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IR6 Questions 21 and 22 Distributions to beneficiaries by foreign and non-complying trusts

Question 21 – Distributions

At Question 21 print the total amount of distributions made to beneficiaries during the year.

A distribution is any income or property of the trust that vests in the beneficiary or is paid or applied for a beneficiary’s benefit. It includes any property or service disposed of or provided to:

  • a beneficiary for less than market value, or

  • the trust by a beneficiary for greater than market value.

Attach a separate schedule to page 3 of the return showing the source and the amount of each distribution.

Distributions are considered to have come from different sources in the following order:

  • beneficiary income

  • accumulated trustee income

  • capital profits or gains realised in the current income year

  • capital profits or gains realised in previous years that have been accumulated by the trust

  • the corpus of the trust.

The ordering establishes if the distribution is a taxable distribution – see Question 22. Capital gains and corpus distributed only after income derived by trustees in the year of distribution and in prior years has been distributed.

Further information about the ordering and taxability of distributions can be found in the Trusts’ and estates’ income tax rules (IR288) guide.

Question 22 – Taxable distributions

A taxable distribution is one made to a beneficiary by a foreign or non-complying trust that isn’t beneficiary income.

For a foreign trust taxable distributions also do not include capital gains profits that aren’t included in the taxable income of the trust except when derived from transactions with associated persons or a distribution from the corpus.

For non-complying trusts they do not include distributions from the corpus.

Write the total taxable distributions made to beneficiaries during the year in Box 22.

Where to include taxable distributions

Include the amount of the taxable distribution made to each beneficiary in the beneficiary’s panel of the IR6B:

  • in Box 24G if the trust is a foreign trust, or

  • in Box 24J if the trust is a non-complying trust.

For tax payable on taxable distributions see Question 24J at IR6 Question 24 IR6B Estate or beneficiary details#Taxabledistributionsbynon-complyingtrust.

Schedule of beneficiary’s estate or trust income

Each beneficiary (excluding minor beneficiaries) must attach a completed Schedule of beneficiary’s estate or trust income (IR307) to their individual tax return if they receive income from a foreign or non-complying trust.

It’s helpful if the trustee or agent also provides a completed IR307 when advising beneficiaries of their share of trust income. Beneficiaries don’t then need to contact the trustee or agent when completing their own returns.

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