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8 Partnerships and trusts

Instructions to complete item 8 partnership's share of income and distributions from other trusts and partnerships.

Last updated 1 July 2024

About partnership and trust distributions

The partnership’s income from another partnership includes any income or a loss that the partnership received, was entitled to receive, or was entitled to deduct in respect of that other partnership.

The partnership’s income from a trust includes the partnership's share of the net income (for tax purposes) of the trust, which generally corresponds to the percentage share of the trust's distributable income that the partnership received or was entitled to receive as a beneficiary under a will, settlement, and deed of gift or other instrument of trust.

If you report a distribution from a trust at item 8, complete a Trust income schedule 2024 and attach it to the partnership tax return.

Distributions from another partnership or a share of the net income of a trust include the share of any:

  • TFN amounts withheld from interest, dividends and unit trust distributions
  • franking credits attached to franked dividends received indirectly from an Australian franking company
  • amounts withheld where an ABN was not quoted
  • TFN amounts withheld from payments by the trustee of a closely held trust because a TFN was not provided.

Copy the details from any statements of distribution or advice received from the other partnerships and trusts to Worksheet 2. This is the partnership’s record if we need more details later.

If the partnership or trust statement of distribution or advice includes an amount described as dividends or franking credits from a New Zealand franking company, don't include these at item 8. Show these amounts at item 23 Other assessable foreign source income.

Don't include any payments and loans received from trustees or amounts that are debts forgiven by trustees that are treated as dividends under Division 7A of Part III of the ITAA 1936. Show these amounts at item 12 label K if they are unfranked.

Certain amounts treated as dividends can be franked. If the amounts are franked, show them at item 12 label L, see unfranked amount and franked amount

If a partnership or trust statement of distribution or advice includes amounts described as foreign income or capital gains, don't include these at item 8.

Show foreign income at:

  • item 22 Attributed foreign income
  • item 23 Other assessable foreign source income.

A partnership does not own assets for capital gains tax (CGT) purposes. A partnership's assets are owned by the partners in the proportion to which they have agreed.

Any capital gain or capital loss is made by the partners individually, such as if:

  • a CGT event happened for the partnership in 2023–24 (or a CGT event happened in relation to a CGT asset of the partnership), or
  • the partnership received a share of a capital gain from a trust.

Each partner must work out their capital gain or capital loss by referring to the partnership agreement, or to partnership law if there is no agreement, and include it on their own tax return. For more information on how a partner works out their share of a capital gain or capital loss, see Guide to capital gains tax 2024.

To the extent that family trust distribution tax (FTDT) has been paid on income or capital of a trust to which the partnership is presently entitled or which has been distributed to the partnership, that income or capital is excluded from the assessable income of the partnership under section 271-105 of Schedule 2F to the ITAA 1936.

For more information on the circumstances in which FTDT is payable, see Family trust distribution tax.

If trustee beneficiary non-disclosure tax (TBNT) has been paid in respect of an amount that would otherwise be assessable to the partnership, that amount is excluded from the assessable income of the partnership.

Any losses or outgoings incurred in deriving an amount that is excluded from assessable income because FTDT or TBNT has been paid are not deductible.

The partnership can't claim a tax offset for any franking credits attributable to the whole or a part of a dividend that is excluded from assessable income.

Taxation of financial arrangements (TOFA)

If the TOFA rules apply to the partnership, include at item 8 Partnerships and trusts the partnership's share of all the partnership's primary production and non-primary production amounts, or deductions relating to such amounts. This includes amounts from financial arrangements subject to the TOFA rules.

If what you show at item 8 includes an amount which is brought to account under the TOFA rules, also complete item 31 Taxation of financial arrangements (TOFA).

Primary production

Show at this section:

Distribution from partnerships

Show at label A the amount of primary production income or loss distribution from other partnerships.

If this amount is a loss, print L in the box at the right of the amount.

Share of net income from trusts

Show at label Z the partnership's share of primary production income that has been included in the net income (for tax purposes) of a trust. Include primary production income of a trust that the partnership became presently entitled to in the income year, whether or not it has been received. The statement of distribution or advice from the trust should separately show this amount. If the partnership's share of primary production income included in the net income of the trust is zero because the trust has made a loss from its primary production activities, print L in the box at the right of the amount. Only show a loss at label Z if it is a component of an overall distribution of net income from the same trust.

If this amount is not a loss, in the box at label Z print the code from Table 4 that best describes the type of trust from which the distribution is made. If this amount is from more than one type of trust, print the code that represents the trust with the greatest amount of distribution.

Table 4: Trust codes

Code

Type

M

Cash management unit trust

D

Deceased estate

E

Testamentary trust

S

Discretionary trust, where the main source of income of the trust is from service and management activities

T

Discretionary trust, where the main source of income of the trust is from trading activities

I

Discretionary trust, where the main source of income of the trust is from investment activities

H

Hybrid trust

P

Public unit trust (listed), other than a cash management unit trust

Q

Public unit trust (unlisted), other than a cash management unit trust

U

Fixed unit trust (including a corporate collective investment vehicle (CCIV) sub-fund trust), other than a public unit trust described in or Q

F

Fixed trust, other than a fixed unit trust or public unit trust described in P, Q or U

Deductions relating to amounts shown at A and Z

Show at label S the partnership’s deductions for its own expenses relating to primary production distributions from other partnerships or its share of net income from trusts.

Also show at label S the partnership's deductions for expenses it incurred in deriving its share of primary production income, which has been included in the net income (for tax purposes) of a trust. Note that expenses incurred on behalf of the trust are not to be deducted by the partnership.

If the partnership has prepaid any expenses, the amount it can claim at label S may be affected by the prepayment provisions. For more information, see Deductions for prepaid expenses 2024.

Expenses listed here that are costs associated with borrowing and servicing debt may not be allowable deductions under the thin capitalisation rules. For more information, see Appendix 3. The disallowed amount reduces the amount that would otherwise be included at label S.

Net primary production amount

Show at this entry the net result of adding partnership distributions of primary production income and the partnership's share of primary production income that has been included in the net income (for tax purposes) of a trust minus allowable deductions related to that income.

Write the total amount in the box at label Net primary production amount. If this amount is a loss, print L in the box at the right of the amount.

Non-primary production

Show at this section:

Distribution from partnerships, less foreign income

Show at label B the amount of non-primary production income or loss distributions from other partnerships. Include any share of credit for tax withheld in Australia due to foreign resident withholding that is attached to the distribution. Also include the share of credit at item 8 – label U.

If the amount at label B is a loss, print L in the box at the right of the amount.

If the distribution includes franked dividends from a franking entity, check the statement of distribution or advice detailing the distribution to ensure that the amounts to be included at this entry represent both the partnership’s share of the franked dividend and its share of the franking credit attached to the franked dividend. The franking credit is included at item 8 – label D.

Don't show at label B any dividends or franking credits indirectly received that are attributable to distributions from a New Zealand franking company. If the partnership received dividends or franking credits indirectly from a New Zealand franking company, see 23 Other assessable foreign source income.

If the partnership received a distribution from another partnership, and that other partnership claimed a deduction for a listed investment company (LIC) capital gain amount, then the partnership must add back its share of the deduction claimed by the other partnership at item 14 Other Australian income.

Share of net income from trusts, less capital gains, foreign income and franked distributions

Show at label R the partnership's share of non-primary production income that was included in the net income (for tax purposes) of trusts. The statement of distribution or advice from the trusts should separately show this amount. Include any share of credit for tax withheld in Australia due to foreign resident withholding that is attached to the distribution. Also include the share of credit for tax withheld from foreign resident withholding at item 8 – label U.

The partnership's share of franked distributions from trusts and its share of the franking credits referable to those franked distributions (the franking credit 'gross-up') should be included at item 8 – label F. The franking credit should be included at item 8 – label D; see Franked distributions from trusts for more instructions. However, these amounts are still relevant to working out whether the overall share of net income (for tax purposes) from non-primary production activities is a positive amount.

Don't show the partnership's share of any non-primary production income included in the net income of a trust that includes any dividends or franking credits indirectly received which were attributable to distributions from a New Zealand franking company at this entry. Instead, see 23 Other assessable foreign source income.

In working out the partnership's share of non-primary production income that was included in the net income (for tax purposes) of a trust, amounts to which the partnership became presently entitled in the income year but has not yet received should also be taken into account.

Although for tax purposes a trust can't distribute a loss, in certain circumstances a trust may have made a loss in relation to its non-primary production activities and yet still have a positive amount of net income because its share of primary production income included in the net income for tax purposes is positive. In these circumstances, for the purposes of certain provisions relating to primary producers, it may be necessary to identify where the partnership's share of net income from a trust related to non-primary production activities is a loss and record this at label R.

If the partnership's share of non-primary production income which was included in the net income (for tax purposes) of a trust is a loss, print L in the box at the right of the amount. Only show a loss at label R if the amount is a component of an overall distribution of net income from the same trust. The loss at label R should be reduced by amounts at labels and G relating to franked distributions from trusts.

If this amount is not a loss, in the box at the right of label R print the code from Table 4 Trust codes that best describes the type of trust from which the distribution is made. If this amount is from more than one type of trust, print the code that represents the trust with the greatest amount of distribution.

If the partnership received or was entitled to receive income from a trust, and that trust claimed a deduction for a listed investment company (LIC) capital gain amount, then the partnership must add back its share of the deduction allowed to the trust at item 14 Other Australian income.

Deductions relating to amounts shown at B and R

Show at label T the partnership’s deductions for its own expenses relating to non-primary production distributions from other partnerships or its share of net income from trusts, except those deductions which are directly related to the earning of franked distributions from trusts which are shown at label G. Also show at label T the partnership's own expenses incurred in deriving its share of non-primary production income which has been included in the net income (for tax purposes) of a trust. Note that expenses incurred on behalf of a trust are not able to be deducted by the trust.

If any expenses have been prepaid, the amount that you can claim at label T may be affected by the prepayment provisions. For more information, see Deductions for prepaid expenses 2024.

Expenses listed here (and where relevant at label G relating to franked distributions from trusts) that are costs associated with borrowing and servicing debt may not be allowable deductions under the thin capitalisation rules. For more information, see Appendix 3. The disallowed amount reduces the amount that would otherwise go at label T.

If family trust distribution tax (FTDT) has been paid on the income or capital of another partnership or trust that the partnership is entitled to or which has been distributed to the partnership, an amount is excluded from the partnership's assessable income under section 271-105 of Schedule 2F of the ITAA 1936. Don't show this at labels AZB, or F. You can't claim a deduction for any losses or outgoings incurred in deriving an amount which is excluded from assessable income at label ST or G. For more information on the circumstances in which FTDT is payable, see Family trust distribution tax.

If trustee beneficiary non-disclosure tax (TBNT) has been paid in respect of an amount that would otherwise be assessable to the partnership, that amount is excluded from the assessable income of the partnership. Don't show that income at label AZBor F. You can't claim a deduction for any losses or outgoings incurred in deriving an amount which is excluded from assessable income at label Sor G.

Franked distributions from trusts

If the partnership's share of the non-primary production income included in the net income of a trust includes an amount described as franked dividends, franked distributions or attributable franked distributions, check the statement of distribution or advice detailing the distribution to ensure that the amounts to be included at this entry represent both the partnership's share of the franked distribution and its share of the franking credit attached to the franked distribution (the franking credit 'gross-up').

Show at label F the partnership's share of the franked distribution (described as franked dividends, franked distributions or attributable franked distributions) plus its share of the franking credit attached to the franked distribution. The franking credit is also included at item 8 – label D.

Don't show any share of a trust's non-primary production income included in the net income of that trust that includes any dividends or franking credits indirectly received which were attributable to distributions from a New Zealand franking company at this entry; instead, see 23 Other assessable foreign source income.

Deductions relating to franked distributions from trusts in label F

Show at label G the partnership's deductions for its own expenses incurred in deriving its share of the franked distributions from trusts at label F.

Net non-primary production amount

Show at this entry the net result of adding the partnership distributions of non-primary production income and the partnership's share of non-primary production income included in a trust's net income (for tax purposes), minus deductions related to that income, plus the net amount of the franked distributions from trusts, minus the deductions relating to the franked distributions from trusts.

Write the total amount in the box at label Net non-primary production amount. If this amount is a loss, print L in the box at the right of the amount.

Share of credits from income

Show as this section:

Share of credit for tax withheld where ABN not quoted

If the income shown at label AZBor F includes any share of amounts that have had tax withheld where an ABN was not quoted, show any share of credit for the tax withheld at label C. The trust or partnership statement or distribution or advice should separately disclose this amount.

Share of franking credits from franked distributions

Show at label D the partnership’s share of any franking credits from a franking entity received through another partnership or trust.

Show franking credits received directly from a paying franking entity at item 12 – label M.

Don't show franking credits relating to a dividend received through another partnership or trust if any of the following apply:

  • They were attributable to a distribution from a New Zealand franking company. If the partnership received franking credits indirectly from a New Zealand franking company, see 23 Other assessable foreign source income.
  • The holding period rule and related payments rule were not satisfied for the dividend, or the dividend washing integrity rule applies; for more information, see Appendix 1.
  • Family trust distribution tax (FTDT) has been paid on the dividend paid or credited by a company which has made an interposed entity election. The dividend is excluded from assessable income under section 271-105 of Schedule 2F to the ITAA 1936. A franking credit or tax offset can't be claimed for any franking credit attached to that dividend. For more information on when FTDT is payable, see Family trust distribution tax.
  • Trustee beneficiary non-disclosure tax (TBNT) has been paid in respect of the dividend. A franking credit or tax offset can't be claimed for any franking credit attached to that dividend.

Share of credit for TFN amounts withheld from interest, dividends and unit trust distributions

Unless an entity claimed an exemption or quoted a TFN, an investment body may withhold amounts from interest, dividends or income of a unit trust to which a beneficiary is presently entitled. These are TFN amounts withheld, the current rate is 47% of the payment made.

Show at label E the partnership's share of any credit for TFN amounts withheld from amounts of interest, dividends and income of unit trusts to which a beneficiary is presently entitled, that are received from other partnerships or trusts. Credits for TFN amounts withheld are allowed in the assessments of the partners.

Share of credit for TFN amounts withheld from payments from closely held trusts

Where a beneficiary of a closely held trust does not provide their TFN to the trustee, the trustee may be required to withhold from payments or distributions.

Show at label O the amounts withheld from payments where a TFN has not been provided to the trustee of a closely held trust.

If amounts have been withheld from distributions to the partnership under these rules, the partnership is required to receive an annual payment summary in the approved form from the trustee.

Share of credit for tax withheld – foreign resident withholding (excluding capital gains)

Amounts may be withheld in Australia from some payments made to certain partnerships or trusts due to the operation of the foreign resident withholding rules. These payments relate to entertainment or sports activities, construction and related activities, and casino gaming junket activities.

Show at label U the partnership’s share of any foreign resident withholding credits received from other partnerships and trusts. Ensure this amount is included in the gross distribution amount shown at item 8 Non-primary production – label B or label R.

Don't include at this item any credits in relation to foreign resident capital gains withholding.

Continue to: 9 Rent

Return to: Instructions to complete the Partnership tax return 2024

 

 

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