General information

Australian Business Register

We are authorised by the A New Tax System (Australian Business Number) Act 1999 and other taxation laws to collect certain information relating to your entity. We may use business details supplied on the tax return to update the information held in the Australian Business Register (ABR) in relation to your entity. This may include cancelling the ABN if your entity is no longer entitled to be registered in the ABR.

Where authorised by law, selected information on the ABR may be made publicly available and some may be passed on to other Commonwealth, state, territory and local government agencies. These agencies may use ABR information for purposes authorised by their legislation, or for carrying out other functions of their agency. Examples of possible uses include registration, reporting, compliance, validation and updating of databases.

You can find details of agencies that regularly receive information from the ABR at abr.gov.auExternal Link or you can phone us on 13 92 26 between 8.00am and 6.00pm Monday to Friday to have a list of the agencies sent to you.

See our privacy statementExternal Link for more information about:

• privacy
• the information we collect
• how it may be used.

Foreign exchange (forex) gains and losses

Under the forex measures (Division 775 of the ITAA 1997) and the general translation and functional currency rules (Subdivisions 960-C and 960-D of the ITAA 1997), forex gains and losses are generally brought to account as assessable income or allowable deductions when realised. The forex measures cover both foreign currency denominated arrangements and, broadly, arrangements to be cash-settled in Australian currency with reference to a currency exchange rate. Forex gains and losses of a private or domestic nature, or in relation to exempt income or non-assessable non-exempt income, are not brought to account under the forex measures.

If a forex gain or loss is brought to account under the forex measures and under another provision of the tax law, it is assessable or deductible only under the forex measures.

Generally, where the TOFA rules apply to the forex gains and losses of a trust then those gains and losses will be brought to account under those TOFA rules instead of the forex measures.

Additionally, forex gains and losses will generally not be assessable or deductible under the forex measures if they arise from certain acquisitions or disposals of capital assets, including CGT assets and depreciating assets, and the time between the acquisition or disposal and the due date for payment is no more than 12 months. Instead, any forex gain or loss is usually matched with or integrated into the tax treatment of the underlying asset.

The general translation rule requires all tax-relevant amounts to be expressed in Australian currency regardless of whether there is an actual conversion of that foreign currency into Australian dollars.

The tax consequences of forex gains or losses on foreign currency assets, rights and obligations that were acquired or assumed before 1 July 2003 are determined under the law as it was before these measures came into effect, unless:

• you have made a transitional election that brings these arrangements under the forex measures, or
• there is an extension of an existing loan (for example, an extension by a new contract or a variation to an existing contract) that brings the arrangement within these measures.

See also:

• Foreign exchange gains and losses

Interposed entity elections and family trust elections

The Tax Laws Amendment (2007 Measures No. 4) Act 2007 amended Schedule 2F to the Income Tax Assessment Act 1936 (ITAA 1936) to:

• allow interposed entity elections to be revoked where the election was made for an entity that was already included in the family group of the individual specified in the family trust election at the election commencement time. An interposed entity election may also be revoked at a later time where the entity becomes wholly owned by members of the family group. If an interposed entity election is revoked you need to complete an Interposed entity election or revocation 2017 (NAT 2788) and attach it to the trust’s tax return
• broaden the definition of family to include lineal descendants of a nephew, niece, or child of the test individual or the test individual’s spouse
• ensure that the death of a family member does not by itself result in another family member ceasing to be a member of the family
• exempt distributions made to former spouses, former widows/widowers and former stepchildren from family trust distribution tax by including them within the definition of family group
• allow family trust elections to be revoked if the family trust is a fixed trust or if the family trust election was not required for deduction of tax losses, bad debt deductions or accessing franking credits
• permit family trusts that have made a family trust election in respect of the same test individual to be included in each other’s family group and not treated as an outsider to the trust for the purposes of the income injection test
• allow the test individual specified in a family trust election to be changed only once, where the new test individual was a member of the original test individual’s family, provided that no conferrals of present entitlement to (or distributions of) income or capital of the family trust (or an interposed entity) have been made outside the new test individual’s family group.

Electronic lodgments

Tax agents who lodge trust tax returns through the electronic lodgment service (ELS) must complete the Partnerships and trusts rental property schedule 2017 if item 9 Rent is completed.

You do not have to complete that schedule if you are lodging a paper version of the trust tax return.

Information matching

We are making increasing use of information-matching technology to verify the correctness of tax returns.

Ensure all information is fully and correctly declared on your tax returns. Certain claims made may be subject to additional scrutiny by us.

In particular, we will be checking the following on the 2017 tax returns:

• distributions from partnerships and trusts
• total salary and wages paid against the pay as you go (PAYG) withholding system
• interest and dividend income
• franking credits claimed.

Hobby or business

It is important to determine whether the trust is carrying on a business, as distinct from pursuing a hobby, sport or recreational activity that does not produce assessable income.

The factors or business indicators various courts and tribunals have taken into account in determining if a business exists for tax purposes include whether the activity:

• has actually started
• has a significant commercial purpose or character
• is undertaken with a purpose of profit as well as a prospect of profit
• is carried out in a manner that is characteristic of the industry
• has repetition, regularity or continuity
• is planned, organised and carried on in a business-like manner
• is of a sufficient size, scale and permanency to generate a profit
• is not more properly described as a hobby, recreation or sporting activity.

Find out about:

• Are you in business?
• TR 97/11 Income tax: am I carrying on a business of primary production?

Private ruling by the Commissioner of Taxation

A private ruling is a written expression of opinion by the Commissioner of Taxation (the Commissioner) about the way in which tax laws and other specified laws administered by the Commissioner would apply to, or be administered in relation to, an entity in relation to a specified scheme.

An application for a private ruling must be made in the approved form and in accordance with Divisions 357 and 359 of Schedule 1 to the Taxation Administration Act 1953 (TAA).

The required information and documentation that accompany a private ruling request must be sufficient for the Commissioner to make a private ruling and include:

• the entity to whom the ruling is to apply
• the facts describing the relevant scheme or circumstance
• relevant supporting documents such as transaction documents
• issues and questions raised relate to the relevant provision to which the ruling relates
• your arguments and references on such questions.

The Commissioner may request additional information to make a ruling. The Commissioner will then consider the request and either issue or, in certain limited circumstances, refuse to issue a private ruling.

Publication

To improve the administration of the private rulings system, we publish all notices of private rulings for public record. For more information, see Register of private binding rulings.

Private rulings are published in an edited form to safeguard taxpayer privacy.

Private ruling applicants are invited to provide a statement detailing any information they believe should be removed from the published version of their private ruling.

If the information the applicant wants removed is more than simply names and addresses, reasons why publication of this information will breach the applicant’s privacy should be provided.

Before publication, applicants can comment on the edited version of their private ruling.

Review rights

Generally, taxpayers can object to adverse private rulings or a failure to make a private ruling in much the same way that they can object to assessments. They can refer to a review of adverse objection decisions on a private ruling by the Administrative Appeals Tribunal (AAT) or a court. An explanation of review rights and how to exercise them is issued with the private ruling.

A taxpayer cannot object to a private ruling if there is an assessment for the taxpayer for the same income year to which the ruling relates. If this is the case, the taxpayer can only object to the assessment.

Where a taxpayer has objected to a private ruling, the taxpayer cannot object to a later assessment about the same matter ruled on, unless the assessment relates to facts that are materially different from those dealt with in the private ruling, or deals with the application of tax law provisions not dealt with in the private ruling (for example, the application of Part IVA of the ITAA 1936).

Private rulings dealing with the ITAA 1936 continue to apply to the ITAA 1997, to the extent that the old law to which the ruling applies expresses the same ideas as the new law in the ITAA 1997.

For more information on how to object to private rulings and assessments, including the time limits within which those objections have to be made, go to Dispute or object to an ATO decision.

When rulings are binding

A private ruling is binding on the Commissioner where it applies to an entity and the entity has relied on the ruling by acting (or omitting to act) in accordance with the private ruling. A private ruling only applies to the particular scheme or circumstance that it describes. If there is a material difference between the scheme described and what actually occurs, the private ruling does not apply.

An entity can stop relying on a private ruling at any time (unless prevented by a time limit imposed by a taxation law) by acting (or omitting to act) in a way that is not in accordance with the private ruling, and can subsequently resume relying on the private ruling by acting accordingly. The Commissioner cannot withdraw a private ruling. However, where the scheme to which a private ruling relates has not begun to be carried out and where the private ruling relates to an income year or other accounting period, and that period has not begun, the Commissioner can make a revised private ruling.

Penalties and interest charges

The law imposes penalties on trustees for:

• failing to lodge a tax return on time and in the approved form, which includes all applicable schedules
• having a shortfall amount by understating a tax-related liability or over-claiming a credit that is caused by
• making a false or misleading statement
• taking a position that is not reasonably arguable
• making a false or misleading statement in a material particular that does not result in a shortfall amount
• failing to provide a tax return from which the Commissioner can determine a liability
• obtaining a scheme benefit
• failing to keep and produce proper records
• preventing access to premises and documents
• failing to retain or produce declarations.

Penalties

Penalties may be applied to any false or misleading statement in a material particular, whether the error results in a liability or not. This penalty will not apply where the trustee and their agent, if applicable, has taken reasonable care in making the statement.

For shortfall amounts over $20,000 or 2% of the net income, the taxpayer also needs to have a reasonably arguable position for the statements made in the tax return.

The law makes it clear that, when considering whether a penalty should be imposed, we will consider a taxpayer’s position to be reasonably arguable if it would be concluded in the circumstances that what is argued for is about as likely to be correct as incorrect, or is more likely to be correct than incorrect.

The Commissioner must explain, in writing, the reasons for a penalty and, if remission of a penalty has been considered but not fully granted, the reasons for the decision.

General interest charge

Trustees are liable for the general interest charge (GIC) where they have:

• not paid a tax, penalty or certain other amounts by the due date
• varied their pay as you go (PAYG) instalment amount or rate to less than 85% of the amount or rate that would have covered the trustee's actual liability on business and investment income for the year.

Shortfall interest charge

Where an assessment is amended because the tax payable has increased, the due date for payment of the amended assessment is 21 days after the Commissioner gives the notice increasing the liability. Generally, trustees are liable to pay a shortfall interest charge (SIC), which accrues from the due date for payment of the original assessment to the day before the issue date of the amended notice of assessment on the increase. Trustees will be notified of the amount of SIC and it will be due 21 days after the notice is given. The GIC will apply automatically to any unpaid amount of the amended assessment and the SIC once the due date has passed.

The SIC is calculated at a rate 4% lower than the GIC.

See also:

• Shortfall interest charge
• Penalties

Purchase or sale of a business during the income year

Keep a record of the following:

• the name and address of the other party to the transaction
• the purchase or sale price, including details of the allocation of purchase or sale price to all items purchased or sold, including stock on hand and depreciating assets
• a copy of the contract of purchase or sale.

If there is no trustee who is an Australian resident, the onus is on the public officer to keep this information.

Requirements

Record-keeping requirements and retention

If you are carrying on a business, you must keep records relevant for any tax purpose that record and explain all transactions and other acts you are engaged in. subsection 262A(2) of the ITAA 1936 prescribes the records to be kept, including:

• any documents relevant for the purpose of ascertaining the person’s income or expenditure
• documents containing particulars of any election, estimate, determination or calculation made by the person for tax purposes and, in the case of an estimate, determination or calculation, particulars showing the basis on which and the method by which the estimate, determination or calculation was made.

You must keep these records for your financial arrangements covered by the TOFA rules, even if you are not carrying on a business in relation to those arrangements.

Generally, the trust must keep all relevant records for five years after they were prepared or obtained, or five years after the completion of the transactions or acts to which they relate, whichever is the later. This period may be extended in certain circumstances. Keep records in writing and in English. You can keep them electronically as long as the records are in a form that we can access and understand to ascertain your tax liability. See TR 2005/9 Income tax: record keeping – electronic records.

Trust record retention

Keep the following records:

• a copy of the trust deed
• a copy of all trustee resolutions
• detailed statement of assets and liabilities
• the names in which business contracts are made
• a record of the name and contact details of the trustee at year end
• records that show you have met your choice of superannuation fund employer obligations.

See also:

• Keep records
• Phone 13 28 64

Tax losses record keeping

If your trust incurs tax losses, you may need to keep records longer than five years from the date when the losses were incurred.

Generally, tax losses incurred this year can be carried forward indefinitely, until they are applied by recoupment. When applied, the loss amount is used in calculating the trust’s net income (and beneficiary’s taxable income) in that year. It is in the trust’s interest to keep records substantiating the balance of this year’s losses until the amendment period for the trust’s or beneficiary’s assessment for the recoupment year in which the losses are fully applied has lapsed.

For more information on record keeping where losses are incurred, see TD 2007/2 Income tax: should a taxpayer who has incurred a tax loss or made a net capital loss for an income year retain records relevant to the ascertainment of that loss only for the record retention period prescribed under income tax law?

Capital gains tax (CGT) record keeping

A trust must keep adequate records of all expenditure which will help to correctly work out the amount of capital gain or capital loss made when a CGT event happens. A trust must keep records relating to the ownership and all the costs of acquiring and disposing of property. It will also help to make sure the trust does not pay more CGT than is necessary.

A trust must keep records of everything that affects the trust’s capital gains and capital losses. Penalties can apply if the trust does not keep the records for at least five years after the relevant CGT event. If the trust uses the information from those records in a later tax return, the trust should generally keep records longer. If the trust has applied a net capital loss, the trust should generally keep records of the CGT event that resulted in the loss until the end of any period of review for the income year in which the capital loss is fully applied.

For more information on record keeping for CGT, see the Guide to capital gains tax 2017 and TD 2007/2.

Record keeping for overseas transactions

Keep records of any overseas transactions in which the trust is involved, or has an interest, during the income year.

The involvement can be direct or indirect, for example, through individuals, trusts, companies or other entities. The interest can be vested or contingent and includes a case where the trust has direct or indirect control of:

• any income from sources outside Australia not disclosed elsewhere on the tax return, or
• any property, including money, situated outside Australia. Where this is the case keep a record of the          
  • location and nature of the property
  • name and address of any partnership, trust, business, company, or other entity in which the trust has an interest
  • nature of the interest.
   

If an overseas interest was created by exercising any power of appointment, or if the trust had an ability to control or achieve control of overseas income or property, keep a record of the:

• location and nature of the property
• name and address of any partnership, trust, business, company, or other entity in which the trust has an interest.

If there is no trustee who is an Australian resident, the onus is on the public officer to keep this information.

Trusts

Appointment of public officer

If a trust carries on a business in Australia or derives income from property in Australia and there is no trustee who is an Australian resident, the trustee generally appoints a public officer. The public officer must be a natural person of at least 18 years of age residing in Australia and who is capable of understanding the nature of their appointment as the public officer. The appointment of a public officer is made by giving written notice, specifying the name and address of the public officer, to the Commissioner.

The trust does not need to appoint a public officer if the Australian income of the trust consists solely of dividends, interest and/or royalties subject to withholding tax, or the Commissioner has granted an exemption in writing.

If the trustee does not appoint a public officer they may be prosecuted. A fine of up to $180 (one penalty unit) from 31 July 2015 may be imposed for each day that the trustee fails or neglects to meet the requirements.

The public officer is answerable for doing everything required to be done by the trustee under the ITAA 1936, the ITAA 1997 or the Regulations. A public officer who defaults on any of these duties is liable to the same penalties as the trustee.

Lodging a trust tax return

A notice advising which entities are required to lodge tax returns is published annually in the Federal Register of Legislative Instruments. The ‘Lodgment of income tax returns for the year ended 30 June 2017’ legislative instrument can be found on ComLawExternal Link.

For most trusts, the trust income tax return is due to be lodged on or before 31 October 2017. The Commissioner may allow later lodgment dates in certain circumstances, see Due dates for lodging and paying.

If no trustee is resident in Australia, the trust tax return is lodged by the public officer of the trust or, if a public officer does not need to be appointed, by the trust’s agent in Australia.

If a trust has derived income, irrespective of the amount of income derived, a trust will have to lodge a return unless exempted by the Commissioner.

However, a trust tax return is not required if the trust was a subsidiary member of a consolidated group or multiple entry consolidated (MEC) group for the full income year. Where this is the case, the head company of the group will have the responsibility for reporting any trust income in its tax return and for preparing any necessary schedules.

If the administration of a deceased estate is not completed in the same year as the date of death, a trust tax return for that income year does not have to be lodged if:

• the deceased person died less than 3 years from before the end of that income year
• no beneficiary is presently entitled to a share of the income of the trust estate at the end of that income year
• the deceased estate received no income from capital gains or franked dividends
• the net income of the trust estate under section 95 of the Income Tax Assessment Act 1936 is less than $18,200 for that income year, and
• there are no non-resident beneficiaries of the trust estate during the income year.

Trustees of trusts that satisfy the conditions of section 102R (public trading trusts) of the ITAA 1936 in an income year are subject to the company tax arrangements and lodge company returns and must apply for a company TFN. Trustees of trusts that formerly satisfied section 102J (corporate unit trusts) of the ITAA 1936 must lodge company returns if their income year started before 1 July 2016.

See also:

• Taxation Ruling IT 2486 Income tax: children’s savings accounts
• Do you have to pay income tax?

Our address to lodge tax returns is:

Australian Taxation Office
GPO Box 9845
[insert the name and postcode of your capital city]

For example;

Australian Taxation Office
GPO Box 9845
SYDNEY NSW 2001

The following are the only schedules that are sent with the trust tax return:

• Capital gains tax (CGT) schedule 2017 (NAT 3423)
• Family trust election, revocation or variation 2017 (NAT 2787)
• International dealings schedule 2017 (NAT 73345)
• Interposed entity election or revocation 2017 (NAT 2788)
• Losses schedule 2017 (NAT 3425)
• Non-individual PAYG payment summary schedule 2017 (NAT 3422).

At various questions you may be instructed to attach additional information to the tax return. If you are instructed to provide a statement on a separate sheet of paper showing particular information (for example, the type and amounts of a claim for a tax offset) include a heading indicating which question or item the information relates to, sign the statement, attach it to the tax return and print X in the Yes box at Have you attached any ‘other attachments’? at the top of page 1 of the tax return.

Do not send other schedules or documents with your tax return unless instructed to attach them as ‘other attachments’. Keep any other schedules or documents with the trust’s tax records. Tax returns lodged without all the required schedules may not be considered to have been lodged in the approved form. Unless the trust tax return and all required schedules are lodged by the due date, a failure to lodge on time penalty may be applied.

International dealings schedule

Where relevant information is reported in the trust tax return at item 22 Attributed foreign income, item 29 Overseas transactions/thin capitalisation you must complete an International dealings schedule 2017 (NAT 73345).

See also:

• International dealings schedule instructions 2017

Tax offsets

A beneficiary may be entitled to claim certain tax offsets, such as those for:

• medical expenses
• private health insurance
• seniors and pensioners
• national rental affordability scheme (NRAS) tax offset
• foreign income tax offset.

For more information, see the Individual tax return instructions 2017.

If a trustee is assessable on behalf of a beneficiary who is presently entitled but under a legal disability, the trustee may be entitled to tax offsets to which that beneficiary would be entitled. Provide a statement on a separate sheet of paper showing the type and amounts of any claim for a tax offset. Sign the statement, attach it to the tax return and print X in the Yes box at Have you attached any ‘other attachments’? at the top of page 1 of the tax return.

Seniors and pensioners tax offset

If you are claiming the seniors and pensioners tax offset, you will need to provide a statement of information for each beneficiary and their spouse (if they had one) and attach to the trust return.

Provide the following information on each statement:

• trust’s name and TFN
• beneficiary’s name and TFN
• full name of beneficiary’s spouse and TFN on 30 June
• beneficiary’s residency status
• rebate income of the beneficiary
• total amount received by the beneficiary of any Australian Government allowances and payments like Newstart allowance, youth allowance and Austudy payment; see item 5 Australian Government allowances and payments on the Tax return for individuals 2017
• total amount received by the beneficiary of any Australian Government pensions and allowances; see item 6 Australian Government pensions and allowances on the Tax return for individuals 2017
• rebate income of the beneficiary’s spouse; see question T1 Seniors and pensioners in the Individual tax return instructions 2017
• total amount received by the spouse of Australian Government pensions and allowances; see Spouse details – married or de facto item P on the Tax return for individuals 2017
• total amount received by the spouse of exempt pension income; see Spouse details – married or de facto item Q on the Tax return for individuals 2017.

Net medical expenses tax offset (for disability aids, attendant care or aged care)

A trustee assessed under section 98 of the ITAA 1936 may be able to claim this offset where the trustee has paid for eligible medical expenses in respect of a resident beneficiary.

Only eligible medical expenses for disability aids, attendant care or aged care can be claimed.

The amount of offset the trustee can claim will depend on the beneficiary's share of trust net income (in respect of which the trustee is assessed), the spouse's adjusted taxable income (if any) and family status.

Where the beneficiary’s share of the trust net income plus their spouse’s adjusted taxable income (if any) is:

• $90,000 or less for singles or $180,000 or less for a couple or family (plus $1,500 for each dependent child after the first), the trustee can claim an offset of 20% for eligible out of pocket expenses incurred by the beneficiary in excess of $2,299
• above $90,000 for singles or above $180,000 for a couple or family (plus $1,500 for each dependent child after the first), the trustee can claim an offset of 10% for eligible out of pocket expenses incurred by the beneficiary in excess of $5,423.

The Trustee will need to work out the beneficiary’s total net medical expenses for disability aids, attendant care or aged care.

See also:

• Question T5 in the Individual tax return instructions 2017, or
• Net medical expenses tax offset calculator.

To claim the offset, provide a statement on a separate sheet of paper showing all the following.

• trust’s name
• trust’s TFN
• beneficiary’s name
• beneficiary’s TFN
• beneficiary’s share of trust net income
• the amount of total net medical expenses for disability aids, attendant care or aged care claimed by, or on behalf of, the beneficiary
• full name of beneficiary’s spouse, if they had a spouse on 30 June
• if the beneficiary's spouse died during the year (the period they had the spouse)          
  • the date from which the beneficiary had a spouse
  • the date to which the beneficiary had a spouse
   
• spouse’s adjusted taxable income, if applicable
• number of the beneficiary’s dependent children, if applicable.

Sign the statement, attach it to the tax return and print X in the Yes box at Have you attached any ‘other attachments’? at the top of page 1 of your trust tax return.

We will calculate the amount of offset the beneficiary is entitled to receive based on the information provided.

Private health insurance tax offset

If you are a trustee who is assessable on behalf of a beneficiary who is presently entitled but under a legal disability (see section 98 of the ITAA 1936) and the beneficiary is entitled to a tax offset under the private health insurance rebate, you can claim the tax offset for this rebate up to the value of any tax payable. To do this, provide a statement on a separate sheet of paper showing:

• trust's name
• trust's TFN (tax file number)
• beneficiary’s name
• beneficiary’s TFN
• beneficiary’s share of the net income of the trust estate
• beneficiary’s spouse’s income for surcharge purposes (if they had a spouse on 30 June 2017)
• all the lines of information separately as they are displayed on the private health insurance statement          
  • ‘Health insurer ID’ at B on the beneficiary’s health insurance statement
  • ‘Membership number’ at C on the beneficiary’s health insurance statement
  • ‘Your premiums eligible for Australian Government rebate’ at J on the beneficiary’s health insurance statement
  • ‘Your Australian Government Rebate received’ at K on the beneficiary’s health insurance statement
  • ‘Benefit code’ at L on the beneficiary’s health insurance statement
  • tax claim code (see Private health insurance policy details 2017 in the Individual tax return instructions 2017)
  • number of beneficiary’s dependent children who are under 21 years old or full-time students under 25 years old.
   

If the beneficiary has a spouse and they have agreed to allow the beneficiary to claim their own share of the rebate as well as their spouse's share of the rebate, you must provide the policy details listed above for the spouse. The beneficiary and spouse must be covered under the same policy so the policy details should be the same for the beneficiary and spouse except for the tax claim code which will be C for the beneficiary and D for the spouse. Go to ato.gov.au/privatehealthinsurance for assistance in providing the details.

The Australian Government has changed the way the rebate is calculated and applied to premiums. Rebate percentages are adjusted on 1 April each year. If premiums for the policy were paid before and on or after 1 April, the private health insurance statement will contain at least two lines of information. All those lines should be provided separately without adding amounts reported in any column or row.

Sign the statement, attach it to the trust tax return and print X in the Yes box at Have you attached any ‘other attachments’? at the top of page 1 of the tax return.

For more assistance in providing private health insurance policy details, see Private health insurance policy details in the Individual tax return instructions 2017.

Special cases

Public trading trusts (and corporate unit trusts with an income year that started before 1 July 2016) are taxed as companies, and so are required to lodge a Company tax return 2017. A public trading trust is defined below and must apply for a company TFN. Corporate unit trust is also defined below.

The trust loss provisions of Schedule 2F to the ITAA 1936 apply to public trading trusts (even though they are taxed as companies), except where the public trading trust is participating in the consolidation regime for taxing wholly owned groups as a single income tax entity.

For more information about the trust loss provisions, see Losses. For detailed information about the treatment of losses under consolidation, see the Consolidation reference manual:

• Part C – Detailed information
• C9 – Determine tax liabilities, manage obligations
• C9-5-110.

Corporate unit trusts

A trust is a corporate unit trust for an income year if:

• the trust is a public unit trust
• under an arrangement, a business or property previously carried on or owned by a company is transferred to the unit trust and the shareholders of the company are entitled to take up units in the unit trust
• the trust is either a resident unit trust or was a corporate unit trust in a previous income year.

A public unit trust for this purpose is a trust whose units are listed on a stock exchange or offered to the public or held by 50 or more persons. A unit trust is not a public unit trust if 20 or fewer persons hold 75% or more of the beneficial interest of the income or the property of the trust.

A unit trust is a resident unit trust for an income year if, at any time during the income year:

• either          
  • any property of the unit trust was situated in Australia, or
  • the trustee of the unit trust carried on business in Australia
   

and

• either          
  • the central management and control of the unit trust was in Australia, or
  • one or more persons who were residents held more than 50% of the beneficial interests in the income or the property of the unit trust.
   

Public trading trusts

A trust is a public trading trust, if:

• the trust is a public unit trust
• the trust is a trading trust; and
• either          
  • the trust is a resident unit trust, defined as above under corporate unit trust, or
  • the trust was a public trading trust in a previous income year
   

A unit trust is a resident unit trust for an income year if, at any time during the income year:

• any property of the unit trust was situated in Australia, or
• the trustee of the unit trust carried on business in Australia

and

• the central management and control of the unit trust was in Australia, or
• one or more persons who were residents held more than 50% of the beneficial interests in the income or the property of the unit trust.

A public unit trust for this purpose is a trust any of whose units are listed on a stock exchange or offered to the public or whose units are held by 50 or more persons, except where 20 or fewer persons hold or have the right to hold 75% or more of the beneficial interests in the income or property of the trust, and the Commissioner does not consider it reasonable to treat the trust as a public unit trust.

In addition, a unit trust is a public unit trust if one or more tax exempt entities (other than an exempt institution that is eligible for a refund of franking credits) hold or have the right to hold 20% or more of the beneficial interests in the income or property of the trust, or are paid or credited with 20% or more of the moneys paid or credited by the trustee to the unit holders, or an arrangement exists whereby the two outcomes just outlined could have been obtained.

Broadly speaking, a trading trust for this purpose is a trust whose trustee:

• carries on a trading business, or
• controls, or is able to control, the carrying on of a trading business by another person.

A trading business for this purpose is a business that does not consist wholly of eligible investment business consisting of:

• investing in land for rent
• investing or trading in loans, securities, shares, units in a unit trust, futures contracts, forward contracts, interest rate swap contracts, currency swap contracts, forward exchange rate contracts, forward interest rate contracts, life assurance policies, or rights or options in any of these, or
• investing or trading in other financial instruments that arise under financial arrangements (other than certain excepted arrangements).

From 2008–09 there is a 2% safe harbour allowance at the whole of trust level for non-trading income and for investments in land there is a 25% safe harbour allowance for non-rental, non-trading income from those investments. However, the trustee of a unit trust may choose not to apply those safe harbours.

Attribution managed investment trusts

Eligible managed investment trusts can make an irrevocable choice to become an Attribution managed investment trust (AMIT). Where this choice has been made, trustees will be required to lodge an Attribution managed investment trust (AMIT) tax return and Attribution managed investment trust (AMIT) tax schedule where the trust is eligible to be an AMIT for the income year.

Ceasing to be an AMIT

A trust that:

• was an AMIT for an earlier income year, and
• is not eligible to be an AMIT for a later income year

may need to lodge a Trust tax return for the later income year.

A trust that is not eligible to be an AMIT for an income year must continue to work out unders or overs that relate to a year that the trust was an AMIT.

Where the trust has an under or over in the later income year (the discovery year), it must work out the unders and overs and their effect on trust components as if it were an AMIT. The trust must then take these amounts into account in determining the trust's net income, exempt income, NANE income and/or tax offsets, in accordance with Subdivision 276-K of the ITAA 1997.

Broadly, unders and overs can only arise in income years that fall within the period of review (generally four years) for the original income year (the base year) that they relate to.

Where these unders or overs are discovered in a post-AMIT income year and you are required to lodge a Trust tax return, you must lodge an AMIT tax schedule with the return to disclose those unders or overs.

Trustee liabilities

Where an over of a character relating to tax offset arises, you may be liable to pay tax on the amount by which the over exceeds your other tax offsets of that character for the discovery year. To determine whether you have a liability to pay tax, see subsection 276-820(6) of the ITAA 1997.

Where an ex-AMIT is liable to pay tax under paragraph 276-820(6)(a), you must provide the following information in the text box at Additional information.

• AMIT name
• AMIT ABN/TFN
• Subject: Trustee assessment under subsection 276-820(6) of the Income Tax Assessment Act 1997
• income year the excess amount relates to, that is, the base year
• amount of the excess.

Additional Information

If these instructions ask you to provide additional information, provide it in the text box at Additional information. Include a heading indicating the question or item the information relates to.

Keep any schedules or documents with your tax records.

Annual investment income reporting

Managers of unit trusts that are investment bodies for the purposes of Part VA of the ITAA 1936 may be required under Division 393 of Schedule 1 of the TAA to lodge an Annual investment income report if they made distributions to unit holders during the year. The report requires details of distributions, including the amounts paid and the names of the payees. For more information, phone 13 28 66.

Payment arrangements

Paying your tax debt

Income tax debts must be paid by the due date.

You can make payments by one of the five methods explained in How to pay. For more information, phone 1800 815 886.

If the trust tax return is lodged on time, any tax payable by the trustee is due on the later of:

• 21 days after the due date for lodgment of the tax return, or
• 21 days after receipt of the notice of assessment.

If the trust tax return is lodged late or not at all, any tax payable by the trustee is due 21 days after the due date for lodgment.

The general interest charge (GIC) accrues on outstanding amounts from the due date for payment.

For more information on the GIC, phone 13 28 66.

What if you cannot pay your tax debt by the due date?

If you cannot pay your tax debt by the due date, phone Account management on 13 11 42 to avoid action being taken to recover the debt.

We expect you to organise your affairs to ensure that you can pay your debt on time. However, we may allow you to pay your debt under a mutually agreed payment plan if you have genuine difficulty paying your debt on time but have the capacity to eventually pay the debt. The GIC will continue to accrue on any outstanding amounts of tax during any payment arrangement.

In some circumstances the trustee may need to provide details of the trust’s financial position, including a statement of its assets and liabilities and details of income and expenditure. We will also want to know what steps the trustee has taken to obtain funds to pay its tax debt and the steps the trustee is taking to meet future tax debts on time.