Appendix 12: Trustee beneficiary reporting

If you are the trustee of a closely held trust with trustee beneficiaries presently entitled to an untaxed part of a share of net income or tax-preferred amount (amounts not included in the trust's assessable income in working out the net income and capital of the trust) you must provide the Commissioner with a correct Trustee Beneficiary (TB) statement for each trustee beneficiary.

Closely held trust

A closely held trust is:

• a trust where 20 or fewer individuals have between them, directly or indirectly, fixed entitlements to 75% or more of the income or capital of the trust, or
• a discretionary trust

except where the trust is an excluded trust.

See section 102UC(1) of the ITAA 1936.

A discretionary trust is a trust that is not a fixed trust within the meaning of section 272-65 of Schedule 2F to the ITAA 1936. See also section 102UC(4) of the ITAA 1936.

An excluded trust is a:

• complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust
• deceased estate, up to the end of the income year in which the fifth anniversary of the death occurs
• fixed trust that is a unit trust, and exempt entities (entities whose ordinary and statutory income are exempt from tax) have fixed entitlements, directly or indirectly, and for their own benefit, to all of the income and capital of the trust
• unit trust whose units are listed on the ASX Limited
• family trust, or
• trust that has made an interposed entity election under section 272-85 of Schedule 2F to the ITAA 1936 or is wholly owned by the family (see section 272-90(5) of Schedule 2F to the ITAA 1936).

See section 102UC(4) and section 272-100 of Schedule 2F to the ITAA 1936.

Trustee beneficiary

A trustee beneficiary is a beneficiary of the trust in the capacity of trustee of another trust. See section 102UD of the ITAA 1936.

Instructions for completing the TB statement

To make a correct TB statement you must complete the following for each trustee beneficiary.

Beneficiary details

• For resident beneficiaries show the name of the trustee beneficiary and their TFN.
• For non-resident beneficiaries show the name of the trustee beneficiary and their address.

TB statement Information

• Print X in the Yes box if you are making a TB statement for this trustee beneficiary. Otherwise print X in the No box.
• At P show any tax-preferred amounts to which the trustee beneficiary is presently entitled. If there are no tax-preferred amounts, show zero at P.
• At Q show any untaxed part of a share of net income to be included in the assessable income of the trustee beneficiary. If there is no untaxed part of a share of net income, show zero at Q.

A tax-preferred amount is income of the trust that is not included in its assessable income in working out its net income or capital of the trust.

Example 12.1

Trust X is a closely held trust and has made a family trust election. Trust X makes a distribution of $1,000 net income to the trustee of Trust Y, who is outside the 'family group'. As Trust Y is outside the family group, FTDT is paid by the trustee of Trust X on that distribution.

Income on which FTDT has been paid is non-assessable, non-exempt income and is not included in the assessable income of Trust Y.

Trustee of Trust Y distributes that amount ($1,000) to the trustee of Trust Z (resident trustee beneficiary). This amount is a tax-preferred amount as it is not included in the assessable income of Trust Y.

To make a correct TB statement for the trustee beneficiary the trustee of Trust Y would report:

- the name and TFN of the Trustee of Trust Z, '1000' at P and '0' at Q.

An untaxed part of a share of net income is the share of the net income of a closely held trust less any part that has been taxed under:

• subsection 98(4) of the ITAA 1936
• Subdivision 12-H in Schedule 1 to the Taxation Administration Act 1953
• Division 6D (trustee beneficiary non-disclosure tax) in respect of which the trustee of another trust estate is liable to pay the non-disclosure tax.

An untaxed part of a share of net income includes interest, dividends or royalties that have been subjected to a withholding tax if these amounts are included in the assessable income of a non resident trustee beneficiary.

Example 12.2

The trustee of Trust A (a closely held trust) has three trustee beneficiaries:

To make correct TB statements for the trustee beneficiaries, the trustee of Trust A would report:

The reporting obligations under Division 6D apply to both Australian and foreign source income however Australian source income which is taxed under section 98(4) of the ITAA 1936 is not included as an untaxed part of a share of net income. If the share of the net income which is included in the assessable income of a non resident trustee beneficiary includes income from a foreign source, then that foreign source income is an untaxed part of a share of net income and must be reported in a TB statement.

For further details of what amounts comprise an untaxed part of a share of net income or a tax-preferred amount, see the fact sheet Trustee beneficiary rules.

End of further information

Amendments to TB statements

TB statements can only be amended in certain circumstances.

Trustees can lodge an amended TB statement where they have given a TB statement that they believe on reasonable grounds to be correct, and:

• they could not reasonably have foreseen the event that caused the statement to be incorrect
• the statement is not correct because of an inadvertent error.

For further information on amendments to TB statements, see the Trustee beneficiary rules.

End of further information

Trustee beneficiary non-disclosure tax

TBNT is payable where:

• the trustee of a closely held trust fails to lodge a correct TB statement within the specified period in respect of each trustee beneficiary's share of net income
• a share of the net income of a closely held trust is included in the assessable income of a trustee beneficiary under section 97 of the ITAA 1936 and the trustee of the closely held trust becomes presently entitled to an amount that is reasonably attributable to the whole or a part of the untaxed part of the share (referred to as a 'round robin' or 'circular distribution').

The specified period for lodgment of the TB statement is the period between the end of the relevant year of income and the due date of the trust's tax return, or such further period allowed by the Commissioner. Completion of the TB statement in the distribution statement in the trust's tax return will satisfy the lodgment requirement.

TBNT is imposed on the untaxed part of a share of the net income of the trustee beneficiary. TBNT is due and payable 21 days after the TB statement is due, or a later date allowed by the Commissioner.

If you are required to pay TBNT, you will need to complete a TBNT payment advice (NAT 72967)

If the trustee fails to make a correct TB statement within the specified period in respect of a trustee beneficiary's share of tax-preferred amounts, the trustee may be guilty of an offence under the TAA 1953.

For further information on the TB reporting rules, refer to the fact sheet Trustee beneficiary rules.

End of further information