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22 Attributed foreign income
For information on calculating the amounts shown at M and X, see Foreign income return form guide 2018.
Where the trust is a member of a consolidated group or MEC group for the whole income year and derived foreign income, the responsibility for preparing the schedule will rest on the head company of the group.
Where a return is required because the trust had a period in the income year when it was not a member of a consolidated group or MEC group (a non-membership period) the trust should complete an International dealings schedule 2018 where it has derived foreign income attributable to the non-membership period.
For more information, see Consolidation reference manual, C9-5-110.
Did you have overseas branch operations or a direct or indirect interest in a foreign trust, foreign company, controlled foreign entity or transferor trust?
With the repeal of the foreign investment fund rules, foreign trust in this context refers to a controlled foreign trust.
Overseas branch operations include:
- business operations carried on by an Australian resident entity at or through a fixed place of business in another country
- business operations carried on by a foreign resident entity at or through a fixed place of business in Australia.
Direct or indirect interests in a controlled foreign company or a controlled foreign trust are taken to have the same meaning as set out in Division 3 of Part X of the ITAA 1936. For the purposes of the controlled foreign company rules, do not trace interests through another Australian entity. For example, if your trust has an interest in an Australian trust, which owns a controlled foreign company, your trust is not regarded as having a direct or indirect interest in the controlled foreign company although your trust must still include any attributable income to which it was presently entitled at item 22 Attributable foreign income.
A trust has an interest in a transferor trust if the trust has ever made, or caused to be made, a transfer of property or services to a non-resident trust. Transfer of property and services is defined in section 102AAB of the ITAA 1936.
Sections 102AAJ and 102AAK of the ITAA 1936 provide guidance on whether there was a transfer, or a deemed transfer, of property or services to a non-resident trust.
If the answer to this question is yes, print X in the Yes box at S. Attach the completed International dealings schedule 2018 to the tax return.
Print X in the Yes box at Have you attached any 'other attachment'? at the top of page 1 of the tax return.
If the answer to this question is no, print X in the No box at S.
For more information, see the International dealings schedule instructions 2018.
If you answered Yes and the trust had foreign source business income and is a small business entity see Small business income tax offset.
Show at M the amount of gross attributed foreign income from controlled foreign entities and transferor trusts of listed countries. Listed countries are set out in Regulation 19 of the Income Tax Assessment (1936 Act) Regulation 2015 (ITA(1936)R).
Attributed foreign income is the income attributed to the taxpayer from controlled foreign entities, calculated in accordance with Division 7 of Part X of the ITAA 1936, and includes an amount grossed-up under section 392 of the ITAA 1936, as appropriate, to the extent of any foreign taxes paid.
Show at M the amount of income attributed from a transferor trust that is a listed country trust estate, calculated in accordance with Subdivision D of Division 6AAA of the ITAA 1936.
A listed country trust estate is defined in section 102AAE of the ITAA 1936.
Show at X the amount of attributed foreign income from controlled foreign entities in unlisted countries. Unlisted countries are countries that are not listed in Regulation 19 of the ITA(1936)R.
Show at X the amount of income attributed from a transferor trust if the amount has not been shown at M.
Small business income tax offset
If the trust is a small business entity and has attributed net business income, any individual beneficiaries may be entitled to the small business income tax offset.
See the instructions for item 5 Business income and expenses and complete Worksheet 1A Net small business income.
The individual beneficiaries will need to know their share of net small business income from the trust to work out their entitlement to the small business income tax offset.
Last modified: 14 Feb 2020QC 55259