Show at J the interest from banks and credit unions, building societies, debentures, notes and deposits, income accrued on discounted or deferred interest securities, government securities and interest paid by us.
The total, which is the gross amount of interest received or credited, must be included in assessable income.
If the TOFA rules apply to the trust, include all interest received or credited. This includes interest from financial arrangements subject to the TOFA rules at J.
If the trust has received or entitled to receive an amount described as interest from a cash management trust or other similar trust investment product include this at item 8 Partnerships and trusts.
Copy details from all statements to Worksheet 3. Keep the worksheet with your tax records.
Do not include non-share dividends received from holding a non-share equity interest. If the trust holds such an interest, the issuer is obliged to forward a dividend statement with details of the dividends, which should be shown at item 12 Dividends.
For more information on non-share dividends and non-share equity interests, see Debt and equity tests: overview.
Discounted, deferred interest or capital-indexed securities
Show at J the appropriate amount of discount, interest or other gain which accrued this income year on a discounted, deferred interest or capital-indexed security.
Qualifying security rules
A discounted, deferred interest or capital-indexed security may be subject to the qualifying security rules in Division 16E of the ITAA 1936.
Those rules will only apply if the TOFA rules do not apply (see below). In addition, the security must be one that:
- was issued after 16 December 1984
- had a maturity date more than 12 months from the issue date
- the sum of all payments under the security (except periodic interest, for example, a coupon rate) exceeds its issue price by greater than 1.5%.
Example 8
On 1 July, a zero-interest-discounted security is issued at $82.65, redeemable on 30 June after two years at a face value of $100. The investor holds the security until it matures. Where this security is not subject to TOFA, the investor is required to calculate the effective rate of interest for each six-month period. In this case, it is 4.88%.
The accrued amount included in the total income each income year is equal to the increase in value of the security in that year, as follows:
Value of security at: |
Year 1 |
Year 2 |
Calculation |
|---|---|---|---|
Beginning of year |
82.65 |
90.91 |
a |
Half-year |
86.68 |
95.35 |
b |
Increase |
4.03 |
4.44 |
b − a = c |
End of year |
90.91 |
100.00 |
d |
Increase |
4.23 |
4.65 |
d − b = f |
Increase for year |
8.26 |
9.09 |
c + f |
In the example, the six-monthly period falls at exactly half-year.
End of exampleTFN amounts withheld from gross interest
Show at I any TFN amounts withheld from gross interest where a TFN has not been provided to the investment body.
Record keeping
Keep all documents issued by the investment body that detail payments of income and any TFN amounts withheld from those payments.
Do not attach these documents to the trust tax return; keep them with the trust’s tax records.
We may check the amount shown at J with our own records to determine accuracy, see Information matching.