to provide the information set out at Non-resident beneficiaries that the appropriate tax rates can be applied.

    The amount to show at J will include the beneficiary's share of net income from the trust attributable to the period that the beneficiary was a resident as well as the beneficiary's share of net income attributable to Australian sources for the period the beneficiary was a non-resident. It will exclude income subject to non-resident withholding tax and fully franked dividends. Do not include any capital gains for which the trustee is not liable to pay tax under Subdivision 855-A of the ITAA 1997.

    Section 98(4) assessable amount

    Non-resident trustee beneficiaries assessable amount K

    If you have entered assessment calculation code 140 (non-resident trustee beneficiary) at V, you must include an amount at K. Any amounts reported K should not be included at P or Q (TB statement).

    Show the assessable amount under section 98 of the ITAA 1936 if the trustee is assessable on a share of the net income of the trust on behalf of a non-resident trustee beneficiary. Show whole dollars only. It only includes income attributable to Australian sources. It will not include income subject to withholding tax (unfranked dividends, interest and royalties), fully franked dividends, and distributions to a foreign resident which require an Australian managed investment trust to withhold an amount, but will include all other Australian source income, including capital gains. Do not include any capital gains for which the trustee is not liable to pay tax under Subdivision 855-A of the ITAA 1997.

    If the trustee is assessable on behalf of a non-resident trustee under section 98 of the ITAA 1936 and the share of the net income assessed to the trustee includes a discounted capital gain made by the trust estate, the assessable amount includes double the discounted capital gain. This ensures that a trustee assessed on behalf of a non-resident trustee beneficiary does not get the benefit of the CGT discount. Do not include the capital gain in the assessable amount if the gain is one for which the trustee is not liable to pay tax under Subdivision 855-A of the ITAA 1997.

    Last modified: 13 Aug 2014QC 22968