Part C: Components of a distribution

Last updated 15 June 2014

12	Australian income These details provide a break up of U item 13 Non-primary production income and C item 13 Franked distributions from trusts. The information is necessary for those investors who use the Application for refund of franking credits for individuals 2014 (NAT 4098) and Refund of franking credits instructions and application for individuals 2014 (NAT 4105). Show the net income for each item. The net income is either: the gross income less expenses directly relevant to that income, or the gross income less expenses directly relevant to that income and indirect expenses that are apportioned against all income components. Expenses indirectly incurred in respect of deriving the income (for example, trust operating expenses) can be shown here or separately at Less other allowable trust deductions. Indirect trust expenses should be apportioned fairly and reasonably against income components. The Less other allowable trust deductions item uses the same information as the Trust deductions not included elsewhere field in version 10.0 of the AIIR.
13	Discounted capital gain If the trust's capital gain has been reduced by the 50% discount, show the part of the discounted capital gain that is included in the unit holder's share of net income. In our example, the $5 amount shown in the Tax paid or tax offsets column is the foreign tax paid on the discounted capital gain that is included in the unit holder's share of net income.
14	CGT concession amount The CGT concession amount is identified as the amount referred to in subsection 104-71(4) of the ITAA 1997. Frozen indexation amounts paid to the unit holder should not be shown as CGT concession amounts on the distribution statement. This amount comprises the non-assessable CGT discount amount paid to the unit holder. Also included is the amount of any capital losses (including unapplied net capital losses carried forward from previous years) applied by the trust (or another trust in a chain of trusts) to reduce capital gains made, that is reflected in the payment to the unit holder. Refer to items 1 and 7 in the table in subsection 104-71(4) of the ITAA 1997.
15	Capital gains: other method This item shows the part of the capital gain included in the unit holder's share of net income where the trustee has not applied the indexation or discount method. This item, that is required to allow an investor to make choices about the order that capital losses can be deducted in, forms part of the calculation of net capital gain, and is also relevant for unit holders preparing CGT schedules. In our example, the $2 amount shown in the Tax paid or tax offsets column is the foreign tax paid.
16	Distributed capital gains This item represents the actual cash amount of capital gains distributed and includes the non-assessable CGT concession amount. It is the sum of the Cash distribution column for capital gains. This figure is not taken into account in working out the unit holder's net capital gain but it allows fund managers to reconcile the net cash distribution amount paid to the unit holder. The total Distributed capital gains (that is, the Cash distribution plus the Foreign income tax offset) equals the Total current year capital gains in part B.
17	Net capital gain This item is the sum of the Taxable amount column of capital gains and represents the net capital gain under the various methods included in the unit holder's share of net income. In our example, this is $155, that is transferred directly to A item 18 on the Tax return for individuals (supplementary section) 2014 (NAT 2679) as discussed in Part A. Where the individual unit holder has no current year capital losses or unapplied prior year net capital losses, this figure can be used directly to complete A item 18. If the unit holder has current year capital losses or unapplied prior year net capital losses to offset, they would need to refer to the Guide to capital gains tax 2014 (NAT 4151) or Personal investors guide to capital gains tax 2014 (NAT 4152).
18	Foreign income For the 2013-14 year funds may choose to consolidate the foreign income components into one line. Capital gains made by Australian residents from foreign sources are not assessable foreign income and should not be shown in this section of part C but in the capital gains section of part C.
19	Other non-assessable amounts The headings used are based on the terminology used in sections 104-70 and 104-71 of the ITAA 1997. 'Tax-exempted amounts' are amounts referred to in subsection 104-71(1). Unit holders are not required to adjust either the cost base or reduced cost base of their units for these amounts. 'Tax-free amounts' are amounts referred to in subsection 104-71(3). Unit holders are required to reduce the reduced cost base of their units by these amounts but not their cost base. These amounts now only include infrastructure borrowing amounts under section 159GZZZZE and exempt income arising from shares in a pooled development fund under sections 124ZM and 124ZN of the ITAA 1936. 'Tax-deferred amounts' are amounts referred to in subsection 104-70(1) of the ITAA 1997. Unit holders are required to reduce both the cost base and reduced cost base of their units by these amounts. Building allowance amounts paid on or after 1 July 2001 are now treated as tax-deferred amounts. 'CGT concession amounts' are shown in the capital gains section to allow reconciliation of capital gains.
20	Other amounts deducted from trust distribution TFN amounts withheld This item allows the cash amount to be reconciled in part C. Other expenses This item allows the cash amount to be reconciled in part C. This is used for expenses incurred by unit holders (for example, management fees) and not deductions allowable to the trustees that are taken into account in the net income calculation under section 95 of the ITAA 1936 and are discussed at paragraph 12 above. Only the deductible expenses component of this amount should feed through to part A, Y item 13.
21	'Please retain this statement for income tax purposes.' The use of this wording exempts the fund manager from the requirement to include the words 'Payment summary' on the SDS where TFN amounts have been withheld from the investment. Our position on this and other PAYG withholding payer issues was provided to the FSC on 21 December 2001.

Footnotes

If Part A is varied then Part C may also need to be varied.

Attachment 1

For reporting purposes a fund needs to work out what should be reported as ‘Franked distributions’ even though initially a fund at the start of a chain of trusts will receive dividends and not franked distributions. The method shown in Part C of the SDS above is effective for reporting purposes and will assist the funds to work out what should be reported as ‘Franked distributions. Funds further down the chain can also use this method even if ‘Franked distributions’ are included in the reports they receive.

For example, the fund may have received a distribution report that shows the following:

Item	Amount
Dividend: franked amount	70
Dividend: unfranked amount	60
Franking credit	30
Franked distribution	120

The method shown in Part C of the SDS above will result in the Franked distribution being reported as $100.

Alternatively, the following method may be used where funds have their systems set up to trace and report ‘Franked distributions’. This will require more complicated reporting in Part C as below.

Part C: Components of distribution

	Cash distribution	Tax paid or tax offsets	Taxable amount
Australian income		Franking credits
Dividends:
Franked amount	70	30.00	100
Unfranked amount	60		60
Total dividend	130	30.00	160
Less Franked distribution (X)	90	30.00	120
Unfranked distribution*	40	0	40
Interest	20		20
Other income	15		15
Less other allowable trust deductions	-30		-30
Non-primary production income (A)	45		45

* We have coined the term ‘unfranked distribution’ to describe the amount of dividends received that are not a franked distribution. You can leave this term out of the SDS. There is a requirement to report this value in the AIIR and it is used in the calculation of non-primary production income. The term has been included in this example to align with the AIIR. This example shows that part of the unfranked amount is included in the franked distribution calculation. For further information refer to field 7.113 within the AIIR v10.0.0 electronic reporting specification.

Part A of the SDS will show Item 13 Label U as $45 and Item 13 label C as $120. The total of $165 is the same total as these two components in Part A of the SDS ($100 plus $65).

Attachment 2

The relationship between the field on the SDS and the corresponding field on the AIIR is shown below. The number shown refers to the reference number in Version 10 of the AIIR specification. Some additional items have been inserted and notes removed.

Tax return (supplementary section)	Amount	Tax return label
Share of primary production income	7.106	13L
Other deductions relating to distributions	7.108	13X
Share of non-primary production income	7.77	13U
Franked distributions from trusts	7.114	13C
Other deductions relating to non-primary production distributions	7.78	13Y
Share of credit for tax withheld where Australian business number not quoted	7.107	13P
Share of franking credit from franked dividends	7.75	13Q
Share of credit for tax file number amounts withheld from interest, dividends and unit trust distributions	7.66 less 7.67	13R
Share of credit for tax paid by trustee	7.95	13S
Share of credit for amounts withheld from foreign resident withholding	7.94	13A
Share of National rental affordability scheme tax offset	7.105	13B
Total current year capital gains	7.84	18H
Net capital gain	7.83	18A
CFC income	7.111	19K
Assessable foreign source income	7.86	20E
Net foreign rent	7.112	20R
Other net foreign source income	7.87	20M
Australian franking credits from a New Zealand company	7.89	20F
Foreign income tax offsets*	7.88	20O

Part B: CGT information - additional information for item 18
Capital gains: discounted method	7.79	(grossed up amount)
Capital gains: indexation method	7.80
Capital gains: other method	7.81
Total current year capital gains	7.84
CGT concession amount	7.82
Tax-deferred amounts	7.92

Part C: Components of distribution
	Cash distribution	Tax paid or tax offsets	Taxable amount
Australian income		Franking credits

Dividends: unfranked amount not declared to be conduit foreign income			7.72
Dividends: unfranked amount declared to be conduit foreign income			7.73
Unfranked distributions			7.113
Interest			7.71
Other income			7.76
Less other allowable trust deductions			7.93
Non-primary production income (A)			7.77
Dividends: Franked amount (Franked distributions) (X)	7.74	7.75	7.114
Capital gains*		Foreign income tax offset**
Discounted capital gain			7.79
CGT concession amount			7.82
Capital gains: indexation method			7.80
Capital gains: other method			7.81
Distributed capital gains (B)			7.84
Net capital gain			7.83
Foreign income
Assessable foreign source income			7.86
Cash distribution (C)		7.88
Cash distribution sub-total (add A, X, B and C)
Other non-assessable amounts
Tax-exempted amounts	7.90
Tax-free amounts	7.91
Tax-deferred amounts	7.92
Gross cash distribution
Other amounts deducted from trust distribution
TFN amounts withheld	7.66 less 7.67
Other expenses	7.78
Net cash distribution

QC40281

Part C: Components of a distribution

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