Under Division 6 ITAA 1936, a trustee will be liable to pay tax in relation to:
- shares of net income of a trust where non-resident companies and individual beneficiaries not being trustees are presently entitled to a share of the income of the trust - both these amounts are shown at JNon-resident beneficiary additional information s98(3) assessable amount item 65
- share of net income of a trust where a beneficiary who is presently entitled to the income of the trust is itself a trustee and is a non-resident at the end of the income year - these amounts are shown at K Non-resident beneficiary additional information s98(4) assessable amount item 65.
Section 98(3) assessable amount
Non-resident company beneficiaries assessable amount J
If you have entered assessment calculation code 139 (non-resident company beneficiaries) at V, you must include an amount at J.
The amount to show at J is the amount the trustee is liable to pay tax on under section 98 of the ITAA 1936 on behalf of the corporate beneficiary who is a non-resident at the end of the income year - show whole dollars only.
The amount the trustee is liable to pay tax on is calculated as:
- so much of the trust's net income that is attributable to a period (if any) that the corporate beneficiary was a resident multiplied by the beneficiary's percentage share of the income of the trust, and
- so much of the trust's net income that is attributable to Australian sources for the period the corporate beneficiary was a non-resident multiplied by the beneficiary's percentage share of the income of the trust.
Do not include income subject to withholding tax (unfranked dividends, interest and royalties), fully franked dividends or amounts on which managed investment trust withholding tax is payable. Do not include the capital gains for which the trustee is not liable to pay tax under Subdivision 855-A of the ITAA 1997.
If the corporate beneficiary's share of net income of the trust includes an amount that is attributable to a discounted capital gain made by the trust, work out the amount the trustee is liable to pay tax on under subsection 98(3) as if the part attributable to the capital gain was double the amount it actually is - see section 115-220 of the ITAA 1997. This ensures that a trustee assessed on behalf of a non-resident company beneficiary does not get the benefit of the CGT discount that the corporate beneficiary would not be entitled to if it were assessed.
To work out whether the corporate beneficiary's share of the net income includes an amount that is attributable to a discounted capital gain of the trust, multiply the beneficiary's percentage share of the income of the trust by so much of that discounted capital gain that is reflected in the trust's net capital gain, that is, after the application of any capital losses and net capital losses to that gain.
If the beneficiary is a non-resident at the end of the year and has not been a non-resident for the entire year, show clearly in a separate schedule full details of its share of the net income. It is important to provide the information set out at Non-resident beneficiaries so that the appropriate tax rates can be applied.
Non-resident individual beneficiaries assessable amount J
If you have entered assessment calculation code 138 (non-resident individual beneficiaries) at V, you must include an amount at J.
The amount to show at J is the amount the trustee is liable to pay tax on under section 98 of the ITAA 1936 on behalf of an individual beneficiary who is a non-resident at the end of the income year. Show whole dollars only.
The amount assessed to the trustee is comprised of the beneficiary's share of the net income from the trust that is attributable to a period (if any) that the beneficiary was a resident, as well as the beneficiary's share of the trust's net income that is attributable to Australian sources for the period the beneficiary was a non-resident.
Do not include income subject to withholding tax (unfranked dividends, interest and royalties), fully franked dividends or amounts on which managed investment trust withholding tax is payable. Do not include any capital gains for which the trustee is not liable to pay tax under Subdivision 855-A of the ITAA 1997. All other Australian source income is included.
If the beneficiary is a non-resident at the end of the year, but has not been a non-resident for the entire year, you will have printed X in the Yes box at A item 29. It is important to provide the information set out at Non-resident beneficiaries so that the appropriate tax rates can be applied.
Section 98(4) assessable amount
Non-resident trustee beneficiaries assessable amount K
If you have entered assessment calculation code 140 (non-resident trustee beneficiary) at V, you must include an amount at K. Any amounts reported at K should not be included at P or Q (TB statement).
The amount to show at K is the amount the trustee is liable to pay tax on under section 98 of the ITAA 1936 because a trustee beneficiary, who is presently entitled to a share of the trust's distributable income, is a non-resident at the end of the income year - show whole dollars only.
The amount the trustee is liable to pay tax on is so much of the non-resident trustee beneficiary's share of the net income of the trust as is attributable to Australian sources. Do not include income subject to withholding tax (unfranked dividends, interest and royalties), fully franked dividends or amounts on which managed investment trust withholding tax is payable. Do not include any capital gains for which the trustee is not liable to pay tax under Subdivision 855-A of the ITAA 1997.
If the trustee beneficiary's share of net income of the trust includes an amount that is attributable to a discounted capital gain made by the trust, work out the amount the trustee is liable to pay tax on under subsection 98(4) as if the part attributable to the capital gain was double the amount it actually is, see section 115-222 of the ITAA 1997. This ensures that a trustee assessed on behalf of a non-resident trustee beneficiary does not get the benefit of the CGT discount that the corporate beneficiary would not be entitled to if it were assessed.
To work out a non-resident trustee beneficiary's share of the net income that is attributable to a discounted capital gain of the trust multiply the beneficiary's percentage share of the income of the trust by so much of that discounted capital gain that is reflected in the trust's net capital gain, that is, after the application of any capital losses and net capital losses to that gain.
If the beneficiary is a non-resident at the end of the year and has not been a non-resident for the entire year, show clearly in a separate schedule full details of its share of the net income. It is important to provide the information set out at Non-resident beneficiaries so that the appropriate tax rates can be applied.