Where method 1 cannot be applied, a beneficiary's share of the net income of the trust estate is determined by:
- calculating the beneficiary's share of the net income of the trust estate that relates to interests the beneficiary held in the trust estate for the whole year
- calculating the beneficiary's share of the net income of the trust estate that relates to interests the beneficiary held in the trust estate for only part of the year, and
- adding these amounts to determine the beneficiary's total share of the net income of the trust estate that relates to all the interests the beneficiary held in the trust estate. [subsections 96C(2) to (5)]
Where the aggregate of the Australian beneficiaries' present entitlement is more than 100% of the income of the non-resident trust estate, the total interests are reduced to 100% and each beneficiary's interests are reduced proportionally. [subsection 96C(6)]