Trust Return - Income

For more information, refer to Income excluding foreign income on the ATO website.

The Income tab comprises Business Income and Expenses; Capital Gains, and Foreign Income items:

• Item 5 - Business income and expenses
• Item 6 - Tax withheld
• Item 7 - Credit for interest on early payments
• Item 8 - Partnerships and trusts (Trust Return)
• Item 9 - Rent (Trust Returns)
• Item 10 - Forestry managed investment scheme income (trust)
• Item 11 - Gross interest received
• Item 12 - Dividends
• Item 13 - Superannuation lump sums and employment termination payments
• Item 14 - Excepted net income
• Item 21 - Capital Gains
• Foreign Income

General Information

The amounts included in business income, excluding foreign income, labels - C to G and D to H - and expense labels - P to N - are accounting system amounts (which may require specific adjustment, for example, to exclude GST) subject to two exceptions for small business entities.

Small business entities should use tax values for their closing stock in calculating their cost of sales shown at E, and for their depreciation expenses at K.

The accounting system amounts are shown or included on the business profit and loss statements and form the basis of the calculation of the business net profit or loss for tax purposes. You should make adjustments to these accounting amounts for tax purposes at the Reconciliation items.

GST is payable by entities that are registered, or required to be registered, for GST. If GST is payable on income, exclude the GST from the income derived. Exclude input tax credit entitlements on outgoings from deductions. Some GST adjustments - occurring for example where the percentage of business use of an asset changes - may be included in assessable income or allowed as deductions.

Only include at item 5:

• business income amounts derived directly by the trust. Include distributions of income and Foreign Resident Withholding (excluding capital gains) income received from other partnerships and trusts at item 8 Partnerships and trusts.

• Australian sourced income. Include foreign source income at:

• item 22 Attributed foreign income, and/or

• item 23 Other assessable foreign source income.

• Income and expenses are divided into three columns:

• primary production - showing relevant amounts of income and expenses from primary production

• non-primary production - showing relevant amounts of income and expenses from non-primary production

• totals - showing the total of the previous two columns.

Income subject to foreign resident withholding (excluding capital gains) is only to be included at label B in the Non-primary production column.

Ceasing use of the STS accounting method

If the trust has discontinued using the STS accounting method, business income and expenses that have not been accounted for (because they have not been received or paid), will be accounted for in this year. You may need to make additional reconciliation adjustments.

CCH References

6-080 Net income of a trust

7-050 Small business entities - aggregated turnover

10-000 What is assessable income?

10-005 Checklist of taxable and non-taxable items

22-000 Tax liability of non-residents