From 1992–93, the share of the income of an Australian beneficiary of a non-resident trust who is not assessed under the FIF measures is worked out by one of two methods. [SECTIONS 96B and 96C]
Method 1
This method is used where all the income, profits or gains derived by the non-resident trust estate during the income year consisted of either or both:
- income, profits or gains to which beneficiaries of the non-resident trust estate were presently entitled
- income, profits or gains to which beneficiaries of the non-resident trust estate were not presently entitled but which were distributed to the beneficiaries within 2 months after the end of the income year.
In the above cases, the beneficiaries are deemed to be presently entitled to a share of the net income of the non-resident trust estate equal to the percentage of the total income, profits or gains of the non-resident trust represented by the total of the amounts:
- to which the beneficiaries were presently entitled, or
- to which the beneficiaries were not presently entitled but which were distributed to the beneficiaries of the trust estate within 2 months after the end of the income year. [SUBSECTION 96C(1)]
Method 2
In any other case, the beneficiaries are deemed to be presently entitled to a share of the net income of the non-resident trust equal to whichever is the greater percentage of:
- the income of the non-resident trust estate represented by the share of income to which the beneficiaries were entitled or were entitled to acquire, or
- the capital of the non-resident trust estate represented by the share of the capital to which the beneficiaries were entitled or were entitled to acquire. [SUBSECTION 96C(2)]
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)]