Show at the Excepted net income field the amount that will be included at label O for excepted net income of the trust, excluding net capital gains that are included at label A, item 21 Net capital gain.
Attach a statement to the trust
detailing the distribution of excepted income to each beneficiary, and
listing each beneficiary who is considered to be an excepted person, giving supporting reasons
The amount of excepted net income will integrate from the Other Income schedule (oi) if it is used. Refer to Other Australian source income worksheet (oi).
Label O - Other Australian income
The amount and description of the income may be entered directly in the main return or the Other Income schedule (oi) may be used to provide a dissection of the amount to integrate to label O. Press Alt+S at label O to access the worksheet. Refer to Other Australian source income worksheet (oi).
Show at label O the total amount of other Australian income. If the amount is a loss, key a negative before the amount.
The following are some examples of the amounts to be included at label O.
Include at label O any gains on the disposal or redemption of a traditional security which are assessable under section 26BB of the ITAA 1936. For more information about gains and losses on traditional securities, including traditional securities that are convertible notes or exchangeable notes, refer to the publication You and your shares (NAT 2632) available on the ATO website.
If during the year, the trust received any bonuses or other amounts in the nature of bonuses on the maturity, forfeiture, partial or full surrender of a short-term life insurance policy taken out after 7 December 1983, this amount may need to be shown at label O.
Life insurance policies are issued by life insurance companies and friendly societies.
A trust is regarded as having received a bonus if it re-invests or otherwise deals with the bonus during the year.
Do not include the amount shown on a bonus certificate if the trust:
- Received it because of death, accident, illness or other disability suffered by the person on whose life the policy was effected;
- Received it under a policy held by a complying superannuation fund or scheme, a complying approved deposit fund or a pooled superannuation trust, or;
- Can show that the amount was received because of serious financial difficulties, or;
- Received a bonus certificate in respect of an amount allocated to increase the amount receivable on surrender or maturity.
If the policy has a date of commencement of risk after 7 December 1983, any bonuses received this year are not assessable.
If the policy was taken out after 7 December 1983, any bonus is included in assessable income:
In full if received within the first eight years after the date of commencement of the risk of the policy
2/3 of the amount if the bonus is received in the ninth year
1/3 if the bonus is received in the 10th year.
Amounts received after the 10th year, are not included.
If during the term of the policy, the amount of a premium increased by more than 25% over the previous year's premium, the policy is taken to have started again with a commencement date at the beginning of the policy year in which the premium increased.
The beneficiaries may claim, in their own tax returns, a tax offset for a bonus or any other amount in the nature of a bonus included in the income, if the organisation issuing the life policy is:
A life insurance company that pays tax on the income from which the amount was paid, or
A friendly society
The tax offset for the current year is equal to 30 cents in each dollar.
Include the bonus or another amount in the nature of a bonus in the calculation of net income or loss of the trust and apportion it among the beneficiaries in the same ratio as they share in that net income or loss.
To ensure that the tax offset is allowed, attach a statement to the trust return showing the amounts from the life insurance or friendly society life insurance policies.
If a bonus or other amount in the nature of a bonus is included at O, or an amount was not included because of the circumstances under which it was received, for each such Bonus keep a record of the following:
The type of policy
The name of the issuing organisation
The policy number
The date the policy was taken out
The bonus statement or advice
The date that each amount was received
The nature of each amount - for example, bonus, loan, withdrawal
The circumstances under which each amount was received - for example, partial surrender of policy, serious financial difficulties, death, accident, illness or other disability
The basis of calculation of the amount included.
For more information on bonuses received from certain life insurance policies, see Taxation Ruling IT 2346 - Bonuses paid on certain life assurance policies - section 26AH - interpretation and operation.
For more information on amounts switched between investment options for the same life insurance policy, see Taxation Determination TD 94/82 - Does section 26AH of the Income Tax Assessment Act 1936 apply when investment options are 'switched' under an eligible policy?
Include bonuses received from friendly society income bonds at label O. The Statement of distribution issued by friendly societies to income bond holders will advise the amount that should be included as income. Do not include these amounts in the calculation of the tax offset applicable to bonuses from life insurance policies.
If the trust receives or is entitled to receive income from another trust or a distribution from a partnership which advises that it has claimed a deduction for an 'LIC capital gain amount', the trust is required to add back as income an amount equivalent to its share of the deduction allowed to the other partnership or trust.
Show at label O assessable Australian source foreign exchange (forex) gains or deductible losses that you have not already included at any other label in the return - for example, a label at item 5 Business and income expenses. If the total amount at label O is a loss, key a negative before the amount and a /L will be printed on the return to the right of the amount.
As foreign currency is a CGT asset, the capital gains tax provisions can apply to any capital gain or capital loss made on a CGT event. Any capital gain would generally be ignored or reduced to prevent double taxation if the gain was assessable under the TOFA rules or Division 775 of the ITAA 1997.
Under the foreign exchange measures (forex measures), foreign exchange gains and losses are generally brought to account as assessable income or allowable deductions, when realised. The forex measures cover both foreign currency denominated arrangements, and broadly, arrangements to be cash-settled in Australian currency with reference to a currency exchange rate. Foreign exchange gains and losses of a private or domestic nature, or in relation to exempt income or non-assessable non-exempt income, are generally not brought to account under the forex measures.
If a foreign exchange gain or loss is brought to account under the forex measures and under another provision of the tax law, it is generally assessable or deductible only under the forex measures. However, if a financial arrangement of a trust is subject to the TOFA rules, forex gains and losses from the financial arrangement will generally be brought to account under those TOFA rules instead of the forex measures.
Additionally, gains and losses generally will not be assessable or deductible under these measures if they arise from certain acquisitions or disposals of capital assets, or acquisitions of depreciating assets, and the time between the acquisition or disposal and payment is no more than 12 months. Instead, any foreign exchange gain or loss is usually matched with or integrated into the tax treatment of the underlying asset.
The general translation rule requires all tax relevant amounts to be expressed in Australian currency regardless of whether there is an actual conversion of that foreign currency into Australian dollars.
The tax consequences of gains or losses on existing foreign currency assets, rights and obligations that were acquired or assumed before 1 July 2003 are determined under the law as it was before that date, unless
a transitional election that brings these under these forex measures has been made, or
there is an extension of an existing loan (for example an extension by new contract or a variation to an existing contract) that brings the arrangement within these measures.
Royalties include considerations of any kind paid or credited for:
The use of or right to use:
Any copyrights, patent, design or model, plan, secret formula or process, trademark or other like property or right
Industrial, commercial or scientific equipment
Motion picture films
Films or video tapes for use with television
Tapes for use with radio broadcasting
Visual images and/or sounds transmitted by satellite, cable, optic fibre or other similar technology. In connection with television or radio broadcasting
Capacity covered by a spectrum licence under the Radio Communications Act 1992
The supply of scientific, technical, industrial or commercial knowledge or information
The supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of any property, right, equipment, knowledge or information mentioned in the first 2 bullet points of 1 and all of 2.
The reception of, or the right to receive, visual images and or sounds transmitted to the public by satellite, cable, optic fibre or similar technology.
The total or partial forbearance in respect of the previously listed activities.
Royalties paid by a resident to a non-resident may be subject to withholding tax. The rate for royalties is generally 30%. If there is a double tax agreement, the rate may be reduced to 5% or 10%.
Record keeping: If the trust claims a deduction for royalties paid or credited, keep a record of the name and address and the amounts paid or due to each person.
If the payment was made to a non-resident, keep details on whether or not tax has been paid or an amount withheld to provide for tax payable by the non-resident.
If the TOFA rules apply to calculate an assessable gain or a deductible loss on the trust's financial arrangements, include at this item those gains relating to the financial arrangements.
Include at this item any TOFA gains (or part thereof) that have not already been included at:
Label S Net income or loss from business, item 5
Label A Distribution from partnerships, item 8
Label Z Distribution from trusts, item 8
Label J Gross interest, item 11
Label K Unfranked amount, item 12
Label B Gross other assessable foreign source income, item 23
If the TOFA rules apply to the trust and the other Australian income shown at label O includes an amount which is brought to account under the TOFA rules, item 31 Taxation of financial arrangements (TOFA) must be completed.
Description: Enter a description that best describes the income being disclosed. To add extra entries in the main return click [Ctrl+Ins].
Amount: This is the total amount for the transaction.
Refer to the current income year NAT0660 Trust Tax Return Instructions.
The BSWAT lump sum in arrears payment must be included at O Other Australian income. Show the description as ‘BSWAT lump sum in arrears’ at the Type of income field.
You must provide a photocopy of Attachment E: Important tax information which includes their BSWAT tax table: for their Schedule of additional information - item 14.
The beneficiary's letter of offer from the Department of Social Services will include Attachment E.
At the top of the photocopy, write:
the trust’s name and TFN
the beneficiary’s TFN under the individual’s information already recorded.
If lodging a paper return, attach the photocopy to the tax return and mark X in the Yes box at Have you attached any ‘other attachments’? at the top of page 1 of the tax return.
For more information, see:
Other income in the Individual tax return instructions supplement 2018 - BSWAT payment scheme.
Refer to BSWAT payment scheme - what it means for you on the ATO website.