Item 57 - Statement of distribution

Include death benefit ETPs and superannuation lump sums on the distribution statement at label B - Share of Non-PP income to which no beneficiary is presently entitled. The trustee may be liable to pay the tax on these amounts. The amount of tax calculated depends on the components of the ETP or superannuation lump sum and the extent to which the dependents of the deceased benefit from the estate.

If the following persons or entities are beneficiaries, and the trust claimed a deduction in respect of a LIC capital gain amount, the trust must advise these beneficiaries of their share of the deduction claimed by the trust for the LIC capital gain amount:

• Non-resident individual

• Trustee of a trust

• Trustee of a superannuation entity

• Company (including a life insurance company), and

• Partnership.

If resident beneficiaries are presently entitled to a share of the income of a trust and are not under any legal disability, it is the beneficiaries who are assessable on their share of the net income of the trust, not the trustee.

A beneficiary is deemed to be presently entitled to income of a trust if they have an 'indefeasible vested interest' in that income. An indefeasible interest is simply one that cannot be defeased or brought to an end or varied by someone else. A vested interest is one that presently exists. However, it can be either a present right or one that can be enjoyed in the future.

It's important to read the Trust return instructions before completing item 55.

Any income of the trust that is not distributed to presently entitled beneficiaries is calculated by MYOB Tax and shown in the second column of the statement of distribution as Income to which no beneficiary is presently entitled.

The trustee is liable to pay tax on this amount and must:

• select an Assessment Calculation code from the drop down list at item 55: label V on the income tax return,
• answer Yes at the question Is any tax payable by the trustee? on the front cover, and
• complete select the applicable tax table under which the trust is assessed.

If the trustee is assessable under section 99A of the ITAA 1936 on net income, capital gains income included in that part of the trust's net income is not eligible for the CGT discount and the small business 50% reduction (refer to section 115-225 of the ITAA 1997).

If the trust's net income, to which no beneficiary is presently entitled, includes a capital gain to which either the CGT discount or the small business 50% reduction has been applied, work out the amount assessable to the trustee under section 99A as if the part attributable to the capital gain was double the amount it actually is.

If the trust's net income, to which no beneficiary is presently entitled, includes a capital gain to which both the CGT discount and the small business 50% reduction has been applied, work out the amount assessable to the trustee under section 99A as if the part attributable to the capital gain was four times the amount it actually is.

Attach a separate statement to the trust tax return showing details of the amount assessable under section 99A using the above method.

You must enter an assessment code in the xT for each beneficiary receiving a distribution of the trust income.

Where there is income to which no beneficiary is presently entitled and in which no beneficiary has an indefeasible vested interest, the assessment calculation code indicates what action is to be taken in respect of this income or credit.

The assessment calculation code is a mandatory field and must be provided. Enter the code or select it from the list of relevant values:

At label W show each beneficiary's share of the income of the trust estate to which they are presently entitled.

A beneficiary's entitlement to income may be prescribed by the deed or it may depend on the exercise of a trustee's discretion. A beneficiary will be taken to be presently entitled to any income they are paid or that is applied on their behalf, at the discretion of the trustee.

A beneficiary will be deemed to be presently entitled to the income of a trust estate if they have an 'indefeasible vested interest' in that income. An indefeasible interest is simply one that cannot be deceased or brought to an end or varied (for example, it is not able to be varied by the exercise of a power by the trustee or another person). A vested interest is one that presently exists. However, it can be either a present right or one that can be enjoyed in the future.

The principal beneficiary of a special disability trust is considered to be presently entitled to all of the net income of the trust.

You only complete this label if the trust is a non-resident trust and the amount was withheld in Australia and remitted to the ATO.

If the trust has no net income, the beneficiaries are not entitled to a share of the credit for tax withheld. Instead, show the sum of the amounts withheld at L under Income to which no beneficiary is presently entitled at the end of item 55.

Show each beneficiary’s share of credit for tax withheld where income of the trust is subject to foreign resident withholding.

The total of the amount at L must equal the total amount of credit shown on the tax return at:

Item 6: Credit for tax withheld - foreign resident withholding (excluding capital gains)–label U, and

Item 8: Share of credit for tax withheld from foreign resident withholding (excluding capital gains)–label U.

See Australian franking credits from a New Zealand company.

Include at label N the beneficiary's share of the Australian franking credit received from a New Zealand company, including any amounts received through another trust or a partnership. The amount at N is not necessarily the amount that can be claimed by each beneficiary.

If the resident beneficiaries are presently entitled to a share of the income of the trust and are not under any legal disability, the beneficiaries are assessed on their share of the net income of the trust. If the beneficiary is under a legal disability, then the trustee is assessable.

If the beneficiary is under a legal disability or it is income to which no beneficiary is presently entitled and in which no beneficiary has an indefeasible vested interest, the trustee will be assessed on the income. In these circumstances, include at N the amount of Australian franking credits attached to a New Zealand dividend allowed to the trustee. Under section 220-405 of the ITAA 1997, the Australian franking credits are reduced by the relevant part of the supplementary dividend paid by the New Zealand company if:

• The supplementary dividend was paid in connection with the franked dividend, and

• The beneficiary under a legal disability or trustee is entitled to a Foreign income tax offset because the franked dividend is included in their assessable income.

See Appendix 1 in the ATO Trust return instructions.

If there is no presently entitled beneficiary, the amount will filter through to the Not presently entitled column in the income tax return.

Australian franking credits from a New Zealand company

New Zealand imputation credits are credits arising under New Zealand's imputation system. Australian imputation credits are now called franking credits.

The ATO cannot refund New Zealand imputation credits.

It is important to read the Trust return instructions on the ATO website for full information before completing the income labels.

If the trust made a loss from its primary production or non-primary production activities, key a minus before the amount and an L will be filled into the box when you print the ATO PDF or the client copy .

For information concerning label A and Franked Distributions refer to Share of Income A and B.

The trust cannot distribute an overall loss. primary production income plus non-primary production income must be a positive amount.

If you are completing a paper return, an adjustment is required at label B: Non-primary production income if the trust received any franked distributions (either directly or indirectly via a partnership or another trust) during the income year. Completing the xT auto calculates label B to include those franking credits.

For information concerning label B and Franked Distributions refer to Share of Income A and B.

The trust's primary production income is generally indicated at items 5: Business income and expenses and 8: Partnerships and trusts, less any primary production deductions.

The trust's non-primary production income is the amount shown at item 26 Total net income or loss, less primary production income as calculated above, amounts attributable to capital gains (shown at item 21 Capital gains), Foreign income included at items 22 Attributed foreign income and 23 Other assessable foreign income (all of which are shown at separate labels in the Distribution Statement).

For the purpose of recording beneficiaries' shares of franked distribution included in the net income of the trust for income tax purposes, the trust's non-primary production income includes franked distributions, these amounts should not be shown at B.

Franked distributions (both fully and partially franked) should be shown at label U in the distribution statement. Unfranked distributions should continue to be shown at label B.

Beneficiaries of primary production trusts that report a loss

Eligible primary producer beneficiaries can access income averaging and hold a Farm Management Deposit in years even where a primary production trust reports a loss for trust purposes.

What you are required to show at label A Primary Production will depend on the type of trust that has made the loss for trust purposes.

Fixed Trusts

If the trust is a fixed trust, all the eligible beneficiaries are able to access income averaging and hold Farm Management Deposits.

Discretionary Trusts

If the trust is a discretionary trust, the trustee will need to choose those beneficiaries who will still be eligible for the concessions.

Trustees may choose beneficiaries who will be eligible for income averaging or hold a Farm management deposit.

The Trustee's choices must be:

• Made in writing.

• Signed by both the trustee and the beneficiary.

• Made by the time that the trust return is lodged (unless the Commissioner allows a later time).

The trustee may choose the greater of:

• 12 Beneficiaries or

• The number of primary producer beneficiaries chosen in the previous income year.

How to complete label A Primary production

Show '0' at label A Primary production for each eligible beneficiary; that is:

• All fixed trust beneficiaries

• Each chosen discretionary trust beneficiary eligible for income averaging.

If as a result of the trustee's choices, a primary producer is eligible to access Farm Management Deposits but is not eligible for income averaging, do not show anything at label A Primary production for that beneficiary.

For more information go to www.ato.gov.au and search for 'income averaging' or 'farm management deposits'.

Show each beneficiary’s share of credit for tax withheld where an ABN was not quoted.

The total of label C amounts equals the sum of any credit shown on the return at:

• Label T - Tax withheld where ABN not quoted, item 6, and

• Label C - Share of credit for tax withheld where ABN not quoted, item 8 

If the trust has no net income, the beneficiaries are not entitled to a share of the credit for tax withheld. Instead, show the sum of the amounts withheld at C under Income to which no beneficiary is presently entitled at the end of item 55.

Show at label U each beneficiary's share of franked distributions to the extent they formed part of the net income of the trust for tax purposes. The amount shown at U also includes the beneficiary's share of attached franking credits (the franking credit 'gross-up').

Trusts which have not made beneficiaries (or the trustee) 'specifically entitled' to franked distributions or capital gains, generally work out a beneficiary's share of the franked distributions by multiplying the total amount of the trust's franked distributions (and any attached franking credits) to the extent to which those distributions formed part of the net income of the trust estate for tax purposes, by the beneficiary's percentage share of the trust income. Show whole dollars only.

For relevant trusts with capital gains or franked distributions that any beneficiary (or the trustee) is 'specifically entitled' to in full or in part, the amount shown at U in respect of a beneficiary should generally include:

• The amount of the net franked distributions to which the beneficiary is 'specifically entitled' (Net franked distributions are determined by reducing the franked distributions by expenses which are directly relevant to them) to the extent to which those distributions formed part of the net income of the trust estate for tax purposes, plus any attached franking credits; plus

• The beneficiary's 'adjusted Division 6 percentage' share of any net franked distributions of the trust to which no beneficiary is 'specifically entitled' to the extent to which those distributions formed part of the net income of the trust estate for tax purposes, plus that same share of any attached franking credits.

For trusts that did not make any beneficiary (or the trustee) specifically entitled to any franked distributions or capital gains, the amount shown at label D is worked out by multiplying the total franking credits included in the trust's net income (at labels D item 8, and at M item 12 and label D item 23) multiplied by the beneficiary's percentage share of the trust income.

The amount shown at label D will need to be worked out differently if the trust:

• Is a relevant trust with capital gains or franked distributions that any beneficiary (or the trustee) is 'specifically entitled' to in full or in part; OR

• Is a managed investment trust that has not elected to apply the new streaming provisions.

For relevant trusts with capital gains or franked distributions that any beneficiary (or the trustee) is 'specifically entitled' to in full or in part, the amount shown at label D in respect of a beneficiary should include:

• Any franking credits attaching to franked distributions to which the beneficiary is 'specifically entitled', to the extent to which those distributions formed part of the net income of the trust estate for tax purposes; plus

• The beneficiary's 'adjusted Division 6 percentage' share of any franking credits attaching to any part of the franked distributions forming part of the net income of the trust estate, to which no beneficiary is 'specifically entitled'.

For MITs that have not elected to apply the new streaming changes show at label D each beneficiary's share of franking credits for franked distributions received by the trust (including dividends flowing to the trust via a partnership or another trust).

• A beneficiary's share of the franking credit on a franked distribution will depend on their entitlement to the distribution, having regard to the trust deed and any relevant trustee resolution. To work out the beneficiary's entitlement to the franked distribution where it has come via one or more trusts or partnership, then you will need to work out the entitlements to the franked distribution of each interposed entity through which the dividend flowed.

• If only some of the beneficiaries to whom the income of the trust has been distributed are en-titled to benefit from the franked distribution, then only those beneficiaries will have a share of the franking credits. To work out a beneficiary's share, express their entitlement to the franked distribution as a percentage of the total franked distribution. Multiply the result by the amount of franking credits on that dividend.

• Show '0' at D for any other beneficiary who is presently entitled to a share of the trust's distributable income but that entitlement does not comprise or include the franked dividend.

If the trustee is assessable on a part of the net income under section 99 or 99A the trustee may have a share of the franking credit on the dividend. To work out the trustee's entitlement, express that part of the dividend in respect of which no beneficiary has an entitlement as a percentage of the total dividend. Multiply the result by the amount of the franking credit on that dividend at label D under Income to which no beneficiary is presently entitled at the end of item 55.

Except as explained below, the total of label D amounts for each completed statement of distribution must equal the sum of franking credits claimed at:

• D Share of franking credit from franked dividends item 8

• M Franking credit item 12

• D Australian franking credits from a New Zealand company item 23.

If the shares or interests are not held at risk as required under the holding period and related payments rules, or there is other manipulation of the imputation system, do not include the relevant franking credits at label D.

Note that under section 220-405 of the ITAA 1997, the Australian franking credits from a New Zealand company may be reduced by the relevant part of the supplementary dividend paid by the New Zealand company if:

• The supplementary dividend was paid in connection with the franked dividend

• The beneficiary under a legal disability or trustee is entitled to a foreign income tax offset be-cause the franked dividend is included in their assessable income. Refer to Appendix 1 in the ATO Trust return instructions.

See Interim changes to the taxation of trusts on the ATO website.

The total of label E amounts equals the sum of TFN amounts withheld claimed in the return at:

• Label E - Share of credit for TFN amounts withheld from interest, dividends and unit trust distributions, item 8

• Label I - TFN amounts withheld from gross interest, item 11

• Label N - TFN amounts withheld from dividends, item 12. 

If there is trust income to which no beneficiary is presently entitled, show that share of the credit for the TFN amounts withheld at E under Income to which no beneficiary is presently entitled at the end of item 55.

Show at label O each beneficiary's share of credit for any amount withheld by the trustee of a closely held trust from a distribution made to you as a trustee beneficiary, because a TFN was not provided.

If there is trust income to which no beneficiary is presently entitled, show that share of the credit for the TFN amounts withheld from payments from closely held trusts at label O under Income to which no beneficiary is presently entitled at the end of item 55.

If the trust has no net income, the beneficiaries are not entitled to a share of the credit for tax withheld. Instead, show the sum of the amounts withheld at label O under Income to which no beneficiary is presently entitled at the end of item 55.

The total of all label O amounts must equal the sum of TFN amounts withheld on closely held trust distributions shown at item 8: Partnerships and trusts–label O in the trust return.

Do not show at label O amounts you have withheld as the trustee of a closely held trust, from payments or distributions where the beneficiary has not provided their TFN to you. These should be reported at label T (Total TFN amounts withheld from payments).

See TFN withholding for closely held trusts on the ATO website.

See Label F Capital Gains on the ATO website.

Use the Capital Gains worksheet (g) to calculate Capital Gains and Losses.

To complete their own tax returns and meet their capital gains tax obligations, beneficiaries need the following information:

1. A dissection of the net capital gain distributed by the trust for the income year to the extent that it comprises an amount attributable to the following:

   Assets	Capital Gains Methods of Calculation
   	Indexation	CGT discount	Other method
   Collectables
   Small business 50% active asset reduction was applied
   All other capital gains

2. Details of any non-assessable payment made in the income year in respect of an interest in the trust (CGT event E4 section 104-70 of the ITAA 1997). The details should indicate the extent to which the payment is attributable to each of the following:

   1. Tax-exempted amounts (subsection 104-71(1) of the ITAA 1997)

   2. Tax-free amounts (subsection 104-71(3) of the ITAA 1997)

   3. CGT concession amounts (subsection 104-71(4) of the ITAA 1997)

See capital gains tax concessions for small business on the ATO website.

Show at label Z item 55 each beneficiary’s share of foreign resident capital gains withholding.

Except for relevant trusts which have made beneficiaries specifically entitled to franked distributions or capital gains, you work out a beneficiary’s share of the foreign resident capital gains withholding by multiplying the amount of foreign resident capital gains withholding by the beneficiary’s percentage share of the trust income. Show also the cents.

For trusts that have made beneficiaries specifically entitled to franked distributions or capital gains, you generally work out a beneficiary’s share of the foreign resident capital gains withholding by multiplying the foreign resident capital gains withholding by their adjusted Division 6 percentage share. Show also the cents.

If there is trust income to which no beneficiary is presently entitled, show that share of the foreign resident capital gains withholding at label Z under Income to which no beneficiary is presently entitled at the end of item 55.

If the trust has no net income, the beneficiaries are not entitled to a share of the foreign resident capital gains withholding. Instead, show the sum of the amounts of foreign resident capital gains withholding at label Z under Income to which no beneficiary is presently entitled at the end of item 55.

Show each beneficiary's share of attributed foreign income included in the net income of the trust in whole dollars only. Except for relevant trusts that have made beneficiaries 'specifically entitled' to amounts of franked distributions or capital gains, this amount is generally worked out by multiplying a beneficiary's percentage share of trust income by the total attributed foreign income of the trust.

For trusts which have made beneficiaries specifically entitled to franked distributions or capital gains, you generally work out a beneficiary's share of attributed foreign income by multiplying the amount of tax withheld by their 'adjusted Division 6' percentage share. Show whole dollars only.

The total of G amounts must equal the sum of any attributed foreign income shown at item 22 - Attributed foreign income on the trust return.

If no beneficiary is presently entitled, enter the amount in the Not presently entitled column.

If the beneficiary was not a resident of Australia at any time during the income year, refer to ‘Non-resident beneficiaries’ in the current year Trust Tax Return instructions.

Show each beneficiary's share of other assessable net foreign source income included in the net income of the trust for tax purposes. Except for relevant trusts that have made beneficiaries 'specifically entitled' to amounts of franked distributions or capital gains, this amount is generally worked out by multiplying a beneficiary's percentage share of trust income by the total of the trust's other assessable net foreign source income.

For trusts that have made beneficiaries specifically entitled to franked distributions or capital gains, you generally work out a beneficiary's share of assessable net foreign source income by multiplying the amount of tax withheld by their 'adjusted Division 6' percentage share. Show whole dollars only.

The total of H amounts must equal the amount of net foreign source income shown at label V - Net at item 23.

If no beneficiary presently entitled, enter the amount in the Not presently entitled column.

If the beneficiary was not a resident of Australia at any time during the income year, refer to ‘Non-resident beneficiaries’ in the current year Trust return instructions.

Except for relevant trusts that have made beneficiaries 'specifically entitled' to amounts of franked distributions or capital gains, this amount is worked out by multiplying a beneficiary's percentage share of trust income by the total of the trust's foreign income tax offsets.

For trusts that have made beneficiaries specifically entitled to franked distributions or capital gains, you generally work out a beneficiary's share of assessable net foreign source income by multiplying the amount of tax withheld by their 'adjusted Division 6' percentage share.

The total of I amounts must equal the amount of Foreign income tax offsets shown at label Z - Foreign income tax offsets, item 23 on the trust tax return.

If no beneficiary presently entitled, enter the amount in the Not presently entitled column.

Show each beneficiary's share of the NRAS tax offset (include cents).

A beneficiary's share of the NRAS tax offset will depend on their entitlement to the NRAS rent derived by the trustee (or flowing to the trustee via a partnership or another trust) having regard to the trust deed and any relevant trustee resolution.

The beneficiary's entitlement to the NRAS rent is expressed as a percentage of the total NRAS rent derived from all rental dwellings covered by the certificate issued by the Secretary of the Department of Sustainability, Environment, Water, Population and Community. To work out the beneficiary's entitlement to the NRAS rent where it has come via one or more trusts or partnership, you will need to work out the entitlements to the NRAS rent of each interposed entity in the chain through which the amount flowed.

The beneficiary's percentage entitlement is then multiplied by the amount of the tax offset stated in the certificate relating to those dwellings (or the tax offset amount stated in any amended certificate).

If only some of the beneficiaries to whom the income of the trust has been distributed are entitled to benefit from the NRAS rent, then only those beneficiaries will be entitled to the offset.

If the trustee is assessable on a part of the net income under section 99 or 99A the trustee may be entitled to the NRAS offset. To work out the trustee's entitlement, express that part of the NRAS rent in respect of which no beneficiary has an entitlement as a percentage of the total NRAS rent derived from all rental dwellings covered by the certificate. Multiply the result by the amount of the tax offset stated in the certificate at label R under Income to which no beneficiary is presently entitled at the end of item 55.

A trustee may also be entitled to the NRAS offset if the trust does not have any net income for the year (see section 380-20 of the ITAA 1997). Record the trustee's entitlement at label R under Income to which no beneficiary is presently entitled at the end of item 55.

The total of the amounts shown at label R for each completed statement of distribution must equal the amount of NRAS tax offset entitlement shown at label F item 50 on the trust tax return. Include cents.

If no beneficiary presently entitled, enter the amount on the face of the return in the Not presently entitled column.

Show each beneficiary’s share of exploration credits at item 55 label M.

Where a trust receives exploration credits, the trustee may pass the exploration credits to beneficiaries. To be entitled to benefit from exploration credits, the beneficiary must be an Australian resident for the whole of the income year.

Special rules apply to a beneficiary who receives exploration credits from a trust. For more information, refer to what to do if you receive exploration credits on the ATO website.

The trustee is entitled to a relevant proportion of the exploration credit tax offset if the trustee is liable to pay tax because a beneficiary is under a legal disability, or no beneficiary is presently entitled. The offset is only available if the trustee is taxed as if it were an Australian resident individual and the relevant beneficiary is also an Australian resident.

The trustee is not entitled to the exploration credit tax offset to the extent that a beneficiary has already been made entitled to a share of the exploration credit. Show the trustee's entitlement at item 55 label X Share of other refundable tax offsets.

Show each beneficiary's share of the ESVCLP tax offset at label T item 55 Early stage venture capital limited partnership tax offset.

Where a trust would be entitled to the ESVCLP tax offset if it were an individual, the trustee may allocate the ESVCLP tax offset to beneficiaries as decided by the trustee. The trustee determines the amount of the ESVCLP tax offset to allocate to any one or more beneficiaries. If a beneficiary is entitled to a fixed proportion of any capital gain from investments that gave rise to the offset, the trustee must allocate that same fixed proportion of the tax offset to the beneficiary. Otherwise, there are no requirements as to how the trustee may decide to allocate the offset between its beneficiaries.

The trustee is entitled to claim the ESVCLP tax offset:

• to the extent that the trustee has not allocated the offset to beneficiaries and

• if the trustee is liable to pay tax under section 98, 99 or 99A of the ITAA 1936.

The trustee is entitled to the ESVCLP tax offset if the trustee is liable to pay tax on behalf of a beneficiary under section 98 (a beneficiary under a legal disability or a non-resident beneficiary) or under section 99 or 99A (no beneficiary is presently entitled). The amount of the trustee’s offset entitlement is reduced by the amount of the offsets allocated to any beneficiary

The trustee’s notice of assessment from the previous income year should show if the trustee has any unused ESVCLP tax offset that is carried forward to next income tax year.

Show the amount of unused ESVCLP tax offset carried forward by the trustee from 2016–17 at K item 55 Income to which no beneficiary is presently entitled.

If you are eligible for the early stage investor tax offset because of investment in an early stage innovation company, include at item 52 label J the amount of offset available for distribution to beneficiaries.

Enter the amount you invested in the income year in any qualifying early stage innovation companies.

If you do not meet the requirements of the ‘sophisticated investor’ test under the Corporations Act 2001, your investment in an income year in any early stage innovation companies must not exceed $50,000. If the investment exceeds $50,000, you and your beneficiaries are not eligible for any offset.

The maximum amount for this offset in a year is $200,000 (or $10,000 if you do not meet the requirements of a ‘sophisticated investor’ test). The test is assessed at the time of your investment. You will not be eligible if your percentage of equity in the innovation company exceeds 30% at that time.

The trustee’s notice of assessment from the previous income year should show if the trustee has any unused early stage investor tax offset that is carried forward to the current income year.

Show the amount of unused early stage investor tax offset carried forward by the trustee from previous years at label M item 55 under Income to which no beneficiary is presently entitled.

Show each beneficiary's share of the net small business income at X item 55 Share of net small business income.

This is worked out by multiplying the trust's net small business income by the beneficiary's proportional share of the trust income.

The total of all the amounts at X for each completed statement of distribution must equal the amount of net small business income shown at V item 5 on the trust tax return.

You need to advise any beneficiaries who are individuals of their share of net small business income from the trust to assist them to work out their entitlement to the small business income tax offset.

Trustees and beneficiaries who are prescribed persons (under 18 years of age and not excepted persons) are not entitled to the offset.

If you have entered assessment calculation code 139 - certain non-resident company beneficiaries - at label V, you must insert an amount at label J.

The amount to show a label J is the amount the trustee is liable to pay tax on under section 98 of the ITAA 1936 on behalf of the corporate beneficiary who is a non-resident at the end of the income year. Show whole dollars only. If a previous trustee has been assessed under section 98(3) then a non-resident corporate beneficiary will not be assessed.

The amount the trustee is liable to pay tax on calculated as:

• So much of the trust's net income that is attributable to a period (if any) that the corporate beneficiary was a resident multiplied by the beneficiary's percentage share of the income of the trust, and

• So much of the trust's net income that is attributable to Australian sources for the period the corporate beneficiary was a non-resident multiplied by the beneficiary's percentage share of the income of the trust.

Do not include income subject to withholding tax (unfranked dividends, interest and royalties), fully franked dividends or amounts on which managed investment trust withholding tax is payable. Do not include the capital gains for which the trustee is not liable to pay tax under Subdivision 855-A of the ITAA 1997.

If the corporate beneficiary's share of net income of the trust includes an amount that is attributable to a discounted capital gain made by the trust, work out the amount the trustee is liable to pay tax on under subsection 98(3) as if the part attributable to the capital gain was double the amount it actually is (see section 115-220 of the ITAA 1997). This ensures that a trustee assessed on behalf of a non-resident company beneficiary does not get the benefit of the CGT discount that the corporate beneficiary would not be entitled to if it were assessed.

To work out whether the corporate beneficiary's share of the net income includes an amount that is attributable to a discounted capital gain of the trust multiply the beneficiary's percentage share of the income of the trust by so much of that discounted capital gain that is reflected in the trust's net capital gain (that is, after the application of any capital losses and net capital losses to that gain).

If the beneficiary is a non-resident at the end of the year and has not been a non-resident for the entire year, show clearly in a separate schedule full details of its share of the net income. It is important to provide the information set out at Non-resident beneficiaries so that the appropriate tax rates can be applied.

Non-resident company beneficiaries - assessable amount (label J)

If you have entered assessment calculation code 134 (non-resident company beneficiaries that are a base rate entity) or 139 (non-resident company beneficiaries that are not a base rate entity) at label V, you must include an amount at label J. The amount you show at label J is the amount the trustee is liable to pay tax on under section 98 of the ITAA 1936 on behalf of an individual beneficiary who is a non-resident at the end of the income year. Show whole dollars only. This amount can be zero if tax has been paid under section 98(3) by a previous trust and this trust is not assessable.

The amount assessed to the trustee is comprised of the beneficiary's share of the net income from the trust that is attributable to a period (if any) that the beneficiary was a resident, as well as the beneficiary's share of the trust's net income that is attributable to Australian sources for the period the beneficiary was a non-resident.

Do not include income subject to withholding tax (unfranked dividends, interest and royalties), fully franked dividends or amounts on which managed investment trust withholding tax is payable. Do not include any capital gains for which the trustee is not liable to pay tax under Subdivision 855-A of the ITAA 1997. All other Australian source income is included.

If the beneficiary is a non-resident at the end of the year but has not been a non-resident for the entire year, you will have selected Yes at label A item 29. It is important to provide the information set out at Non-resident beneficiaries so that the appropriate tax rates can be applied.

Non-resident individual beneficiaries - assessable amount (label J)

If you have entered assessment calculation code 138 (non-resident individual beneficiaries) at label V, you must include an amount at label J. Do not include at J any amounts from managed investment trust fund distributions that have been subject to non-final withholding under Subdivision 12H in Schedule 1 to the TAA 1953. If all of the distribution to the beneficiary consists of such amounts, you must enter a zero at label J. This amount can be zero if tax has been paid under section 98(3) by a previous trust and this trust is not assessable.

Show the assessable amount under section 98 of the ITAA 1936 if the trustee is assessable on behalf of a non-resident individual beneficiary not under a legal disability on a share of the net income of the trust. Show whole dollars only. Generally, for beneficiaries who have been non-residents for the entire year, the assessable amount will not include income subject to withholding tax (unfranked dividends, interest and royalties), fully franked dividends and distributions to a foreign resident which requires an Australian managed investment trust to withhold an amount, but will include all other Australian source income, including capital gains. Do not include any capital gains for which the trustee is not liable to pay tax under Subdivision 855-A of the ITAA 1997.

If the beneficiary is a non-resident at the end of the year and has not been a non-resident for the entire year, ensure you have entered Y at label A - Overseas transactions, item 29.

The amount to show at label J will include the beneficiary's share of net income from the trust attributable to the period that the beneficiary was a resident as well as the beneficiary's share of the net income attributable to Australian sources for the period the beneficiary was a non-resident. It will exclude income subject to non-resident withholding tax and fully franked dividends. Do not include any capital gains for which the trustee is not liable to pay tax under Subdivision 855-A of the ITAA 1997.

If you have entered assessment calculation code 140 (non-resident trustee beneficiary) at V, you must include an amount at label K. Any amounts reported at label K should not be included at labels P or Q (TB statement). This amount can be zero if tax has been paid under section 98(3) by a previous trust and this trust is not assessable.

The amount to show at label K is the amount the trustee is liable to pay tax under section 98 of the ITAA 1936 because a trustee beneficiary, who is presently entitled to a share of the trust's distributable income, is a non-resident at the end of the income year. Show whole dollars only. If a previous trustee has been assessed under section 98(4) then a non-resident trustee beneficiary will not be assessed.

The amount the trustee is liable to pay tax on is so much of the non-resident trustee beneficiary's share of the net income of the trust as is attributable to Australian sources. Do not include income subject to withholding tax (unfranked dividends, interest and royalties), fully franked dividends or amounts on which managed investment trust withholding tax is payable. Do not include any capital gains for which the trustee is not liable to pay tax under Subdivision 855-A of the ITAA 1997.

If the trustee beneficiary's share of net income of the trust includes an amount that is attributable to a discounted capital gain made by the trust, work out the amount the trustee is liable to pay tax on under subsection 98(4) as if the part attributable to the capital gain was double the amount it actually is (see section 115-222 of the ITAA 1997). This ensures that a trustee assessed on behalf of a non-resident trustee beneficiary does not get the benefit of the CGT discount that the corporate beneficiary would not be entitled to if it were assessed.

To work out a non-resident trustee beneficiary's share of the net income that is attributable to a discounted capital gain of the trust multiply the beneficiary's percentage share of the income of the trust by so much of that discounted capital gain that is reflected in the trust's net capital gain (that is, after the application of any capital losses and net capital losses to that gain).

If the beneficiary is a non-resident at the end of the year and has not been a non-resident for the entire year, show clearly in a separate schedule full details of its share of the net income. It is important to provide the information set out at Non-resident beneficiaries so that the appropriate tax rates can be applied.

Trustee Beneficiary Statement information

Amounts are entered in the worksheet xT for each beneficiary.

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.

For more information about the definitions of tax-preferred amounts and untaxed part of a share of net income, see Appendix 11 in the current year Trust return instructions on the ATO website

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.

Annual trustee payment report information

Amounts are entered in the worksheet xT for each beneficiary.

This section is to be completed by all closely held trusts, including family trusts that are subject to the TFN withholding rules for closely held trusts that have:

• Made payments during the income year, or

• Withheld amounts from payments made to beneficiaries.

Show an amount at label S where you have made one or more distributions during the income year that are wholly or partly from the ordinary or statutory income of the trust for that year and the total of those distributions exceeds the beneficiary's share of the net income of the trust. Only include at label S the amount by which these distributions exceed the beneficiary's share of the net income.

Show at T the amounts withheld from payments or distributions to the beneficiary, where the beneficiary's TFN was not provided to you. Do not show at T the beneficiary's share of amounts that were reported at Item 8 label O, these are included at Item 55 label O.

For more information about the TFN Withholding Rules for closely held trusts, refer to Appendix 12 in the ATO Trust return instructions.

TFN Withholding for Closely Held Trusts

Deceased estate trusts are excluded from the TFN withholding rules up until the end of the year of income in which the fifth anniversary of the individual's death occurred. After this, the trustee will need to consider whether they will be subject to the TFN withholding rules. To find out more about these rules, refer to TFN withholding for closely held trusts on the ATO website.