GST issues registers
Primary production industry partnership3 Entities
3.1.1 Discretionary Trust Disbursements
Question
How will beneficiaries of discretionary trusts account for their share of trust income when calculating their Pay-As-You-Go Instalments for the 2000/01 year?
Answer
A beneficiary is required to include their share of any instalment income earned by the trust for the instalment quarter, in their own instalment income amount for that quarter. In addition, a beneficiary must include income for each trust in which they are a beneficiary.
The amount to include for each trust is worked out by the using the formula set out below:
[Your assessable income from the trust for the last income year ÷ Trust's instalment income for the last income year] × Trust's instalment income for the current period
The trustee of the trust should provide the beneficiaries with the amount to include in their own instalment income or the information that will allow the beneficiaries to work out that amount.
The beneficiaries would then apply their own instalment rate to their instalment income to calculate the PAYG instalment for that period.
If the beneficiary's assessable income from the trust for the last income year was nil, then the formula cannot be applied. In this instance, the beneficiary must include in their instalment income an amount that is fair and reasonable. This amount should be calculated by examining the beneficiary's interest in the trust, the trust's instalment income for the current period and any other relevant circumstances.
Note that for beneficiaries whose Activity Statement has no figure preprinted at T2 on the back, there is no need to provide details of instalment income.
3.21 and 3.2.2 Group ABN quoting
Question
Is entity A, a member of a GST group, required to withhold an amount under section 12-190 of Schedule 1 of the Taxation Administration Act 1953 (TAA) from a payment it makes to entity B, another member within the same GST group, where entity B fails to quote its ABN?
Facts:
Entity A and entity B are members of a GST group. Entity B makes supplies to entity A in the course or furtherance of an enterprise that entity B carries on in Australia. The exceptions listed in section 12-190 of the TAA do not apply to this transaction.
Answer
Yes. Entity A is required to withhold an amount under section 12-190 of Schedule 1 of the TAA from a payment it makes to entity B, where entity B fails to quote its ABN.
Explanation
Under section 12-190 of Schedule 1 of the TAA, an entity (the payer) must withhold an amount from a payment it makes to another entity (the supplier) if:
- a.
- the payment is for a supply that the supplier has made, or proposes to make, to the payer in the course or furtherance of an enterprise carried on in Australia by the supplier; and
- b.
- none of the exceptions apply.
GST groups are not recognised for PAYG purposes. As such, section 12-190 of Schedule 1 of the TAA applies to intra-group payments. Therefore, entity A is required to withhold an amount from a payment it makes to entity B where entity B fails to quote its ABN.
Note
The requirement to quote an ABN for the purposes of section 12-190 of Schedule 1 (TAA) will be satisfied where every member of a GST group keeps a register of ABNs that lists the ABN of each other member of the GST group that makes supplies to it; and is able to link every transaction with the correct ABN.
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