Trust Reporting

Click these links for general information on PLS forms and schedules for Trust Reporting:

• Trust Details (TD)
• Beneficiary Details (Schedule G)
• Reporting and Paying TFN Withheld Amounts

What is a closely held trust?

A closely held trust is:

• A trust where 20 or fewer individuals have between them, directly, or indirectly, fixed entitlements to 75% or more of the income of the trust, or

• A discretionary trust.

Except where the trust is an excluded trust under section 102UC(1) of the ITAA 1936.

What is a discretionary trust?

A discretionary trust is a trust that is not a fixed trust within the meaning of section 272-65 of Schedule 2F of the ITAA 1936. Refer to section 102UC(4) of the ITAA 1936 and section 272-65 of Schedule 2F to the ITAA 1936.

TFN Withholding Rules for closely held trusts

If you are the trustee of a resident closely held trust (that is not an excluded trust) you will need to complete an Annual Trustee Payment Report under the TFN Withholding Rules

What is an excluded trust for the TFN Withholding Rules?

An excluded trust is:

• A complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust.

• A deceased estate up to the end of the income year in which the fifth anniversary of the death occurs.

• A fixed trust that is a unit trust, and exempt entities (those whose ordinary and statutory income are exempt from tax) have fixed entitlements, directly or indirectly, and for their own benefit, to all of the income and capital of the trust.

• A unit trust whose units are listed on the ASX Limited.

• A family trust.

• A trust that has made an interposed entity election under section 272-85 of Schedule 2F to the ITAA 1936 or is wholly owned by the family (see section 272-90(5) of Schedule 2F to the ITAA 1936).

Refer to section 120UC(4) and section 272-100 of Schedule 2F to the ITAA 1936

The Regulations also exclude the following types of trusts from these rules:

• A trust that is a discretionary mutual fund according to the meaning given by subsections 5(5) and 5(6) of the Financial Sector (Collection of Data) Act 2001.

• An employee share trust for an employee share scheme that meets the definition under subsection 130-85(4) of the Income Tax Assessment Act 1997 (ITAA 1997).

• A law practice trust which is a trust regulated by a state or territory law for the regulation of legal practices or legal services.

Annual Trustee Payment Report

Unless you are the trustee of an excluded trust, you will need to complete an Annual Trustee Payment Report under the TFN Withholding Rules.

How do I make an Annual Trustee Payment Report?

You make an Annual Trustee Payment Report by completing in full the information on the Statement of distribution, including the beneficiary details and Annual Trustee Payment Report information.

Trustee beneficiary reporting rules

A trustee of a closely held trust (that is not an excluded trust) is required to complete and lodge a TB statement for a year of income if a share of the net income of the trust is included in the assessable income of a trustee beneficiary under section 97 of the ITAA 1936 and the share comprises or includes an untaxed part.

A TB statement must also be lodged where a trustee beneficiary is presently entitled to a share of a tax preferred amount of the closely held trust.

A trustee beneficiary is a beneficiary of the trust in the capacity of trustee of another trust.

Trustee beneficiary

A trustee beneficiary is a beneficiary of the trust in the capacity of trustee of another trust. Refer to section 102UD of the ITAA 1936.

Completing the TB Statement

For each such trustee beneficiary answer 'yes' to indicate that you are making a TB statement for this trustee beneficiary.

Enter each trustee beneficiary's name and Tax File Number (TFN)

For non-resident beneficiaries show the name of the trustee beneficiary and their address

At label P show any tax-preferred amounts to which the trustee beneficiary is presently entitled. If there are no tax-preferred amounts, enter a zero at label P.

At label Q show any untaxed part of a share of net income to be included in the assessable income of the trustee beneficiary. If there is no untaxed part of a share of net income, enter a zero at label Q.

A Tax-preferred amount is income of the trust that is not included in its assessable income in working out its net income or capital of the trust.

Note that the reporting obligations under Division 6D apply to both Australian and foreign source income; however, Australian source income which is taxed under section 98(4) of the ITAA 1936 is not included as an untaxed part of a share of net income. If the share of the net income which is included in the assessable income of a non-resident trustee beneficiary included income from a foreign source, then that foreign source income, is an untaxed part of a share of net income and must be reported in a TB statement.

For further details of what amounts comprise an untaxed part of a share of net income or a tax-preferred amount refer to the fact sheet titled Trustee beneficiary rules which is available on the ATO website.

Trustee beneficiary Non-disclosure tax (TBNT)

TBNT is payable:

• where the trustee of a closely held trust fails to lodge a correct TB statement within the specified period in respect of each trustee beneficiary's share of net income; or

• a share of the net income of a closely held trust is included in the assessable income of a trustee beneficiary under section 97 and the trustee of the closely held trust becomes presently entitled to an amount that is reasonably attributable to the whole or a part of the untaxed part of the share (referred to as a 'round robin' or 'circular distribution')

The specified period for lodgment of the TB statement is the period between the end of the relevant year of income and the due date of the trust's tax return, or such further period allowed by the Commissioner. Completion of the TB statement in the distribution statement in the trust's tax return will satisfy the lodgment requirement.

TBNT is imposed on the untaxed part of a share of the net income of the trustee beneficiary at the rate of 47% and is due and payable 21 days after the TB statement is due, or a later date allowed by the Commissioner.

TBNT payment advices can be obtained from the ATO website.

If the trustee fails to make a correct TB statement within the specified period in respect of a trustee beneficiary's share of tax-preferred amounts, the trustee may be guilty of an offence under TAA 1953.